Research Summary

Research summary

Territorial Concentration

The analysis highlights a territorial concentration of CeFi projects predominantly in the US, Singapore, Switzerland, and the UK, with the US hosting nearly half of all projects. A Pareto distribution is observed, where 25% of territorial ranges contain 76% of projects, indicating increasing demand for asset tokenization in abovementioned 4 countries.

Importance of Regulated Banking Partnerships

Projects which plan to establish regulated banking partnerships, are noted for potentially higher valuations, demonstrated by SEBA Bank's significant fundraising of $240M for such efforts.

Universal RWA Platform as a Key Enabler

The focus should shift towards creating an architecture that supports tokenization of all asset types universally, rather than on particular asset types or isolated tokenization solutions. This is emphasized by the innovative concept of Ekta and the fundraising successes of Polymath and Taurus Platform for developing a comprehensive technology and solutions stack.

High Cost of Token Studio Design

The analysis outlines the multifaceted expertise and complex infrastructure required for Token Studio design, leading to a baseline cost of $1-2M for delivery and maintenance. This includes a range of skills from economics to cyber security and assets management, along with architectural and technological considerations.

Development Cost Reduction Strategies

Strategies to reduce development costs include leveraging existing blockchains through oracles, utilizing cross-chain oracles for token minting, and focusing on a 'meta' universal solution to onboard competitors as 'user-providers', thereby reducing competition and fostering collaboration.

Territorial coverage and scope of services limitation

RWA tokenization projects frequently encounter territorial limitations and scalability challenges due to the necessity of aligning with regulatory standards specific to each asset type. These challenges are compounded by the projects' need to adhere to the legal frameworks of each country in which they operate. Typically, this results in projects:

  1. Confining their operations to a single country to avoid the complexities and costs associated with complying with multiple jurisdictions

  2. Focusing on a single asset type to limit the amount of compliance effort related to maintaining compliance validity of the framework that would be dedicated to accommodate more asset types.

Expansion beyond these borders often requires the engagement of additional SMEs and legal offices in multiple countries, significantly increasing operational complexity and costs.

This situation underscores the absence of a standardized product framework capable of universally accommodating various types of RWA tokenization models, further highlighting the difficulties in achieving scalability and compliance across diverse territorial legal frameworks.

Collaboration hub instead of centralized solution

A scalable, universal RWA solution is needed to address RWA tokenization industry challenges, and provide a more modular, easily expandable approach that can serve both user-customers and user-providers, overcoming territorial scalability issues and fostering a collaborative ecosystem.

General low quality of products in the RWA tokenization industry

Many RWA tokenization efforts are focusing on niche solutions or adding unnecessary complexity, without offering genuine innovation. The distinction between tokenization and digitization is often blurred, with many projects merely adding layers of tokenization without addressing the fundamental needs for authenticity verification and secure ownership.

Model Projects and Approaches

Ownera and Aconomy are models that can serve as examples of attempts that are slowly starting to move in what seems to be the right direction in the RWA tokenization industry, focusing on enabling ecosystem participation and authentication, and suggests that these strategies could be key components of a successful universal RWA framework.

Last updated