WisdomTree Executive: Benefits of Asset Tokenization

Ritu77

WisdomTree's digital asset expert Benjamin Dean suggests that we need to start seeing blockchain as the infrastructure for financial innovation, rather than focusing solely on the prices of a few digital assets like Bitcoin and Ethereum.

Amidst the strong price surges of many cryptocurrencies, a recent significant development has been underestimated: the tokenization of "real-world assets" is also flourishing.

To understand what this development means and the potential benefits of tokenizing these assets, we need to rebuild our view of the digital asset ecosystem.

We often ask questions like, "What is the price of Ethereum?" "How does digital assets correlate with other asset classes?" "How should I allocate this asset class in a diversified investment portfolio?" While these questions are interesting, they all relate to digital assets themselves as an asset class.

Another perspective is to view various networks (such as Bitcoin, Ethereum, or Solana) as digital infrastructure. Similar to how TCP/IP or POP3/SMTP are protocols used to build and commercialize services, digital asset networks are the foundational layer upon which financial services (and other services) can be deployed and provided.

Asset tokenization is one such example. To quickly define this term, asset tokenization means using distributed networks and databases that constitute these networks to register interactions between parties.

One of the most obvious examples in recent years is the emergence of stablecoins, most of which are tokenized US dollars. There are many ways to build these stablecoins. A popular pattern is to accept USD deposits, typically invested in US Treasuries, and then issue USD tokens against these assets (e.g., USDC, USDT). The outstanding supply of these tokens is currently around $150 billion, up from almost zero five years ago.

The alignment of this product with the market has now been established, and the question now is: if USD tokens can be issued, why can't other currencies or assets be issued on-chain? This is the core of what the tokenization trend seeks to provide.

Another example is US Treasuries. Currently, the tokenized assets in the US amount to approximately $750 million. Tokenized US Treasuries have seen an increase from almost zero two years ago. These tokenized bonds have an advantage over traditional stablecoins: they generate and provide returns. More generally, tokenized assets offer the potential for 24/7 trading, faster settlement times (T+0), and greater accessibility, as they can be used by anyone with a mobile phone.

These examples and others, including tokenized gold, demonstrate how digital asset networks can be used as foundational digital infrastructure for distributing financial services. From this perspective, we can consider what additional value-added services can be provided through digital asset infrastructure, rather than measuring the success of these networks solely through the prices of their native cryptocurrencies. "The ideal outcome of using this technology is to create a faster, cheaper, more transparent, and easier-to-access financial system for everyone.

Samiksha

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Sona59

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Iti9

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Jafar224

Nowadays, many people are using USDT.