Chainlink predicts tokenized asset market will reach $16T by 2030
As asset managers and wealth advisors face growing pressure from clients to offer exposure to crypto, a significant transformation is underway. Despite the increasing demand, many traditional asset managers struggle due to a lack of knowledge to assess the security and risks associated with these digital assets, making it challenging to integrate them into their portfolios.
Tokenized assets, which are digital representations of physical or traditional financial assets on a blockchain, present an intriguing solution. They offer several benefits including improved liquidity, enhanced transparency, and more efficient risk management and compliance. However, these advantages come with added complexity, especially when evaluating the technology and security risks involved.
The potential market for tokenized assets is immense and encompasses almost every financial instrument. Estimates suggest that by 2030, 5-10% of all assets will be digital, with tokenized assets making up between $10 to $16 trillion of that. Currently, tokenized assets on public blockchains are valued at around $147 billion, with stablecoins commanding over 97% of this market.
A study by BNY Mellon and Celent revealed that 97% of institutional investors believe tokenization will revolutionize asset management. Larry Fink, CEO of BlackRock, emphasized that the approval of 11 spot Bitcoin ETFs is just the beginning, with tokenizing every financial asset being the second stage of this financial market revolution.
Tokenized assets are gaining traction across numerous industries. The World Economic Forum anticipates that by 2027, 10% of global GDP could be stored on blockchain. This is facilitated by the unique capabilities of blockchains, which allow for trades to be executed and settled simultaneously, enabling delivery versus payment (DvP) settlement, 24/7 trading, and instant access to global liquidity pools.
Smart contracts also play a crucial role by automating transactions based on predefined conditions, thus reducing settlement times and operational friction. Traditional finance uses a T+2 settlement system, which means trades take two days to settle. However, blockchain technology can enable T+0 settlement, thereby significantly reducing counterparty risk. For instance, Sweden’s central bank is experimenting with an e-krona that could provide real-time payment settlement.
Tokenization unlocks global liquidity and boosts capital efficiency by establishing a universal standard for execution and settlement. This can create instantly accessible global liquidity pools and bring liquidity to traditionally illiquid assets like real estate. Tokenizing real estate, for example, allows for fractional ownership, lowering the entry barrier and broadening the investor base.
Normally, dividing real estate into smaller, tradable portions is a complex process, but tokenization simplifies this, making it possible to buy and trade small fractions of assets at near-zero cost. Another advantage is composability. With a unified settlement layer on blockchains, tokenized assets can be integrated into various on-chain smart contract-based financial services.
