Real-world asset (RWA) tokenization is currently one of the best-performing sectors in the digital asset landscape, netting investors a 213% return in the first half of 2024, according to BitEye and Wu Blockchain, and fostering institutional interest in Web3.

Despite the meteoric price performance of RWA, injections of fresh capital from Web2 companies and institutional firms are needed to continue growing the Web3 space, according to Jason Dehni, CEO of decentralized private credit platform Credbull.

The CEO explained that Web3 firms typically focus on accessing liquidity from within the Web3 sector rather than seeking capital from the outside world. “We [have] become very insular,” Dehni said, noting that the announcement of new tokenized products from investment bank Goldman Sachs confirms there is a high degree of institutional interest for tokenized assets.

Dehni then explained that the true value proposition in RWA tokenization rests in providing operational efficiencies, enhanced liquidity and accountability to the end user, thereby democratizing asset classes and investment processes that are traditionally opaque.

“The value of RWA, for me, is primarily to provide more compelling product terms to a broader set of audience and liquidity and transparency. This is the ethos that we live by in Web3.”

Not all real-world assets should be tokenized, with some asset classes, such as private credit or equity being more of an instant fit for asset tokenization, according to the Credbull CEO.

Conversely, commercial real estate could benefit from tokenization. However, the hard asset still presents challenges regarding adequately tokenizing something as complex as a real estate portfolio or a multi-unit commercial real estate property with monthly cash flows, expenses and taxes from multiple sources.

The user interface nightmare

Institutional capital flows aren’t the only thing holding Web3 back. Shifting his focus to the broader investment public, Dehni explained that complex user interfaces and a poor user experience in crypto are some of the biggest factors keeping many people away from crypto.

On a scale of 1 to 10, “we’re probably still around a four” when it comes to creating seamless and intuitive user interfaces, the CEO said.

Source : Cointelegraph - Jul 25, 2024