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October 2024: Real World Assets (RWA) & Stablecoin Recap

October 2024: Real World Assets (RWA) & Stablecoin Recap

In what is historically one of crypto's best-performing months over the past decade, October proved to be another promising month for RWA & stablecoins - with head-turning market developments left and right.

November 06, 2024

Crypto Overview: What Happened Last Month?

October, or what many had been calling UPtober given its historical performance, began with a cautious tone as macroeconomic concerns weighed on the crypto market. The release of strong U.S. labor data on October 4 showed 254,000 new jobs added in September, with unemployment dipping to 4.1%. The robust reading led some to believe that the Federal Reserve may begin to adopt more of a hawkish stance, which led to dampening risk sentiment and a modest retrace in crypto. Early in the month, regulatory pressures added to tensions; on October 10, the SEC charged Cumberland DRW for allegedly operating as an unregistered dealer, and just a day later, two employees of prominent crypto market makers faced charges of market manipulation and fraud. The aforementioned actions taken by regulators underscored ongoing scrutiny in the U.S. crypto sector, leaving many investors on edge as the market continues to seek greater regulatory clarity out of the U.S.

Fig. 1: Oct. 2024 Returns - Top 10 Cryptoassets by Market Capitalization

Mid-month, however, momentum shifted as bullish signals emerged from institutional and market-level developments. On October 16, open interest on CME Bitcoin futures surged to an all-time high, sparking optimism about renewed institutional interest in Bitcoin. Hong Kong also provided a regulatory bright spot on October 7, with reports suggesting that it would accelerate cryptocurrency exchange licensing by year-end, fueling hopes for a more welcoming regulatory environment in Asia. By late October, industry enthusiasm soared as major corporations and financial giants made headlines with pro-Bitcoin moves: Microsoft's board began exploring a potential Bitcoin investment, ETF inflows hit record levels, and the prospect of former president Donald Trump, a newly outspoken supporter of the digital asset ecosystem, winning the 2024 election hit all-time highs.

Considering that October is, historically speaking, the second best performing on average when looking as far back as 2013, it is no surprise that the month ended with a wave of optimism. BTC's push to near all-time highs just a few days before the end of the month, coupled with MicroStrategy's October 29 announcement that the company plans to raise $42 billion to buy BTC over the next few years, was more than enough to offset, amongst other concerns, rumors that Tether was, yet again, under investigation by U.S. prosecutors. When all was said and done, BTC ended the month second to DOGE with an impressive +11.1%, while the other half of the top 10 cryptoassets by market cap ended the month in the red. With October's rally, the crypto market defied bearish seasonality and signaled the potential for stronger price support and broader adoption as we head into year-end. As always, the Real World Assets (RWA) and stablecoin sectors held their own, further cementing their role as stable growth drivers within the evolving crypto ecosystem.

RWA: Oct. 2024 Milestones & Developments

Fig. 2: Real World Assets Total Value Locked (TVL)

RWA TVL roared from $6.44B to $6.74B, marking a -2.1% drop month-over-month and the end of what was previously three consecutive months of declines. Notwithstanding the jump, RWA TVL has yet to hit its previous all-time high of $6.9B set in June 2024. Still, RWA TVL remains up a stagger +163% year-to-date.

Fig. 3: RWA TVL by Category

When looking at RWA TVL on a categorical level, one will find that many of the same trends we've seen over the past several quarters remain in place, and there is effectively no change in ranking. However, it is worth noting that the Asset-Based Finance vertical was, yet again, the worst-performing category in October after giving up nearly -$49M in TVL and notching a -17% drop month-over-month. Conversely, there was a meaningful uptick in Equities, climbing 51% to a total TVL just north of $9M and marking an all-time high. While Equities was the top performing on a percentage basis, the Synthetic Dollar vertical was the best in absolute dollar terms - adding nearly $220M (+8.6%) throughout October.

Fig. 4: RWA TVL Change by Blockchain

After two consecutive months of being the worst performer, Ethereum closed out October as the best-performing chain when looking at the month-over-month change in TVL. Ethereum added a staggered $288M in RWA-related TVL, making October the best-performing month since May 2024. By comparison, Solana and Arbitrum stood at $118M and $45M in RWA TVL at the end of September, respectively.

Fig. 5: RWA-to-DeFi TVL Ratio

Despite RWA TVL pushing towards all-time highs last month, our RWA-to-DeFi TVL Ratio, which compares RWA TVL relative to DeFi TVL to get a better sense of how the RWA vertical is trending relative to the entire DeFi ecosystem, ended lower for a third consecutive month. The drop from 0.0448x to 0.0432x indicates that although October increased RWA interest and activity, it failed to outpace DeFi as a whole. While RWA TVL grew by a respectable $300M, DeFi TVL jumped nearly $4B last month. Still, the ratio remains well ahead of its January 1, 2024, reading of 0.026x - proof that RWA continues to make up an increasingly greater share of DeFi.

Fig. 6: Number of RWA Token Holders

The number of RWA token holders across a select number of RWA-centric tokens, or what we believe to be a proxy for the broader RWA vertical, advanced nearly +1% to roughly 554,400 as of month-end. Despite the positive change month-over-month, October’s +1% increase fell considerably short of September’s +2.5% - the largest monthly increase since May 2024. As great as it is to see an increasingly greater number of RWA token holders, it bears mentioning that we have yet to see this figure accelerate at a pace that is in line with the broader market. That is to say, should the crypto market continue to trend higher, one could expect the number of RWA token holders to surge.

Fig. 7: Oct. 2024 Performance

With BTC and a handful of altcoins leading October’s rally, it should come as little surprise that BTC performed better than our RWA Index and the DeFi Pulse Index. However, when considering that several metrics signaled favorable growth for October, it may be a surprise that our DeFi Index fell -3.7%, nearly in line with Ethereum, and the DeFi Pulse Index closed October down -6.3%. But much like the menial growth October brought in terms of new RWA token holders, the underperformance can be interpreted as merely altcoins having yet to play catch-up with BTC - which many speculate will come in the months ahead.

Notable RWA Developments:

U.S. Treasury Advisory Panel on Tokenization: The U.S. Treasury’s advisory panel acknowledged that tokenization could bring significant benefits to the financial sector. However, the panel warns that a central authority may be needed to oversee the sector to manage risks and ensure proper governance as it scales.
Agridex Integrates Stripe’s Bridge on Solana: Agridex, a Solana-based platform for tokenization, disclosed that it is using Stripe’s Bridge to reduce costs in agricultural trade settlements as part of a broader effort to streamline cross-border payments to make agricultural transactions more efficient and accessible.
ANZ Adopts Chainlink’s Private Transactions Protocol for RWAs: Australian bank ANZ said it plans to use Chainlink’s private transactions protocol to enhance tokenization processes.
Crypto REIT Misleads Investors with Family Deals and Overpriced Real Estate: Real estate-backed crypto project Tangible allegedly misled investors by using family connections and inflating property values to justify higher valuations.
Ethena Labs Proposes Using SOL as Collateral for Stablecoin USDe: Citing Solana’s scalability and efficiency, Ethena Labs, the entity behind developing and maintaining the USDe stablecoin, has proposed accepting (SOL) as part of the synthetic stablecoin's mix of collateral that forms its treasury. If approved, SOL will join BTC and ETH within Ethena's collateral mix.
Singapore’s DBS Bank Launches Tokenized Services for Institutions: DBS Bank in Singapore introduced a suite of tokenized banking services designed for institutional clients, allowing for digital asset custody, trading, and settlements. This expansion into tokenized finance is part of DBS’s broader strategy to attract institutions interested in digital assets.
LatAm Bank Littio Shifts from Ethereum to Avalanche for RWA Vaults: Littio, a Latin American bank, announced that it has moved from Ethereum to EVM capital Avalanche for its RWA vaults to better meet growing demand. The jump comes after the Avalanche Foundation launched a $50M grant program in 2023 to incentivize the development of RWA on its network.
State Street Explores Tokenized Bonds and Money Market Funds: Financial services giant State Street said it is working on tokenizing bonds and money market funds but has no plans to launch a stablecoin project just yet.
Midas Expands Tokenized Real-World Assets to Retail in Europe: RWA issuer Midas has received regulatory approval to extend tokenized asset offerings, previously available only to institutions, to retail users in Europe. This move aims to broaden retail access to tokenized financial products within a regulated framework.
Marathon’s Anduro Launches Tokenization Platform Starting with Whiskey: Bitcoin mining company Marathon unveiled a tokenization platform through its subsidiary, Anduro, with an initial focus on whiskey as its first asset.
Credbull Introduces $500M Private Credit Fund on Plume Network: Credbull, an RWA platform, launched a private credit fund of up to $500M on the Plume Network. Credbull’s fund is targeted on private credit markets, leveraging blockchain for efficient, fixed-rate investment opportunities.
UK Pension Giant LG Enters Tokenization Space: UK pension fund LG said it is exploring the tokenization of assets within its portfolio to diversify investment strategies and improve liquidity.
Lazard Plans Tokenized Funds with Bitfinex Securities: Wall Street financial firm Lazard announced plans to collaborate with Bitfinex Securities to develop tokenized funds, allowing investors to access digital versions of traditional investment products. Lazard and Bitfinex’s partnership aims to bring increased flexibility and accessibility to fund management through tokenization.

Stablecoins: Oct. 2024 Milestones & Developments

Fig. 8: Stablecoin Total Market Capitalization

Although advancing only a mere +$30M month-over-month, the stablecoin total market cap finished October higher and recorded its 12th consecutive month of gains. The relentless rally we’ve witnessed over the past year can be explained by crypto bulls continuing to come back to the market, as well as stablecoin innovation and adoption remaining alive and well. Despite October going down as the sector’s least impressive growth over the past year, should the broader market continue to trend higher, as many are expecting, one could truly expect stablecoin adoption and innovation to explode.

Fig. 9: Top Stablecoin Market Capitalizations

Looking at the top 8 stablecoins by market cap, which makes up nearly 95% of the entire stablecoin market, one can see a few notable changes month-over-month. For starters, DAI was the worst performer, with its total market cap shedding nearly $1B to $4.8B amid the release of its newest Ethereum-first USDS stablecoin on Solana. Meanwhile, Ethena’s USDe stablecoin flipped FDUSD and took rank as the 4th largest stablecoin after closing the month at $2.8B. Lastly, one of the more head-turning changes MoM was PayPal’s PYUSD falling further and ending the month $100M shy of falling below TUSD; at the current pace, PYUSD is set to become the 8th largest stablecoin after peaking out at 6th place in August 2024.

Fig. 10: Change in Stablecoin Supply by Chain

Looking at the change in stablecoin supplies on a chain-by-chain basis, one will find that Tron had the largest monthly increase, with a net issuance of nearly $620M. Although having taken 1st place, trailing relatively close behind was BSC at $486M and Ton at $200M. Unlike last month, when Ethereum saw an unprecedented +$1.9B net issuance of stablecoins, the Layer 1 behemoth took last place with a net redemption of more than $750M.

Fig. 11: Total Stablecoin Transaction Volume by Chain

In terms of total stablecoin transaction volume for October, Tron and Ethereum were, yet again, the month’s top performers at $256B and $153B in stablecoin volume exchanged, up considerably from September’s reading of $210B and $132, respectively. Although the case, Figure 12 shows a stark difference when looking at stablecoin transaction sizes. For example, roughly 20% of all stablecoin transactions on Ethereum were less than $100, well ahead of Tron’s 42%. Additionally, Ethereum saw considerably more transactions greater than $10M. To be more exact, there were nearly 275,000 transactions on Ethereum that had a value exceeding $10M, well above Tron’s 41,700 for Tron. Additionally, while Tron and Ethereum took rank as the chains with the most stablecoin transaction volume, the sheer number of stablecoin transactions on Solana (4.07B) was nearly equal to that of Tron (2.09B), BSC (1.71B) and Ethereum (376M) combined.

Fig. 12: Stablecoin Transaction Size By Blockchain, By Amount

Notable Stablecoin Developments:

Trump's Crypto Project Stablecoin: Donald Trump's crypto venture, a part of his social media company, said it plans to release a U.S. dollar-backed stablecoin, potentially positioning it as a key financial product for the platform's users.
Paxos' Global Dollar Stablecoin in Singapore: In partnership with DBS Bank, Paxos launched a global dollar-backed stablecoin (USDG) issued out of Singapore to expand its reach in Asia. The move underscores Paxos' goal to establish a compliant and scalable stablecoin option for international markets.
Injective’s Agoras Stablecoin Launch: Injective, a Layer-1 blockchain, introduced Agoras USD (aUSD) as its first native stablecoin, designed to maintain a 1:1 peg with the U.S. dollar within the Injective ecosystem.
Solayer and OpenEden's Treasury-Backed Stablecoin on Solana: Solayer and OpenEden launched sUSD, the first yield-bearing stablecoin on Solana backed by U.S. Treasury Bills.
South Korea's SK Telecom Adds Support for USDT on Aptos: SK Telecom, South Korea's largest wireless provider, added support for USDT on the Aptos blockchain.
BitGo Appoints Former Silvergate President for Stablecoin Oversight: Amid growing demand for stablecoins, BitGo announced that it aims to launch USD Standard early next year and appointed the former president of Silvergate Bank to manage its new reward- stablecoin initiative.
UK’s Upcoming Stablecoin Legislation: The United Kingdom said it is preparing to introduce new legislation to regulate stablecoins within the next few months, with Circle’s Dante Disparte advocating for regulatory clarity.
Tether’s $2.5B Q3 Profit and Treasury Holdings: Tether reported a $2.5B profit in Q3 and disclosed over $100 billion in U.S. Treasury holdings, showcasing its strong financial footing.
Stripe Acquires Web3 Wallet Platform Triangle: Payments giant Stripe has acquired stablecoin company for $11B to expand into blockchain-based payment solutions. Just a week prior, Triangle, a web3 wallet infrastructure platform founded by Stripe alumni Tasti Zakarie, was acquired by stablecoin payments platform Bridge; the Triangle team will join Bridge to help build scalable stablecoin systems.

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Disclaimer: The information contained herein is general information, intended for educational purposes only, and is not intended to constitute legal, tax, accounting, or investment advice. Information, opinions, and views are solely of Fortunafi, and none of the information contained should be used as the basis for any investment decisions. To ensure suitability, contact a licensed investment professional when making any investment decisions and do your own research.