Don't get wrong, I am a big fan of putting it all on-chain, I have several articles to back this, but once a while, I love to try to look at things from a different angle, mostly to try to piece together potential flaws to what we're doing as an ecosystem.
I'm a big believer that everything will some run through blockchains, but the truth is, if we're not careful, those blockchains will not be decentralized and everything running on them will be controlled by the centralized governments.
$23.48B, $356.03B, $296.82B, which is the real value of tokenized RWAs?
According to data from rwa.xyz, all the figures above are tokenized real world assets.
$296.82B in stablecoins (tokenized fiat)
$356.03B in tokenized RWAs that investors cannot leverage on-chain.
$23.48B in tokenized RWAs that can be leveraged on-chain.
What these numbers reveal is that we've been talking big on real world assets and so far, just $23.48B are meaningfully tokenized, from a market of several trillions.
You can cite regulation as a potential hinderance but when we look at how artificial intelligence has completely exploded, and I'm referring to the flood of investments here, despite no clear regulatory guidelines, that argument begins to fall apart.
But this article isn't even about the slow pace of tokenizing real world assets, it's about if this all is a distraction?
While we talk about tokenization and celebrate centralized capital coming on-chain, with fingers crossed, in the hopes that we can somehow direct that capital flow to decentralized ecosystems, institutions are actively valuing BTC as cheap and buying up the supply.
Treasury companies BTC balance is growing, ETF issuers are increasingly controlling larger assets under management, but we stay talking about tokenization and get buried in the socials by AI related conversations.
Did we stop building for a decentralized finance future?
Maybe I've been cornered to a cave within my feeds but there's hardly any news recently on any crypto project that's been able decentralized money and tech. We even having Vitalik Buterin trying to sell the idea that institutions somehow love decentralized tech, but not much DeFi products, or services is being released.
The relationship between "institutions" and "cypherpunk" is complex and needs to be understood properly. In truth, institutions (both governments and corporations) are neither guaranteed friend nor foe.
Basically, the game-theoretic optimum for an institution is to have control over what it can control, but also to resist intrusion by others. In fact, institutions are often staffed by highly sophisticated people, who have a much deeper understanding of these issues than regular people and a much deeper will to do something about them. An important driver of many people's refusal to use data-slurping corposlop software is company policy.
Vitalik seems to not understand that there's very little difference between institutions and governments. Once a business is big enough, it becomes government-run or influenced in some form.
Hence, these businesses are guaranteed foe. Surely, as a centralized body of power, they want control without intrusion from others, but that doesn't mean that they want that level of leverage for others.
That's the difference between them and everyone else.
While Vitalik's post concludes with the whole idea of Ethereum being a home for all, it has served as a means to sell the idea that institutions don't mean "guaranteed trouble" for the ecosystem.
And that is an even bigger bullshit that actual bull shit.
Much of these billion and trillion dollar businesses would not exist without centralized finance. And for some reason, Vitalik believes that they will simply sit back and watch the control that has led to their successes go away?
I think that, it part, when "centralized finance" is mentioned, people mostly think of the money itself, and never really the system that supports.
But here's what centralized finance really is:
The government
The banks
The centralized software
The tax laws
The legal system (by extension)
Foreign relations
The centralized trade systems
And many more.
The point is, this isn't a one system industry. There are several moving parts contributing to its successes and anything (such as a decentralized blockchain) that threatens any of it, will be attacked.
The government (with their controlled institutions) won't sit back and allow a decentralized blockchain exist, simply because they can still run their centralized finance individually. The decentralization of the economic layer makes the government a worthless body to the average person!
Looking at all of this, it would make sense to assume that tokenization efforts are a distraction, while sizable centralization movements are being made into crypto.
The right way for tokenized real world assets to come on-chain would be when users demand it, and right now, I can't say anyone already in crypto gives two fs about tokenized private credit.
Building out a sovereign digital economy is what's more important now. The value that needs to come on-chain isn't necessarily real estate, it's the income and liquid wealth of every individual out there, first, before anything else!