According to a recent report by McKinsey & Company, there is still a long way to go to bring real-world assets (RWAs) onto the blockchain. Nevertheless, there is a lot of potential as the market could reach a total tokenized market capitalization of about $2 trillion by 2030.

Mantra – a Layer 1 blockchain that puts security first – is designed to enable standardization of tokenization and is tailored to financial services companies interested in bringing their entire portfolio onto the blockchain.

Mantra Co-Founder and CEO John Patrick Mullin spoke to Benzinga about how to serve traditional finance’s (TradFi) interest in entering the tokenized space, as well as the potential of RWAs in 2024 and beyond.

BZ: Why is there such great interest in RWAs?

Mullin: The RWA revolution is gaining momentum as technological maturity, regulatory advancements, and a growing understanding and acceptance of blockchain’s potential in traditional finance converge. The early stages of stablecoins and other blockchain technologies laid the necessary foundation and demonstrated the feasibility of blockchain for real-world applications. Now that the technology has proven secure and scalable, and regulations are beginning to provide clarity, both markets and institutions are more willing to engage with these innovations on a larger scale.

BZ: What do TradFi companies see in RWAs? And what about consumers?

Mullin: Traditional financial institutions (TradFi) are realizing the efficiency, liquidity, and global reach that blockchain can provide, making crypto a new frontier for investments and operations. Consumers are looking for more stable and tangible investment opportunities in the crypto space that RWAs provide by linking digital assets to real-world commodities and real estate.

BZ: Which RWAs do you consider to be the “spearhead” of the revolution?

Mullin: Real estate and commodities like gold and oil are often seen as the “spearhead” of the RWA revolution. However, US securities, stocks, bonds, private credit, etc. will be the first to arrive. Real estate markets are the most illiquid and will benefit the most from fractional ownership and increased liquidity, making investments more accessible. These may come later, but in my opinion, this is where the most value will be created. Commodities, which traditionally require complex logistics and have high barriers to entry, are also the best candidates for tokenization, which simplifies transactions and opens up new markets.

BZ: Do RWAs help provide liquidity to the crypto ecosystem?

Mullin: RWAs introduce new ways to buy, sell and trade real-world assets on blockchain platforms. By tokenizing assets like real estate, art and commodities, we can break large assets into smaller, more liquid units. Not only does this make these assets more accessible to a wider audience, but it also enables their integration into the broader crypto trading and lending ecosystems, improving overall market liquidity. Over time, on-chain will become the new online, and at Mantra, we are working towards this vision of bringing finance onchain.

BZ: What is your plan to make RWAs accessible to everyone?

Mullin: Mantra Chain’s broader strategy is to work closely with all leading RWA projects to create the most liquid Layer 1 blockchain built specifically for RWAs. The activation of Ondo USDY, the market-leading tokenized US Treasury bond product, represents a significant expansion of our ecosystem. A fungible, interest-bearing liquidity base layer on top of USDY is critical to improving our on-chain liquidity profile, and this is one of many such expansions we are making to the Mantra ecosystem.

Future collaboration between Blockchain and TradFi

Mantra recently released the news that Laser Digital, the digital asset arm of Nomura, has become strategic investors and partners, as well as the partnership with Ondo Finance. Mantra said they are negotiating further partnerships with key players in the TradFi and blockchain space.

It seems unlikely that the larger phenomenon of on-chain RWA tokenization will fall under the purview of a single L1 – however, the existence of projects like Mantra shows that this space is maturing and solving the challenges of tokenization for commodities and traditional financial instruments.

Projects like Mantra will play an important role in this trend as they can negotiate partnerships with traditional financial institutions that are, to varying degrees, willing to join the digital trend.

It is likely that over the next 10 years, partial asset sales will be a permanent part of the industry and will be available to global buyers around the world with lower barriers to entry than ever before. In the meantime, it is worth keeping an eye on projects like Mantra and Chintaior leading tokenization companies such as Tokenize And Securitize to see where the traditional financial world is making new truces with digital assets and embracing the new challenges and opportunities in the crypto space.

Investors and experts alike will have the opportunity to dive deeper into these trends at the upcoming Benzinga Future of Digital Assets event on November 19, where the evolving landscape of digital assets will be a key topic of discussion.

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