Author: Alfred@Gametorich
Recently, with the good performance of cryptocurrencies like CRCL and HOOD, many investors have raised several valuable questions: 'Where will the market's incremental growth appear if the stablecoin bill truly passes?' 'Why do tokens like SBET and BMNR surge when they latch onto the Ethereum trend?' 'Are the opportunities in RWA related to Ethereum?' 'Why do you steadfastly hold a positive outlook on ETH, regardless of short-term price fluctuations?' For these various questions, we have provided fragmented answers, and this article will systematically organize them, offering a summary from a foundational logic and a longer-term perspective, serving as a supplement to previous reports.
The rise of ETH is not driven by the purchases or promotions of one or two institutions, but is a collective choice of mainstream institutions during a transformational layout, and the critical turning point of trend change is approaching.
1. Starting from the data.
Stablecoins have achieved a development speed that exceeds market expectations, with a total market cap reaching a historic high of $258.3 billion. The U.S. (Genius) bill has passed the Senate vote, moving to the Republican-led House stage, with Trump calling for the completion of the U.S. stablecoin bill's legislative process before the August congressional recess. The Hong Kong (stablecoin regulation) has already passed and will take effect on August 1. U.S. Treasury Secretary Yellen predicts that if the U.S. stablecoin bill passes, the stablecoin market cap could rapidly grow to over $2 trillion in the coming years (more than 10 times its current size). Meanwhile, asset tokenization is one of the fastest-growing markets besides stablecoins; RWA has grown from $5.2 billion in 2023 to the current $24.3 billion, an increase of 460%.
Currently, the total market value of traditional finance exceeds $400 trillion, the total market value of the crypto market is $3.3 trillion, the total market value of stablecoins is $0.25 trillion, and the total market value of RWA is $0.024 trillion. According to industry forecasts from Standard Chartered, Redstone, RWA.xyz, and others, by 2030-2034, 10%-30% of global assets may be tokenized, which equates to a scale of $40-120 trillion, with the total market value of RWA expected to expand to over 1,000 times its current value.
What other businesses are the proactive 'BlackRocks' pushing for stablecoins and cryptocurrency ETFs?
BlackRock BUIDL Fund: BUIDL (BlackRock USD Institutional Digital Liquidity Fund) is a blockchain-based tokenized dollar-pegged fund launched by BlackRock, using tokenization to represent underlying assets (mainly U.S. Treasury bonds). Its AUM has reached $2.86 billion (11.7% of the RWA market), with 95% of funds deployed on Ethereum.
Securitize: An asset tokenization company led by BlackRock and Jump, with participation from institutions like Coinbase. In addition to issuing BUIDL with BlackRock, it has collaborated with several traditional financial institutions to issue various tokenized products: tokenizing private equity funds in partnership with Hamilton Lane; exploring the issuance of tokenized investment products with VanEck; tokenizing part of Apollo's private credit and alternative investment products; and assisting KKR in fund tokenization. Tokenized products issued through Securitize have a market value of $3.7 billion (15% of the RWA market), with 80% deployed on Ethereum.
Franklin Templeton's BENJI Fund: BENJI (BENJI Tokenized Fund) is a tokenized fund launched by Franklin, converting traditional assets (money market funds or bonds) into digital tokens to achieve asset digitalization and fragmentation, allowing small investors to participate while supporting smart contract functionality for yield distribution or reinvestment. Its current AUM is $743 million (3% of the RWA market), with 59% of funds deployed on Stellar and 10% on Ethereum.
There is more traditional finance advancing asset on-chain and asset tokenization business. The current wave of institutional adoption represents the culmination of years of infrastructure development finally leading to production-scale deployment.
2. Re-examining RWA.
RWA (Real-World Assets) refers to the digitalization and mapping of tangible or intangible assets in the real world (such as real estate, art, bonds, stocks, commodities, etc.) into digital tokens or assets on the blockchain through blockchain technology or tokenization methods. Broadly, I believe that RWA in the industry mainly corresponds to the on-chain and tokenization of any assets beyond blockchain-native assets, allowing rights, circulation, and settlement of the underlying assets to be completed entirely through blockchain.
Tokenization has the following structural advantages:
1. Programmability - innovation in asset management driven by smart contracts: 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 asset management from static holding to dynamic management, evolving from manual data transmission to on-chain automated updates.
2. Settlement revolution - efficiency enhancement and risk control: Tokenization achieves instant peer-to-peer settlement through blockchain, replacing the lengthy T+2 clearing cycle that has plagued the traditional financial system for years. Trading parties can directly transfer ownership through tokens without centralized intermediaries, reducing counterparty risk and capital requirements.
3. Liquidity revolution - the core of traditional finance embracing crypto: Tokenization significantly enhances asset liquidity by breaking traditionally low-liquidity assets (such as real estate, private equity, etc.) into standardized small tokens for trading in secondary markets, combined with the maturing DeFi system. The unique 7*24 trading environment of blockchain amplifies this effect.
Whenever an asset is on-chain, settlement efficiency increases, and idle assets are utilized by DeFi. 'The faster the value settlement, the more frequently the funds are reinvested, further expanding the overall economic scale. The business model will no longer rely on charging for [liquidity] processes, but rather create new revenue sources through [momentum] effects' (-Sumanth Neppalli). This is the essence of the integration of traditional finance and crypto.
4. Global accessibility - breaking down geographic barriers of capital fragmentation: Tokenization relies on the distributed nature of blockchain, allowing global investors to access tokenized assets via the internet without complex cross-border intermediaries or local accounts. This significantly expands the investor base while lowering distribution costs. The global application of stablecoins is the best testament to this, and this trend is extending to more markets like the stock market.
What assets are being tokenized?
1. Private credit - the largest area of RWA tokenization: Contrary to most perceptions, private credit is currently the largest market for asset tokenization, with a total scale of $14.3 billion, accounting for 58.8% of the total RWA scale. 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 traditional institutions' tokenization: The market size for tokenized treasury bonds has reached $7.4 billion, accounting for 30% of the total RWA scale, with representatives such as BlackRock's BUIDL; Franklin Templeton's BENJI; Superstate's USTB; and Ondo Finance's USDY. Traditional financial institutions are beginning to explore the development of on-chain derivative financial products and the integration of DeFi based on tokenized treasury products.
3. The tokenization of the stock market is accelerating: On June 30, cryptocurrency exchanges Kraken and Bybit announced the launch of tokenized U.S. stocks and ETFs through xStocks, achieving 5*24 hour trading. Although these are not stocks natively traded on the blockchain, participating in price difference trading through stock tokenization breaks the geographical boundaries of the U.S. stock market. Meanwhile, Robinhood announced that it is building 'Robinhood Chain' on the Arbitrum blockchain, aimed at supporting decentralized management of future asset ownership. This marks its transformation from a traditional brokerage to a blockchain-native platform, dividing stock tokenization into three stages to integrate blockchain for composability advantages. At the same time, Coinbase has positioned tokenized stocks as a 'top priority,' with its Chief Legal Officer Paul Grewal actively seeking approval from the U.S. Securities and Exchange Commission (SEC) for its blockchain-based stock trading services, utilizing its Base Layer 2 network as a potential infrastructure for future tokenized stock settlement. This year, we may witness these leaders launch stocks native to the blockchain.
4. Commodity tokenization is primarily focused on gold: Gold accounts for nearly 100% of tokenized commodities. Paxos Gold (PAXG) leads with a market value of approximately $850 million.
5. Active exploration of private equity tokenization: Private equity is the ultimate goal for tokenization; this technology can address structural issues that have plagued traditional private equity for decades, improving its historically poor liquidity.
3. Stablecoin-RWA-DeFi.
Stablecoins are the most important underlying foundation for traditional finance to integrate on-chain, making currency programmable and decentralized, serving as the basis for the circulation and settlement of all on-chain financial assets. Dr. Xiao Feng, Chairman of Hashkey Group, and Professor Meng Yan have previously shared that 'the U.S. presidential team and Congress are relatively frank and transparent regarding the motives behind stablecoin legislation: first, to modernize the U.S. payment and financial system; second, to solidify and enhance the status of the dollar, creating trillions of dollars in demand for U.S. Treasury bonds in the coming years.' 'Bitcoin as a national reserve is second to the U.S. dollar stablecoin, which is the number one priority for the U.S. core interests.'
The rapid development of RWA in this round benefits from institutions continuously exploring new integration methods and promoting legislation for digital asset market structure. Once stablecoin and market structure legislation is completed, a large number of assets will be quickly pushed on-chain, with trading, yield, settlement, and other processes operating on the native blockchain, using stablecoins as the basic currency unit and value carrier.
As a large number of assets go on-chain, DeFi will begin to take effect, integrating newly on-chain assets with increasingly mature DeFi protocols to achieve efficiency, automation, and compliance. This will drive the creation of derivatives and the generation and distribution of high liquidity returns. This cycle may be the next opportunity for the entire DeFi ecosystem to flourish since DeFi Summer.
Cases of RWA and DeFi integration.
1. Securitize connects DeFi systems through sTokens:
Securitize, the world's largest tokenized asset issuer, does not support the direct use of the native tokenized securities it issues in DeFi protocols due to compliance considerations. Tokens must first be deposited into sVault, where a version compatible with DeFi, known as sTokens, can be minted to connect with the existing DeFi ecosystem.
BlackRock BUIDL and Euler protocol: Securitize's sBUIDL (a derivative token of BUIDL) has been integrated with the Euler lending protocol on Avalanche. Holders can deposit sBUIDL into the sToken Vault to borrow other assets while continuing to earn daily yields from BUIDL.
Apollo ACRED and Morpho protocol: The sToken version of ACRED (sACRED) operates through Morpho on Polygon PoS, allowing holders to use sACRED as collateral to borrow USDC, automatically reinvesting to amplify returns.
2. Ethena's USDtb fusion BUIDL achieves a stable yield floor.
The Ethena Risk Committee approved the use of USDtb as the main supporting asset when the Delta neutral financing strategy reaches a local minimum. 90% of USDtb reserves are held in BlackRock's BUIDL fund, serving dual purposes: providing low-risk collateral for margin trading on centralized exchanges and offering compliant treasury exposure in adverse financing environments.
'USDe joining USDtb support has indirectly catalyzed explosive growth in complex DeFi yield strategies, particularly facilitating the robust money market of Pendle's principal token (PT) and yield token (YT) — traditional finance views these tools as interest rate markets. During periods when the financing rates for crypto derivatives become negative or are significantly compressed, the support from USDtb provides crucial yield floor stability (typically a 4-5% annual interest rate). This predictable minimum yield base is essential for the valuation of PT tokens and AAVE's oracle system, enabling a more accurate pricing model and safer liquidation mechanisms for zero-coupon bond mechanisms.'
Currently, traditional financial institutions are starting to explore the development of on-chain derivative financial products and the compliance integration of DeFi based on tokenized treasury products.
4. ETH is currently the mainstream choice for institutions.
Current data shows that ETH remains the primary public chain for institutions to tokenize assets, with a tokenized market value of $7.5 billion on ETH, accounting for 58.41% of the total scale. The tokenized market value on ETH's L2 ZKsync Era is $2.245 billion, accounting for 17.47%, while Aptos, the leading public chain among others, has a tokenized market value of $540 million, accounting for about 4.23%.
From a foundational logic perspective, there are three reasons why institutions prefer ETH as the main battleground for asset tokenization:
1. Ethereum has the highest security among current public chains. With a decade of security history, it has not experienced severe issues like downtime. When Ethereum upgraded from PoW to PoS, it accomplished a core architecture upgrade without downtime, described as 'changing an engine mid-flight.' The stability shown by excellent technical foundations and organizational integration aligns with the prudent principles of institutions undertaking new business layouts.
2. With the most mature DeFi ecosystem and the best liquidity, the most mature DeFi protocols are mostly found on Ethereum. Institutions can quickly access mature DeFi systems and enjoy the best liquidity after deploying on ETH.
3. Extremely high decentralization and global business reach also serve as the balance center for large institutions and global investments. One reason stablecoins hold such strategic significance for the U.S. is that they achieve decentralized global reach on-chain, breaking down the previously politically divided national currency barriers, pushing dollar equivalents globally through the internet. Asset tokenization is similarly significant, as recent U.S. stock tokenization allows individuals who previously could not invest in U.S. stocks to bypass national entry barriers and participate in U.S. stocks on-chain. Benefiting from the best liquidity and influence, ETH is the preferred public chain for global business reach, and due to its decentralized characteristics, it serves as the balance center for the interests of large institutions and global investors; sovereign large institutions will be reluctant to choose a public chain that is entirely controlled by another country to issue products and engage in large financial activities.
Let's see what Etherealize has to say.
EF has undergone significant functional differentiation and specialization, internally restructuring into three major business groups while separating specific functions to external organizations, leading to the birth of Etherealize. Its positioning as the 'institutional marketing and product pillar' of the Ethereum ecosystem focuses on handling connections with traditional finance and Wall Street to accelerate Ethereum's adoption among institutions.
Etherealize believes that ETH should not be evaluated as a tech stock, but rather as a new category of asset: ETH is digital oil — an 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 expected to become the foundational software layer — akin to an operating system, like Microsoft Windows — upon which a new global financial system will be built.'
When all of this comes to fruition, ETH will become the foundational asset of a comprehensive global platform that will encompass the future of finance, tokenization, identity, computation, artificial intelligence, and more. This inherent complexity makes it harder to define ETH, especially in comparison to simpler value-storing assets like Bitcoin — but it also makes ETH strategically more valuable and signifies greater long-term potential.
Furthermore, ETH is not just a cryptocurrency; it is a multifunctional asset whose roles include: computational fuel; a value storage asset with attached yields; original settlement collateral; deflationary asset; and a manifestation of tokenized economic growth: strategic reserve asset.
Thus, ETH cannot be accurately valued through discounted cash flow methods. Instead, ETH must be viewed from the perspective of strategic value storage and utility-driven scarcity. ETH powers the digital economy, secures the safety of the digital economy, derives value from the growth of the digital economy, and possesses intrinsic scarcity due to its dynamic supply and issuance limit. As the global economy transitions to tokenized infrastructure, ETH will become indispensable, not only as fuel but also as the native asset of the monetary and settlement layer of future financial systems.
Why is ETH lagging behind BTC?
The answer is simple: the narrative of Bitcoin has been accepted by institutions, while the narrative of Ethereum has not yet been. In contrast, the value proposition of Ethereum is harder to define — not because it is weaker, but because it is broader. Bitcoin is a single-use value storage asset, while Ethereum is a programmable foundation supporting the entire tokenized economy.
The process accelerating ETH's repricing is already underway.
1. Surge in demand: Institutions have begun large-scale rapid adoption and deployment of tokenized assets and financial infrastructure on Ethereum, as evidenced by the data in this article.
2. Accelerated native crypto yield demand: With institutions rapidly building on ETH, the launch of Ethereum-based ETF staking is just a matter of time. The emergence of a physical subscription/redemption model for institutions will also significantly boost interest in ETH staking yields.
3. Strategic accumulation of ETH: Within the Ethereum ecosystem, a competition is underway to accumulate ETH as a monetary premium value storage asset. Recently, the U.S. publicly listed company Bitmine Immersion Technologies raised $250 million to launch an ETH financial strategy, causing its stock price to rise from $4 to a maximum of $74 in just two days, an increase of over 180%.
4. ETH as an institutional asset: The unique characteristics of ETH — original collateral, neutrality, yield, and global utility — make it the preferred reserve asset for institutions globally.
In summary, ETH is not the only long-term choice for institutions to enter blockchain, but it is currently the optimal solution for large-scale asset tokenization. Considering the data, examples, foundational logic, and recent Big News, the trend of ETH being re-evaluated is becoming increasingly evident.
