Rise of Real-World Asset Tokenization: A Deep Dive with Kinto Founders
Summary:
In 2024, the crypto market's interest in Real-World Asset (RWA) tokenization has surged, with traditional finance also adopting blockchain and asset tokenization. The co-founders of Kinto, a blockchain project specializing in RWAs, discussed the factors behind RWAs' quick growth and the reasons major institutions like BlackRock are leaning towards this asset class. Asset tokenization presents several advantages, including eliminating middlemen, promising a highly liquid market, and ensuring ledger transparency. Kinto works towards bridging the gap for regulated products between decentralized finance and traditional methods by fulfilling counterparty requirements and enhancing asset functionality. This approach could thereby give more audiences access to these products.
In 2024, the cryptocurrency market has seen a rising interest in asset tokenization in relation to real-world assets (RWAs), with many conventional financial institutions also embracing blockchain and asset tokenization. Kinto, a blockchain project specializing in RWAs, co-founded by Victor Sanchez and Alan Keegan, offered insight into the potential of tokenized RWAs in a conversation with Cointelegraph Markets. They explained the factors that have accelerated the growth of RWAs and discussed why heavyweight institutions like BlackRock are leaning towards this asset class. Sanchez believes that the growth of RWAs is primarily driven by a clear interest due to its numerous advantages which include eliminating intermediaries and their accompanying costs, offering a highly liquid and efficient around-the-clock market, and maintaining a transparent ledger. He added that RWAs and traditional finance (TradFi) have found a reliable and usable counterpart in blockchain technology and processes like Kinto's implementation. BlackRock's newfound interest in RWAs, according to Sanchez, is due to the massive potential this multi-trillion-dollar opportunity offers and their awareness of blockchain technology's swift progress in a bull market. He emphasized that missing out on this burgeoning sector was not a feasible option, despite initial challenges. Keegan further discussed that RWAs can unlock numerous transaction types beyond global asset transfers, making them easier and cost-efficient. With appropriate regulatory framework, transactions such as overcollateralized borrowing, yield stripping, collateral claiming on bad debt, and issuing dollar-pegged stablecoins for liquidity can be automated. Sanchez reiterated that for buffering traditional and decentralized finance, RWAs are key as they tackle challenges such as liquidity and usability. However, they require compliance factors like Know Your Customer (KYC) to operate smoothly and efficiently. According to him, RWAs and DeFi have begun to merge, as tokenized RWAs nowadays are highly regulated with stringent counterparty requirements. Kinto works towards bridging this gap between RWAs and TradFi, with everyone falling under the same terms and potentials, allowing for RWAs to flow freely and compose more. They are improving the interaction between multiple DeFi applications or protocols, which has been a long-standing challenge. Sanchez suggests that Kinto, as a safe L2 layer, helps in fulfilling conventional financial institutions' counterparty requirements and enhances asset functioning within the ecosystem, leading to the creation of unique products. Ultimately, he envisages that as regulatory and security elements are taken care of, a much larger audience would have access to these products on Kinto. In a utopian vision outlined by Keegan, Kinto handles everything from tokenized traditional ETFs to corporate debt issuance, thereby symbolizing the infrastructure for the entire future financial system. Disclaimer: This article does not include investment advice or recommendations. Investments and trading moves come with their own risks, and readers must conduct independent research before making decisions.
Published At
4/24/2024 12:15:00 AM
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