Original title: Beyond Stablecoins
Originally Posted by: Sumanth Neppalli
Original translation: TechFlow
Stablecoins have become a hot topic in the cryptocurrency space lately. Some people think they are the best thing since baking bread, while others (like me) think they are just a clever way to export dollars. Faced with the changes brought about by tokenization, we have been thinking about how financial markets will evolve with it. This article will first review the historical background of stablecoins, and then deeply analyze the impact that tokenization may have on the market.
In July 1944, representatives from 44 Allied nations gathered in the ski town of Bretton Woods, New Hampshire, to redesign the global monetary system. They decided to peg their currencies to the dollar, which in turn was pegged to gold. Designed by British economist John Maynard Keynes, the system ushered in a new era of stable exchange rates and unimpeded trade.
If the summit was likened to a GitHub project, the White House created a branch, the Treasury Secretary submitted modification requests, and the finance ministers of various countries approved the modifications, hard-coding the US dollar into every future trade transaction. In todays digital age, stablecoins are like the result of the merger of this code, while other countries are working hard to adjust their own code bases to prepare for a future that may not rely on the US dollar.
Within 72 hours of returning to the Oval Office, President Trump signed an executive order that sounded more like a cryptocurrency enthusiast’s fantasy novel than traditional fiscal policy: “Promoting and protecting the sovereignty of the dollar, including through globally legal, dollar-backed stablecoins.”
Soon after, Congress introduced legislation called the GENIUS Act, which stands for “Guiding and Establishing National Innovation for US Stablecoins.” This is the first bill to set basic rules for stablecoins while encouraging their use for payments around the world.
Currently, the bill is being debated in the Senate and is expected to be voted on this month. Staff revealed that the latest draft has adopted many suggestions from the Democratic Alliance, and the bill is likely to pass.
So why is Washington showing such a keen interest in stablecoins? Is this just a political show, or is there a deeper strategic layout behind it?
Why foreign demand still matters
Since the 1990s, the United States has outsourced much of its production to China, Japan, Germany, and the Gulf States, and paid for these imports with newly printed dollars. Because it imports far more than it exports, the United States has long faced a huge trade deficit. The so-called trade deficit refers to the difference between the total amount of goods a country buys from the world and the total amount of goods it exports.
Source: Visual Capitalist
Exporting countries face a dilemma: if they convert the earned US dollars back into local currencies, the exchange rate will rise, which will weaken the competitiveness of their own products and affect exports. Therefore, the central banks of these countries usually choose to buy US dollars and invest them in US Treasury bonds. This can avoid the volatility of the foreign exchange market, earn interest through Treasury bond income, and at the same time, the credit risk is almost as low as holding US dollars directly.
This pattern forms a self-reinforcing cycle: export goods to the United States, earn dollar income, and then invest these dollars in U.S. Treasury bonds to earn interest. To maintain this cycle, the exporting countries will deliberately lower their currency exchange rates to promote more exports.
This “export financing loop” has helped the U.S. solve part of its debt problem. Currently, about a quarter of the country’s $3.6 trillion debt is financed this way. However, if a prolonged trade war breaks the loop, the cheapest source of financing for the U.S. could dry up.
Financing the deficit: The U.S. government has long spent more than it earns, so it needs to run a budget deficit. By selling Treasury bonds to foreign countries, the U.S. is able to share the deficit pressure. Short-term Treasury bonds (T-bills) usually mature within a year, while long-term Treasury bonds (Treasury bonds) mature in 20 to 30 years.
Keeping interest rates low: High demand for U.S. Treasuries keeps their yields (i.e., interest rates) low. When buyers like China push up Treasury prices, yields fall, making borrowing cheaper for governments, businesses, and consumers. This cheap borrowing supports economic growth and provides funding for expansionary fiscal policy.
The dollars global status: The dollars status as a global reserve currency depends on the international communitys trust in the U.S. economy and assets. Foreign holdings of U.S. Treasury bonds are a symbol of this trust, ensuring that the dollar continues to be widely used in international trade, oil pricing, and foreign exchange reserves. This privilege allows the United States to borrow at a low cost while maintaining economic influence around the world.
However, if this demand decreases, the United States will face higher borrowing costs, a weaker dollar, and reduced geopolitical influence. In fact, the warning signs are already there. When leaving office, Warren Buffett said that his biggest concern was the coming dollar crisis. Now, for the first time, the United States has lost its AAA credit rating from all major rating agencies . AAA ratings are considered the gold medal in the bond market, meaning that such debt is almost risk-free. After the rating downgrade, the U.S. Treasury has to offer higher yields to attract buyers, which will undoubtedly increase the countrys interest expenses at a time when the size of the U.S. debt is still growing.
If traditional buyers of Treasury bonds start to exit the market, who will take over the next round of newly issued trillions of dollars of debt? Washingtons strategy is to open new channels of funding through a wave of regulated stablecoins that are fully backed by the US dollar. The GENIUS Act requires stablecoin issuers to purchase US Treasury bonds. This is why the government is taking a tough stance on trade issues on the one hand, but actively promoting a digital dollar on the other.
The historical impact of the Eurodollar
Techflow Note: Eurodollar refers to US dollar deposits in banking systems outside the United States, especially in European banks. These US dollar deposits are not regulated by the United States, so their interest rates and operations may differ from those of the domestic US banking system.
Detailed explanation
Financial innovation is not new to the United States. The $1.7 trillion eurodollar system has also gone through a process of being completely rejected and gradually accepted. The so-called eurodollar refers to deposits denominated in US dollars, which are placed in overseas banks, mainly in Europe. These deposits are not subject to US bank regulation.
The Eurodollar System was created in the 1950s when the Soviet Union chose to deposit dollars in European banks to circumvent US jurisdiction during the Cold War. The system quickly grew from a few billion dollars to $50 billion by 1970, a fifty-fold expansion in just ten years.
The United States was initially skeptical of the system. French Finance Minister Valery Giscard d’Estaing once vividly compared it to a “multi-headed monster,” alluding to its complexity and potential risks. However, the 1973 oil crisis temporarily eased these concerns. At that time, the Organization of Petroleum Exporting Countries (OPEC) took action to increase the value of global oil trade fourfold in just a few months. In this change, the world urgently needed a stable currency as a tool for trade settlement, and the US dollar became the first choice.
The eurodollar system significantly enhanced the United States ability to influence the world through non-military means. This system gradually expanded as international trade continued to develop and the Bretton Woods system further consolidated the dominance of the dollar. Although the eurodollar is mainly used for payments between foreign entities, these transactions must pass through a global network of correspondent banks, which ultimately pass through US banks.
This arrangement gives the United States a key position in the global financial system, providing it with strong leverage for its national security goals. Not only can the United States block transactions that directly involve the country, it is also able to exclude bad actors from the entire global dollar system. As a clearinghouse, the United States is able to track the flow of funds and impose financial sanctions against countries.
A new era of stablecoins
Stablecoins can be seen as a modern version of the Eurodollar, characterized by a transparent blockchain browser. Unlike the traditional model of storing US dollars in a London vault, todays US dollars are tokenized and circulated through blockchain technology. This innovation has brought significant scale effects: in 2024, the amount of stablecoins settled on the chain in US dollars reached about 15 trillion US dollars , slightly exceeding the size of the Visa payment network. At present, the total amount of stablecoins in circulation has reached 245 billion US dollars , of which 90% are fully collateralized and denominated in US dollars.
As time goes by, the demand for stablecoins continues to grow. Investors hope to convert their returns into stable assets to avoid cyclical market fluctuations. Unlike the violent fluctuations in the cryptocurrency market, the use scenarios of stablecoins continue to expand, indicating that their functions are no longer limited to simple trading tools, but are gradually becoming an important financial infrastructure.
The need for stablecoins dates back to 2014. At the time, Chinese cryptocurrency exchanges needed a way to transfer dollars between their order books without relying on banks. They chose Realcoin, a dollar token based on the Bitcoin network and using the Omni protocol.
Realcoin (later renamed Tether) moved money in and out through a network of banks in Taiwan. This worked well until Wells Fargo terminated its correspondent banking relationship with these banks due to concerns about regulatory risks posed by Tethers rapid growth. Finally, in 2021, the U.S. Commodity Futures Trading Commission ( CFTC ) fined Tether $41 million for misrepresenting its reserves and claiming that its tokens were not fully backed by assets.
Tethers operating model is very similar to that of a traditional bank: it takes in deposits, invests the float, and earns interest on it. Tether invests about 80% of the funds from token issuance in U.S. Treasuries. At the current 5% yield on short-term Treasury bonds, its $ 120 billion in assets can generate about $6 billion in income each year. In this way, Tether achieved a net profit of $13 billion in 2024. During the same period, Goldman Sachs net income was $14.28 billion . It is worth noting that Tether has a total of only about 100 employees, while Goldman Sachs has about 46,000 employees. On a per capita basis, Tether generates a profit of up to $130 million per employee, while Goldman Sachs generates $310,000.
In order to win market trust, some competitors choose to build advantages through transparency. For example, Circle publishes monthly audit reports for USDC, detailing the minting and redemption records of each token. However, the entire industry still relies on the credit commitment of the issuer. In March 2023, the collapse of Silicon Valley Bank (SVB) caused Circles $3.3 billion reserves to be temporarily frozen, and the price of USDC fell to 88 cents until the Federal Reserve intervened and compensated SVB depositors for their losses.
The US government is currently planning to develop a clear regulatory framework. The GENIUS Act proposes the following core rules:
Reserves must be 100% backed by high-quality liquid assets (HQLA), such as U.S. Treasuries and reverse repurchase agreements.
Real-time auditing via permissioned oracles.
Introduction of regulatory tools: including issuer freezing functionality and requirements to comply with FATF (Financial Action Task Force) rules.
Compliant stablecoins will be given access to the Federal Reserve’s master account and can obtain liquidity support through reverse repurchase channels.
Based on this, a graphic designer living in Berlin no longer needs a US or German bank account, nor does he need to deal with the cumbersome SWIFT procedures to hold US dollars. He only needs a Gmail account and complete a quick identity verification (KYC), provided that Europe does not force the promotion of its euro CBDC (central bank digital currency). Currently, funds are moving from traditional bank books to digital wallet-based applications, and the companies operating these applications will be more like global banks without branches.
If this regulatory framework is officially enacted into law, existing stablecoin issuers will face an important choice: either register in the United States and accept quarterly audits, anti-money laundering checks and proof of reserves; or watch US trading platforms switch to compliant stablecoins. Circle currently has most of its USDC collateral assets stored in money market funds regulated by the U.S. Securities and Exchange Commission (SEC), so it has a more competitive advantage in this context.
Tech giants and Wall Street are actively entering the stablecoin space. Imagine Apple Pay launching iDollars: users can top up $1,000 and not only earn rewards, but also use it in any place that supports contactless payments. The core appeal of this model is that the interest income on idle cash balances far exceeds the current card swipe fees, while also reducing the involvement of traditional financial middlemen. This may also be one of the reasons why Apple decided to end its credit card cooperation with Goldman Sachs. When payments are completed through on-chain dollars (that is, blockchain-based dollar tokens), the traditional 3% transaction fee will be compressed into a blockchain fixed fee of only a few cents.
Major banks in the United States are also accelerating their layout. For example, Bank of America, Citibank, JP Morgan, and Wells Fargo are jointly exploring the possibility of issuing stablecoins. It is worth noting that the GENIUS Act clearly stipulates that stablecoin issuers may not distribute interest income to users, a clause that may reassure the banking industry lobby. This stablecoin can be regarded as a new super cheap checking account: instant operation, global coverage, and 24/7 operation.
In the face of this trend, traditional financial giants are also rapidly adjusting their strategies. Mastercard and Visa have launched dedicated stablecoin settlement networks. Paypal has issued its own stablecoin, and Stripe completed its acquisition of Bridge this year, which became the largest cryptocurrency transaction to date. These companies have obviously realized the important role of stablecoins in the future financial system.
Meanwhile, Washington is also keeping a close eye on this sector. Citigroup forecasts that under the base scenario, the stablecoin market will grow sixfold to $1.6 trillion by 2030. The U.S. Treasury Departments research data is more optimistic, predicting it will reach $2 trillion by 2028. If the GENIUS Act requires stablecoin issuers to invest 80% of their reserves in U.S. Treasuries, then stablecoins will replace China and Japan as the largest holders of U.S. debt. This change will not only further consolidate the dollars global position, but may also profoundly affect the global financial landscape.
Applications and advantages of tokenized assets
As “stable dollars” become more popular, they gradually become the core funds that drive the entire Token economy. Once cash is tokenized, people will treat it like traditional funds: store, borrow, or use it as collateral. However, all of this is done at the speed of the Internet, not the processing speed of traditional banks. This fast-flowing capital will also further promote more “real world assets” (RWAs) to enter the blockchain system and enjoy the following advantages:
24/7 Settlement - Traditional T+2 settlement cycles will be eliminated as blockchain validators can confirm transactions in minutes. For example, a trader in Singapore can buy a tokenized apartment in New York in the evening and have ownership confirmed before dinner.
Programmability - Smart contracts can embed complex financial logic directly into assets, such as automated coupon payments, revenue distribution rules, and built-in compliance parameters.
Composability - Tokenized assets can be used in combination. For example, a tokenized Treasury bond can be used as collateral for a loan and distribute interest payments to multiple holders. An expensive beachfront villa can be divided into 50 shares, held by multiple investors, and rented to a hotel service provider through Airbnb.
Transparency - The transparent nature of blockchain can help regulators monitor collateralization rates, systemic risks, and market dynamics on the chain in real time, thereby avoiding risks similar to the 2008 financial crisis caused by the opacity of the derivatives market.
As BlackRock CEO Larry Fink said, “Every stock, every bond, every fund — every asset — can be tokenized.”
The main obstacle is regulatory clarity. Investors know what to expect on traditional exchanges because their rules were established the hard way.
Take the 1987 “Black Monday” stock market crash, when the Dow Jones plunged 22% in a single day after automated programs sold stocks as prices fell, sparking a cascade of selling. The SEC’s solution was to introduce circuit breakers, which halt trading to allow investors to reassess the situation. Today, a 7% drop on the New York Stock Exchange (NYSE) halts trading for 15 minutes.
Tokenizing assets is the easy part, and the issuer guarantees the rights to the real-world assets that the tokens correspond to. The hard part is making sure all the rules are followed both on-chain and off-chain. This means whitelisting at the wallet level, national identity information flows, cross-border KYC/AML requirements, citizen holding limits, and real-time sanctions screening need to be embedded in the code.
Europe’s Markets in Crypto-Assets Act (MiCA) provides a complete playbook for digital assets in Europe, and Singapore’s Payment Services Act is a starting point for Asia, but the regulatory map globally remains incomplete.
The rollout will almost certainly be done in stages.
Phase 1: The first instruments to be introduced on the chain will be the most liquid and least risky instruments, such as money market funds and short-term corporate bonds. The operational benefits of this phase are immediate, as the settlement cycle can be shortened immediately and compliance processing is relatively simple.
Phase 2: The risk curve will rise, involving higher-yield products such as private credit, structured financial products and long-term bonds. In this phase, the goal is not only to improve efficiency, but also to release liquidity and achieve asset composability.
Phase 3: Will expand to less liquid asset classes such as private equity, hedge funds, infrastructure and real estate-backed debt. To reach this stage, there needs to be widespread acceptance of tokenized assets as collateral and a cross-industry technology stack that can service these assets. Banks and financial institutions need to custody these real-world assets (RWA) as collateral while providing credit support.
Although the timetable for different asset classes may vary, the direction of development is clear. Each additional batch of stable dollars will push the Token economy forward one stage.
Stablecoins
The market for dollar-pegged tokens is currently dominated by two giants, Tether (USDT) and Circle (USDC), which together control 82% of the market. Both are fiat-collateralized stablecoins: for example, euro-denominated stablecoins back each token in circulation by depositing euros in a bank.
In addition to the fiat model, developers are exploring two decentralized experimental approaches to maintaining price stability without the need for off-chain custodians:
Crypto-collateralized stablecoins: These stablecoins are backed by other cryptocurrencies as reserves, and usually use over-collateralization to cope with market fluctuations. For example, MakerDAO s DAI is a representative in this field, with an issuance volume of $6 billion. After the bear market in 2022, MakerDAO converted more than half of its collateral into tokenized treasuries and short-term bonds to reduce the impact of ETH fluctuations on the system while obtaining stable returns. Currently, this part of assets contributes about 50% of the protocol revenue .
Algorithmic stablecoins: These stablecoins do not rely on any collateral, but maintain price stability through an algorithmically controlled minting and destruction mechanism. Terra s UST once reached a market value of $20 billion, but due to price decoupling, market confidence collapsed, and eventually led to a massive sell-off. Although emerging projects such as Ethena have achieved growth through improved models and have reached a market value of $5 billion, this field still needs time to gain wider recognition.
If the U.S. government only allows stablecoins that are fully backed by fiat currencies to use the “qualified stablecoin” label, other types of stablecoins may be forced to abandon the “USD” in their names to comply with regulations. The future of algorithmic stablecoins remains uncertain, and the GENIUS Act requires the Treasury Department to study these protocols within one year before making a final decision.
Money Market
Money markets include highly liquid, short-term assets such as Treasury bills, cash, and repurchase agreements. On-chain funds tokenize these assets by packaging ownership of them into ERC-20 or SPL tokens. These tools enable 24/7 redemption, automatic yield distribution, seamless payment integration, and convenient collateral management.
Asset managers retain traditional compliance processes (such as AML/KYC, qualified investor restrictions), but settlement times are reduced from days to minutes.
BlackRocks USD Institutional Digital Liquidity Fund ( BUIDL ) is a market leader in this field. The company has appointed Securitize (an SEC-registered transfer agent) to be responsible for KYC onboarding, token minting and destruction, tax compliance FATCA/CRS reporting, and shareholder register management. Investors need to have at least $5 million in investable assets to qualify, but once they are whitelisted, they can subscribe, redeem or transfer tokens around the clock, which is something that traditional money market funds cannot do.
BUIDL has grown to manage approximately $2.5 billion in assets, which are distributed among more than 70 whitelisted holders on five chains. About 80% of the funds are invested in treasury bonds (mainly 1 to 3 months), 10% in long-term treasury bonds, and the rest of the funds are kept in cash.
Platforms like Ondo (OUSG) act as an investment management pool, allocating funds to a group of tokenized money market funds such as BlackRock, Franklin Templeton, and WisdomTree, and providing free stablecoin on- and off-ramps.
While $10 billion may seem tiny compared to the $26 trillion Treasury market, the trend is significant: Wall Street’s largest asset managers are choosing public chains as a distribution channel.
Commodities
Tokenizing hard assets is pushing these markets toward 24/7, one-click trading platforms. Paxos Gold (PAXG) and Tether Gold (XAUT) allow anyone to buy a fraction of a tokenized gold bar. Venezuela’s PETRO experiment puts crude oil in barrels; some smaller pilot projects peg token supply to soybeans, corn, and even carbon credits.
The current operating model still relies on traditional infrastructure: for example, gold bars are stored in vaults, oil is stored in tanks, and auditors audit reserves monthly. This custody model introduces concentration risks, and physical redemption is not always possible.
The advantage of tokenization is that it allows for fractional ownership of assets, making it easier for traditionally illiquid physical assets to be used as collateral. This market has grown to $145 billion, almost entirely backed by gold. Compared to the $5 trillion physical gold market, tokenized assets still have a lot of room to grow.
Lending and Credit: New Opportunities for DeFi
Decentralized finance (DeFi) lending was originally enabled through over-collateralized cryptocurrency loans. Users can borrow $100 by locking up $150 worth of ETH or BTC. This model is similar to gold-backed loans. Holders want to keep digital assets because they believe their value will appreciate, but at the same time need liquidity to pay bills or make new investments. Currently, on the Aave platform, the total amount of lending is about $17 billion, accounting for nearly 65% of the entire DeFi lending market.
In the traditional credit market, banks dominate the lending market through long-proven risk models and strict capital requirements. As an emerging asset class, private credit has reached $3 trillion in global assets under management, keeping pace with the traditional credit market. Companies raise funds by issuing high-risk, high-yield loans, which attracts institutional investors seeking higher returns, such as private equity funds and asset management companies.
Putting credit on-chain can expand the scope of lenders and improve transparency. Smart contracts can automate the entire process of lending, including disbursement of funds, collection of interest payments, and ensure that liquidation conditions are transparently visible on-chain.
Two on-chain private credit models
“Retail-oriented” direct lending
Platforms such as Figure tokenize home improvement loans and sell fractional notes to retail investors around the world. This model is similar to a debt version of crowdfunding. Homeowners can get cheaper financing by splitting their loans into small shares, while retail investors can receive monthly returns, and the entire process is managed by protocol automation.
Pyse and Glow tokenize power purchase agreements (PPAs) by integrating solar projects and taking care of all related operations, including the installation of solar panels and meter readings. Investors only need to participate in the investment and receive an annualized rate of return (APY) of 15-20% from the monthly electricity bill income.
Institutional Liquidity Pools: On-chain Transparent Private Credit
On-chain private credit pools provide investors with a transparent operating environment. Protocols such as Maple , Goldfinch , and Centrifuge integrate borrowers funding needs into on-chain credit pools, which are managed by professional underwriters. Depositors of these credit pools mainly include qualified investors, decentralized autonomous organizations (DAOs), and family offices. They track investment performance through public ledgers while earning 7-12% floating returns.
On-chain credit protocol to reduce operating costs
These protocols effectively reduce operating costs by introducing on-chain underwriters to complete due diligence and complete loan issuance within 24 hours. For example, the Qiro platform relies on a network of underwriters, each of whom has its own credit assessment model and is rewarded based on its analysis results. However, due to the higher risk of default, the growth rate of this type of loan is not as fast as mortgage loans. When a default occurs, these protocols cannot recover through legal means like traditional finance, but need to rely on traditional collection agencies, which invisibly increases costs.
As underwriters, auditors and collection agents gradually move onto the chain, the operating costs of the credit market will be further reduced, while also attracting more lenders to participate.
Tokenized bonds: The future of debt markets
Although bonds and loans are both debt instruments, they differ significantly in structure, degree of standardization, and the way they are issued and traded. Loans are usually one-to-one agreements, while bonds are one-to-many financing instruments and follow a fixed format. For example, a 10-year bond with an annual coupon of 5% is easier to rate and trade in the secondary market. As a public financial instrument, bonds are subject to market supervision and are usually rated by rating agencies (such as Moodys).
Bonds are mainly used to meet large-scale, long-term capital needs. Governments, utilities and blue-chip companies usually raise funds by issuing bonds for budgets, factory construction or short-term financing. Investors receive coupon income regularly and recover the principal at maturity. The market size is very large. As of 2023, the nominal value of the global bond market has reached 140 trillion US dollars, which is about 1.5 times the global stock market value.
However, the current bond market still relies on the traditional clearing system designed in the 1970s. Clearing companies like Euroclear and DTCC need to process transactions through multiple custodians, which increases transaction delays and forms a T+2 settlement time. Smart contract bonds can complete atomic settlement in seconds and automatically distribute interest to thousands of wallets. Such bonds can also embed compliance logic and access global liquidity pools.
Smart contract bonds can save 40-60 basis points in operating costs per issuance. In addition, treasurers can get a 24/7 secondary market without paying exchange listing fees. Euroclear, as Europes core settlement and custody network, manages 40 trillion euros in assets and connects more than 2,000 participants in 50 markets. Currently, they are developing a blockchain-based settlement platform that aims to cover issuers, brokers and custodians, thereby eliminating duplication, reducing risks, and providing customers with real-time digital workflows.
Source: Euroclear
Companies like Siemens and UBS have issued on-chain bonds in trials with the ECB. The Japanese government is also testing the market, working with Nomura to put bonds on the blockchain.
Source: WEF Insights
Stock Market
This area naturally appears promising because it has already attracted a large number of retail investors, and tokenization can enable a 24-hour Internet capital market.
The current hurdle is regulation. The U.S. Securities and Exchange Commission’s (SEC) custody and settlement rules were written before the advent of blockchain, requiring intermediary involvement and a T+2 settlement cycle.
However, this is changing. Solana has applied to the SEC for approval to conduct an on-chain stock offering, providing a complete service including identity verification (KYC), education onboarding, broker custody requirements, and instant settlement.
Robinhood has also filed a similar application, requesting that tokens representing U.S. Treasury bonds or Tesla shares be treated as securities themselves, rather than synthetic derivatives.
Outside the United States, the market demand is even stronger. Foreign investors already hold about $19 trillion in U.S. stocks due to the lack of strict restrictions. The traditional way to invest is through local brokers like eTrade, which work with U.S. financial institutions but pay high foreign exchange spreads.
Startups like Backed offer an alternative, namely synthetic assets. Backed buys an equal amount of the underlying stock in the US market and has completed $16 million in transactions. Kraken just partnered with Backed to provide US stock trading services to non-US traders.
Real Estate and Alternative Assets
Real estate is one of the most paper-reliant asset classes. Every property deed needs to be recorded in a government registry, and every mortgage is kept in a bank vault. Unless these registries accept hashes as legal proof of ownership, large-scale tokenization will be difficult to achieve. This is why only about $20 billion of the world’s $400 trillion in real estate is currently on-chain.
The UAE is one of the regions leading this change, with $3 billion worth of property deeds already registered on-chain. In the United States, real estate startups like RealT and Lofty AI have tokenized more than $100 million worth of residential properties and are funneling rental income directly into investors’ wallets.
Money also wants to flow
Cypherpunks see the “stable dollar” as a step backward, meaning a return to the traditional model of bank custody and permissioned whitelists. Regulators are uneasy about permissionless blockchain systems that can transfer billions of dollars in a single block. In fact, the popularity of blockchain has occurred at the intersection of these two extreme discomforts.
Cryptocurrency purists may continue to complain, just as early Internet supporters objected to TLS certificates being issued by central authorities. Yet, it is thanks to HTTPS that our parents can safely bank online today. Similarly, while stable dollars and tokenized treasuries may seem “unpure,” they are how billions of people first encountered blockchain through an application that never mentioned the word “crypto.”
The Bretton Woods system once bound the global economy to a single currency framework, but blockchain technology breaks this limitation by making money more efficient. Every time we push an asset on-chain, it saves settlement time, frees up collateral that would otherwise sit idle in a clearing house, and allows the same dollar to support three transactions before lunch.
At Decentralised.co, we have always held the view that increasing the velocity of money is the core application of cryptocurrency , and putting real-world assets (RWA) on-chain fits in with this trend. The faster the value is liquidated, the more frequently funds can be reinvested, allowing the overall economy to scale further. When dollars, debt, and data can all circulate at network speeds, business models will no longer rely on charging for the flow process, but will create new sources of revenue through the momentum effect.
