Author: Alfred@Gametorich
Recently, with the good performance of crypto stocks such as CRCL and HOOD, many investment friends have raised several valuable questions: "Where will the incremental market appear if the stablecoin bill is truly passed?" "Why do things like SBET and BMNR skyrocket when they catch on to the Ethereum hotspot?" "Is the opportunity of RWA related to Ethereum?" "Why are you firmly optimistic about ETH regardless of short-term price increases or decreases?" We have given fragmented answers to different questions. This article will systematically organize and summarize from the underlying logic and a longer-term perspective, and will also serve as supplementary content to the previous report.
"The rise of ETH is not driven by the purchase or promotion of one or two institutions. It is the common choice of mainstream institutions when laying out changes, and the tipping point of trend changes is approaching."
I. Starting from the data
Stablecoins have achieved a development speed that exceeded market expectations, with a total market value reaching a historical high of 258.3 billion US dollars. The US (Genius) Act has passed the Senate vote and is coming to the Republican-led House of Representatives stage. Trump requires the US stablecoin bill to complete the legislative process before the August congressional recess. The Hong Kong (Stablecoin Ordinance) has been passed and will take effect on August 1. US Treasury Secretary Bessenet predicts that if the US stablecoin bill is passed, the stablecoin market value will grow rapidly to more than 2 trillion US dollars in the next few years (10 times+ the current amount). Asset tokenization is one of the fastest-growing markets other than stablecoins. RWA has grown from 5.2 billion in 2023 to 24.3 billion US dollars, an increase of 460%.
Currently, the total market value of traditional finance exceeds 400 trillion US dollars, the total market value of the crypto market is 3.3 trillion US dollars, the total market value of stablecoins is 0.25 trillion US dollars, and the total market value of RWA is 0.024 trillion US dollars. According to industry forecasts by Standard Chartered Bank, Redstone, RWA.xyz, etc., by 2030-2034, 10%-30% of global assets may be tokenized, that is, the scale is 40-120 trillion US dollars, and the total market value of RWA is expected to expand to 1000 times the current amount.
What other businesses are "BlackRocks" that are most actively promoting stablecoins and cryptocurrency ETFs laying out?
(1) BlackRock BUIDL Fund: BUIDL (BlackRock USD Institutional Digital Liquidity Fund) is a blockchain-based tokenized US dollar-linked fund launched by BlackRock, which uses tokenization to represent underlying assets (mainly US Treasury bonds). Currently, AUM has reached 600 million US dollars (11.7% of the RWA market), and 95% of the funds are deployed on Ethereum.
(2) Securitize: An asset tokenization company led by BlackRock and Jump, with Coinbase and other institutions participating in the investment. In addition to issuing BUIDL with BlackRock, it has also cooperated with many traditional financial institutions to issue a variety of tokenized products: tokenizing its private equity fund in cooperation with Hamilton Lane; exploring the issuance of tokenized investment products in cooperation with VanEck; tokenizing some of its private credit and alternative investment products in cooperation with Apollo; assisting KKR in fund tokenization. The market value of tokenized products issued through Securitize is 3.7 billion US dollars (15% of the RWA market), and 80% are deployed on Ethereum.
(3) Franklin Templeton BENJI Fund: BENJI (BENJI Tokenized Fund) is a tokenized fund launched by Franklin, which converts traditional assets (money market funds or bonds) into digital tokens to realize the digitization and disaggregation of assets, allowing small investors to participate, and also supports smart contract functions for profit distribution or reinvestment. Currently, AUM is 743 million US dollars (3% of the RWA market), 59% of the funds are deployed on Stellar, and 10% are deployed on Ethereum.
There is even more traditional finance advancing asset on-chain and asset tokenization businesses. The current wave of institutional adoption represents years of infrastructure construction finally leading to production-scale deployment.
II. Re-examining RWA
RWA (Real-World Assets) refers to the digitization of tangible or intangible assets in the real world (such as real estate, artwork, bonds, stocks, commodities, etc.) and their mapping to digital tokens or assets on the blockchain through blockchain technology or tokenization means. In a broad sense, I believe that RWA in the industry mainly corresponds to the on-chaining and tokenization of any assets other than native blockchain assets, so that the ownership, circulation and settlement of its underlying assets are all completed through the blockchain.
Tokenization has the following structural advantages:
1. Programmability - Smart contract-driven asset management innovation: Programmability refers to encoding the rules, conditions, and execution logic of assets into automated, verifiable code through smart contracts on the blockchain. Tokenized assets can embed functions such as dividends, redemptions, and staking, eliminating manual intervention. This shifts assets from static holding to dynamic management, and from manual data transmission to on-chain automated updates.
2. Settlement Revolution - Efficiency improvement and risk control: Tokenization realizes point-to-point instant settlement through blockchain, replacing the lengthy T+2 clearing cycle that has plagued the traditional financial system for many years. Transaction parties can directly transfer ownership through tokens without the need for centralized intermediaries, reducing counterparty risk and capital requirements.
3. Liquidity Revolution - The core of traditional finance embracing crypto: Tokenization significantly enhances asset liquidity by dividing traditionally illiquid assets (such as real estate, private equity, etc.) into standardized small tokens, trading them in the secondary market, and combining them with the gradually maturing DeFi system. The 7*24 trading environment unique to blockchain further amplifies this effect.
Whenever an asset is on-chain, settlement efficiency increases, and idle assets are used by DeFi. "The faster the speed of value clearing, the higher the frequency of re-investment of funds, thereby further expanding the overall economic scale. Business models will no longer depend on charging for the [liquidity] process, but will create new sources of income through the [momentum] effect" (-Sumanth Neppalli). This is the core of traditional finance merging with crypto.
4. Global accessibility - breaking the geographical barriers of capital fragmentation: Tokenization relies on the distributed characteristics of the blockchain to allow global investors to access tokenized assets through the Internet without the need for complex cross-border intermediaries or local accounts, which significantly expands the investor base while reducing distribution costs. The globalization of stablecoins is the best testimony, and this trend is being derived in more markets such as the stock market.
Which targets are being tokenized?
1. Private Credit - The largest RWA tokenization area: Contrary to most perceptions, private credit is currently the largest market for asset tokenization, with a total size of $14.3 billion, accounting for 58.8% of the total RWA size. Figure, Tradable, and Maple are providing active loans of $10.6 billion, $2 billion, and $800 million, respectively.
2. Treasury bonds - the starting point for tokenization by traditional institutions: The market size of tokenized treasury bonds has reached 7.4 billion US dollars, accounting for 30% of the total RWA size, among which the representative ones are BlackRock's BUIDL; Franklin Templeton's BENJI; Superstate's USTB; Ondo Finance's USDY. Traditional financial institutions are beginning to explore the development of on-chain derivative financial products and DeFi integration based on tokenized treasury bond products.
3. The tokenized stock market is accelerating: On June 30, crypto exchanges Kraken and Bybit announced the launch of tokenization of US stocks and ETFs through xStocks, realizing 5*24 hours of trading. Although it is not trading blockchain-native stocks, it is possible to participate in spread trading through stock tokenization, breaking the geographical boundaries of the US stock market. Robinhood announced that it is building "Robinhood Chain" on the Arbitrum blockchain, aiming to support the decentralized management of future asset ownership. This marks its transformation from a traditional broker to a blockchain-native platform, which divides stock tokenization into three stages to integrate blockchain to obtain composability advantages. At the same time, Coinbase positions tokenized stocks as a "top priority," and its Chief Legal Officer Paul Grewal is actively seeking approval from the US Securities and Exchange Commission (SEC) to provide blockchain-based stock trading services, which will utilize its Base Layer 2 network as a potential infrastructure for future tokenized stock settlement. This year, we may witness these leaders launch popular stocks native to the blockchain.
4. Commodity tokenization is mainly based on gold: Gold accounts for almost 100% of tokenized commodities. Paxos Gold (PAXG) leads with a market capitalization of approximately $850 million
5. Actively explore private equity tokenization: Private equity is the ultimate goal of tokenization. This technology can solve structural problems that have existed for decades and change the extremely poor liquidity of traditional private equity.
III. Stablecoins - RWA - DeFi
Stablecoins are the most important underlying foundation for traditional finance to integrate into the chain. It makes currency programmable and decentralized, and is the foundation for the circulation and settlement of all on-chain financial assets. Dr. Xiao Feng, chairman of Hashkey Group, and Teacher Meng Yan also shared in an interview, "The US president's team and Congress are relatively frank and transparent on the issue of the motivation for stablecoin legislation. The first is to modernize the US payment and financial system, and the second is to consolidate and enhance the status of the US dollar and create trillions of dollars in demand for US Treasury bonds in the next few years." "Bitcoin national reserves are secondary to the United States, and dollar stablecoins are the top priority, and are the core interests of the United States."
The rapid development of RWA in this round has benefited from institutions' continuous exploration of new integration methods and the promotion of legislation on digital asset market structure. When stablecoin and market structure bills are legislated, a large number of assets will be quickly pushed on the chain, and transactions, income, settlement and other links will run on the native blockchain, with stablecoins as the basic currency unit and value carrier.
After a large number of assets are on-chain, DeFi will start to play a role, integrating newly on-chained assets with increasingly mature DeFi protocols to achieve efficiency, automation, and compliance. It will drive the creation of derivative products and the generation and distribution of high-liquidity yields. This cycle may be a new round of booming development opportunities for the entire DeFi ecosystem since DeFi Summer.
Cases of RWA and DeFi integration
1. Securitize connects DeFi systems via sTokens:
Securitize, the world's largest tokenized asset issuer, does not support direct DeFi protocol usage for its issued native tokenized securities due to compliance considerations. The tokens must first be deposited into sVault to mint DeFi-compatible sTokens, which can then be connected to the existing DeFi ecosystem.
BlackRock BUIDL and Euler Protocol: Securitize's sBUIDL (a derivative token of BUIDL) has been connected to the Euler lending protocol on Avalanche. Holders can deposit sBUIDL into the sToken Vault and borrow other assets while continuing to receive daily yields from BUIDL.
Apollo ACRED and Morpho Protocol: ACRED's sToken version (sACRED) runs on Polygon PoS through Morpho, and holders can borrow USDC using sACRED as collateral, automatically reinvesting in a loop to amplify returns.
2. Ethena's USDtb combines with BUIDL to obtain a stable yield floor
Ethena's risk committee approved USDtb as the main support asset when the Delta neutral financing strategy reaches a local minimum. 90% of USDtb's reserves are held in BlackRock's BUIDL fund, which has a dual function: providing low-risk collateral for margin trading on centralized exchanges and providing compliant treasury exposure in adverse financing environments.
"USDe's inclusion in USDtb support has indirectly catalyzed the explosive growth of complex DeFi yield strategies, especially facilitating the robust money market for Pendle's Principal Tokens (PT) and Yield Tokens (YT)—traditional finance views these tools as interest rate markets. During periods when crypto derivative funding rates turn negative or compress significantly, USDtb support provides crucial downside yield stability (typically 4-5% APR). This predictable minimum yield basis is critical for PT token valuation and AAVE's oracle system, enabling a more accurate pricing model and a safer liquidation mechanism for zero-coupon bonds."
Currently, traditional financial institutions are starting from stablecoins, based on tokenized treasury bond products, and are beginning to explore the development of on-chain derivative financial products and the compliant integration of DeFi.
IV. ETH is currently the mainstream choice of institutions
Currently, from the data point of view, ETH is still the main public chain for institutions to carry out asset tokenization. The tokenized market value on ETH is 7.5 billion US dollars, accounting for 58.41% of the total scale. The tokenized market value on ETH's L 2 ZKsync Era is 2.245 billion US dollars, accounting for 17.47%. The tokenized market value of Aptos, which ranks first among other public chains, is 540 million US dollars, accounting for about 4.23%.
Thinking from the underlying logic, there are three main reasons why institutions prefer ETH as the main base for asset on-chaining:
1. Ethereum has the highest security among all public chains. It has accumulated ten years of security records and has not experienced serious problems such as downtime. When Ethereum upgraded from Pow to PoS, the ability of Ethereum to complete the core architecture upgrade without downtime was described as "changing the engine while the plane is flying." The stability demonstrated by the excellent technical foundation and organizational integration capabilities is in line with the prudent principles of institutions for new business deployments.
2. Has the most mature DeFi ecosystem and the best liquidity, and the most mature DeFi protocols. Most of the most innovative product mechanisms exist in Ethereum. After institutions chain ETH, they can quickly connect to the mature DeFi system and enjoy the best liquidity.
3. Extremely high decentralization and global business reach are also the balancing center of interests for large institutions and global investments. One of the reasons why stablecoins are so strategically important to the United States is that stablecoins achieve decentralized global reach on-chain, breaking the national currency barriers divided by politics in the past, and pushing US dollar equivalents to the world through the network. Asset tokenization is also the same, such as the recent tokenization of US stocks, which allows people who could not invest in US stocks in the past to bypass national access and participate in US stocks through the chain. ETH, thanks to the best liquidity and influence, is the preferred public chain for global business reach, and at the same time, thanks to its decentralized characteristics, it is the balancing center of interests for large institutions and global investors. Large institutions in sovereign countries would not want to choose a public chain that is completely dominated and controlled by another country to issue products and participate in large-scale financial activities.
See what Etherealize says
EF has experienced significant functional differentiation and specialization, and has been internally reorganized into three major business groups, while separating specific functions to external organizations, and Etherealize was born as a result. It is positioned as the "institutional marketing and product pillar" of the Ethereum ecosystem, focusing on handling docking with traditional finance and Wall Street to accelerate the adoption of Ethereum in institutions.
Etherealize believes that ETH should not be evaluated as a tech stock, but as a new category of asset: ETH is digital oil—the asset that powers, secures, and reserves the new financial system of the internet.
"The traditional financial system is at the beginning of a structural transformation from analog infrastructure to digital-native architecture. Ethereum is poised to become the foundational software layer—similar to an operating system, like Microsoft Windows—upon which the new global financial system will be built.
When all of this is realized, ETH will serve as the foundational asset for a comprehensive global platform encompassing the future of finance, tokenization, identity, computing, artificial intelligence, and more. This inherent complexity makes ETH more difficult to define, especially relative to simpler stores of value like Bitcoin—but it also makes ETH strategically more valuable and implies that ETH has greater long-term potential."
At the same time, ETH is not just a cryptocurrency; it is a versatile asset whose roles include: computational fuel; a store of value with attached yield; original settlement collateral; a deflationary asset; an embodiment of tokenized economic growth: a reserve trading pair: a strategic reserve asset.
Therefore, ETH cannot be accurately valued using discounted cash flow methods. Instead, ETH must be viewed from the perspective of strategic store of value and utility-driven scarcity. ETH powers the digital economy, secures the digital economy, extracts value from the growth of the digital economy, and has intrinsic scarcity due to its supply dynamics and issuance caps. As the global economy transitions to a tokenized infrastructure, ETH will become indispensable, not just as fuel, but as the native asset of the monetary and settlement layers of the future financial system.
Why is ETH lagging behind BTC?
The answer is simple: Bitcoin's narrative has been accepted by institutions, while Ethereum's has not. In contrast, Ethereum's value proposition is more difficult to define—not because it is weaker, but because it is broader. Bitcoin is a single-purpose store of value asset, while Ethereum is the programmable foundation that supports the entire tokenized economy.
The process of accelerating ETH's re-pricing is happening:
Surge in demand: Institutional levels have begun to rapidly adopt and deploy tokenized assets and financial infrastructure on Ethereum on a large scale, as the data in this article has proven.
Accelerating demand for native crypto yields: As institutions build on a large scale with ETH as the foundation, Ethereum's ETF staking is only a matter of time. The emergence of the institutional physical subscription/redemption model will also greatly increase institutional interest in ETH staking yields.
Strategic hoarding of ETH: A competition is emerging within the Ethereum ecosystem to hoard ETH as a monetary premium store of value. Recently, US-listed company Bitmine Immersion Technologies raised $250 million to launch an ETH financial strategy, driving its stock price up from $4 to a high of $74 in two days, a surge of over 180%.
ETH as an asset for institutional funds: ETH's unique characteristics—original collateral, neutrality, yield, and global utility—make it a preferred reserve asset for institutions and globally.
To put it simply, ETH is not the only long-term choice for institutions to enter the blockchain, but it is the optimal solution for large-scale asset on-chaining at present. Combining data, examples, underlying logic and recent Big News, the trend of ETH being re-valued is coming.
References
(Beyond Stablecoins)
(Real-World Assets in Onchain Finance Report)
(The Bull Case for ETH)
(Dialogue with Dr. Xiao Feng: Dollar Stablecoins and RWA)
