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

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

October 03, 2024

Crypto Overview: What Happened Last Month?

September kicked off with a sense of apprehension in the crypto market, as early developments pointed to bearish price action and uncertainty, especially regarding ETFs. The first week of the month drummed up negative sentiment amid reports of continued net outflows from U.S. spot bitcoin ETFs, with $211M pulled from the market by September 6th. This, combined with weak performance across BTC and ETH ETFs, indicated that the market struggled to regain footing after a modest August. With September starting with a bearish tone, market participants largely braced for what many were already expecting to be an ugly month, given September's rich history of seasonally being one of the worst months for risk assets.

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

However, momentum began to shift mid-month, starting with MicroStrategy announcing a $1.11B BTC purchase on September 13th. The buying spree extended into September 16th, demonstrating strong institutional confidence in BTC's long-term potential, even amid market weakness. This institutional push was further supported by a significant influx into spot bitcoin ETFs, with daily inflows reaching their highest levels in two months in mid-September. By September 20th, optimism grew as altcoins started to outperform BTC and ETH following a favorable outcome from the U.S. Federal Reserve meeting - as evidenced by AVAX, SOL, and DOGE taking rank as the month's top performers with a stagger +21.5%, +12.7%, and +12.6% return, respectively. Market sentiment strengthened further after news broke that the SEC approved options trading for BlackRock's spot bitcoin ETF, signaling a step forward in institutional product offerings.

The closing days of the month saw a flurry of bullish news that gave market participants reason to believe September was set to be anything but bearish, with PayPal allowing business accounts to engage in crypto transactions as of September 25th. The move highlighted continued mainstream adoption of digital assets. Meanwhile, U.S. consumer sentiment hit a five-month high, and BTC surged past $66,000 following positive inflation data on September 27th. The developments above further fueled interest in the Real World Assets (RWA) and stablecoin sectors, further positioning both as promising sectors in a sea of speculative tokens. With that said, next, we'll discuss the key RWA and stablecoin milestones and developments that market participants ought to be aware of to truly understand the speed at which both sectors are being widely adopted.

RWA: Sept. 2024 Milestones & Developments

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

RWA TVL dipped from $6.44B to $6.3B, marking a -2.1% drop month-over-month and a 3rd consecutive month of declines after hitting an all-time high of $6.9B in June 2024. Notwithstanding the recent lackluster performance, RWA TVL remains up a stagger +152% 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 should be noted that Private Funds and Equities are starting to zero in on Private Equities. Both verticals could flip Private Equities in the quarters ahead should the current trend persist. On a month-over-month basis, Asset-Based Finance and Synthetic Dollar were the worst performers, slipping -30% (-$130M) and -10% (-$291M), respectively. Meanwhile, Government Securities and Commodities stood out from the pack with a +6% (+$61M) and +5% (+$90M) lift, respectively.

Fig. 4: RWA TVL Change by Blockchain

When looking at RWA TVL change by chain, one will find that Ethereum was yet again the worst performer with a drawdown of -$337M while Solana and Arbitrum were the outperformers with a TVL increase of +$58M and +$24M, respectively. Be that as it may, it ought to be noted that Ethereum makes up 75% of all RWA TVL and the decline is relatively menial relative to the Ethereum’s month-end reading of $4.67B in RWA TVL. 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 revisiting its all-time high of 0.05x in the first quarter of September, 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, slipped to a 2-month low before finishing the month down at 0.0432x. Given that DeFi TVL roared +8.5% higher to $80.75B while RWA TVL sank (modestly) for a third consecutive month, it should come as no surprise that our RWA-to-DeFi TVL ratio ended the month lower. Nonetheless, 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 +2.5% to more than 550,000 as of month-end. The jump marks the largest monthly increase since May 2024.

Fig. 7: September 2024 Performance

With several RWA metrics signaling a modest slump in growth for September, there’s little surprise in our RWA Index underperforming BTC (+7.4%) and the DeFi Pulse Index (+16.2%). Interestingly enough, our RWA Index did succeed in outperforming ETH (+3.6%), albeit by a measly 10bps.

Notable RWA Developments:

Fortunafi announced the launch of the first tokenized hedge fund strategy on Coinbase's Base network. Users of Fortunafi's Tokenized Asset Protocol (TAP) can now get access to Hilbert Capital's V1 Investment Fund, which leverages a range of properties of the broader cryptoasset markets to generate superior risk-adjusted returns
Guggenheim tokenized $20M of commercial paper on Ethereum. The initiative marked a broader move to enable faster settlements and increased liquidity through tokenization and demonstrate institutional adoption and usage of blockchain tech for traditional financial instruments.
Taurus and Aktionariat partnered to tokenize shares of small and medium-sized enterprises in Switzerland, enabling them to be traded on the Taurus Digital Exchange (TDX). The first to participate is RealUnit Schweiz, whose tokenized shares will be listed on TDX by November 2024.
A Chainlink report predicted that the global tokenized asset market could grow to $10T by 2030 thanks to institutional demand, technological advancements, and regulatory support. The report highlights Ethereum as the dominant platform for tokenized assets and emphasizes that tokenization can bring liquidity to traditionally illiquid assets like real estate and private equity.
Assetera launched Europe's first regulated secondary market for tokenized RWA on Polygon, offering tokenized securities, money market instruments, and real estate.
The Hong Kong Monetary Authority (HKMA) expanded its digital Hong Kong dollar project to explore tokenization, programmability, and offline payments, with financial institutions testing use cases such as settling tokenized assets and cross-border payments.
Digital Asset and the Depository Trust & Clearing Corporation (DTCC) successfully completed a blockchain pilot for tokenizing U.S. Treasury bonds on the Canton Network. The pilot demonstrated faster, secure settlements, even in default scenarios, using tokenized "digital twins" of USTs as collateral for real-time transactions.
Securitize has integrated the Wormhole cross-chain protocol to enhance the transferability of RWA across multiple blockchain networks. The integration aims to support sub-second, cost-effective transactions and foster a multi-chain ecosystem for RWA and marks a step forward in enabling institutional adoption of tokenized assets by improving interoperability between blockchains.
ParaFi Capital announced it is tokenizing a portion of its $1.2B venture capital fund on the Avalanche blockchain using Securitize. Investors will soon be able to buy fractional shares of the fund in the form of digital tokens, enhancing liquidity and accessibility.
Franklin Templeton announced at Solana’s flagship Breakpoint event that it plans to launch a tokenized mutual fund offering on the Solana network as part of an effort to capitalize on the network’s high-throughput speed, thereby enhancing the ability to manage assets digitally. Similarly, Citibank said it is exploring Solana and looking to utilize the network for money transfers and smart contract services.
RWA-focused Layer 2 Plume Network launched a "Mineral Vault" amid strong demand for high-yielding private assets onchain. The Mineral Vault represents tokenized mineral interests, a form of real estate that earns royalty revenues from natural resource extraction and sales.
WisdomTree announced WisdomTree connect in mid-September, a platform that complements the company's recently launched retail-facing digital app, WisdomTree Prime, by offering users access to tokenized funds in their own digital wallets.
A survey by The Official Monetary and Financial Institutions Forum (OMFIF) found that most respondents believe that widespread tokenization of financial assets is still about three years away. The survey highlights a cautious yet optimistic outlook on blockchain adoption, with regulatory and infrastructure challenges remaining key obstacles.
Siemens issued a $330M digital bond using a private blockchain in collaboration with major German banks, including Deutsche Bank. The issuance underscores the growing adoption of blockchain for traditional financial products, offering advantages such as improved efficiency, transparency, and faster settlement times.
An announcement from the Bank for International Settlements disclosed that more than 40 financial institutions have joined a central bank-led initiative to explore the use of tokenization for cross-border payments to develop and test solutions that could improve the efficiency, speed, and transparency of international transactions through the use of blockchain technology and digital currencies.

Stablecoins: Sept. 2024 Milestones & Developments

Fig. 8: Stablecoin Total Market Capitalization

For an 11th consecutive month, the stablecoin total market capitalization finished the month higher and hit a 26-month high of $173.2B on September 29 before ending the month up +1.8% at $172.8B. The relentless rally over the past 12 months and even in September suggests that bulls continue to return back to the market in size while stablecoin innovation and adoption continues to accelerate. At the current pace, the total stablecoin market cap is set to hit a new all-time high in 4Q2024 and surpass $200B in 1Q2025.

Fig. 9: Top Stablecoin Market Capitalizations

When looking at the top 8 stablecoins by market cap, September shows that rankings were largely unchanged, with the exception of FDUSD flipping USDe and becoming the 4th largest stablecoin by market cap. It should be noted that said flip was largely due to USDe shedding more than $300M in market cap, while FDUSD largely held firm, advancing a mere +$27M in market cap. However, there were a few noteworthy changes on an individual basis. For instance, Tether's USDT stablecoin grew by more than $1.5B, further distancing itself from the second-rank USDC, and ended the month commanding nearly 75% of market share. Additionally, after climbing to sixth place in August and briefly surpassing $1B in market cap, PayPal's PYUSD stablecoin lost momentum in September - falling from $907M to $705M and within striking distance of Frax's FRAX stablecoin.

Fig. 10: Change in Stablecoin Supply by Chain

When looking at the change in stablecoin supplies on a chain-by-chain basis, one will find that Ethereum unequivocally saw the biggest monthly change with a net issuance of close to +2$B. Well behind Tron, but in second and third place, was Base and Tron, which saw a relatively underwhelming +$381M and +$380M increase. Polygon and Solana were the month’s underperformers with a net redemption of -$94M and -$158M, respectively.

Fig. 11: Total Stablecoin Transaction Volume by Chain

In terms of total stablecoin transaction volume for September, Tron and Ethereum were the month's top performers with $210B and $132B in stablecoin volume exchanged. However, as shown in Figure 12, the two differ in terms of the size of transactions. For instance, roughly 20% of all stablecoin transactions on Ethereum were less than $100 vs. 42% for Tron. Additionally, Ethereum saw more transactions greater than $10M - 269,000 for Ethereum vs. 40,000 for Tron. That is to say, while both saw considerable transaction volume for September and were well ahead of BSC in 3rd place with $22B in stablecoin transaction volume, Tron appeared to cater more towards smaller transaction sizes while considerably large transactions dominated Ethereum stablecoin volume. Additionally, although Tron and Ethereum stole the cake for September, Solana saw the most transactions at nearly 4B, well ahead of Tron at 2nd place with 2.03B transactions.

Figure 12: Stablecoin Transaction Size By Blockchain, By Amount

Notable Stablecoin Developments:

Following the launch of rUSD in August 2024, Reservoir Protocol surpassed $10M TVL in September. Shortly thereafter, it was announced that Reservoir has partnered with Coinbase to add support for Base and Coinbase wallet.
Société Générale's digital assets arm, Forge, launched its EUR CoinVertible (EURCV) stablecoin on the Solana blockchain amid a growing number of other institutions, such as PayPal, taking a stab at entering the stablecoin sector on Solana.
Circle, the issuer of USDC, predicted that stablecoins will see mainstream adoption within the next two to three years as global regulatory frameworks are established. The issuing company behind the second-largest stablecoin by market cap sees this as a necessary step for the wider use of stablecoins in international payments and digital economies.
Reported surfaced that Robinhood and Revolut are considering entering the stablecoin market, following Tether's dominance and recent growth in market share. With new regulations like the EU's MiCA providing regulatory clarity, these fintech firms may issue their own stablecoins, though no official confirmations have been made yet.
Circle integrated its USDC stablecoin on Arbitrum, expanding its presence within the Ethereum Layer-2 ecosystem. Not only that, but in September, Circle also launched its USDC stablecoin on Sui via its Cross-Chain Transfer Protocol (CCTP) and announced it’s working with Sony to integrate Circle's Bridged USDC Standard and position USDC as a key token for transactions on Soneium, Sony’s forthcoming Layer-2 blockchain.
In partnership with Securitize, Ethena Labs launched its USTB stablecoin, which is backed by BlackRock’s tokenized USD Institutional Digital Liquidity Fund (BUIDL) to maintain its value.
U.S. Representative Maxine Waterscalled for a bipartisan compromise on stablecoin legislation, warning that time is running out to pass a regulatory framework. She emphasized the need for consensus to provide clarity in the stablecoin market and address key regulatory concerns.
A report from Bernstein highlighted that stablecoins are increasingly becoming systemically important in global finance, noting that stablecoin circulation has reached record highs and onchain payments have surged to unprecedented levels.
Digital asset trust company and security company BitGo announced plans to enter the stablecoin market with its new USD-based stablecoin, USDs. This stablecoin will offer rewards to holders, providing a yield-generating option for those seeking both stability and passive income, positioning USDs as a competitive alternative in the stablecoin space.
Payments behemoth Visa said it’s launching a new tokenized asset platform that will enable banks to issue fiat-backed tokens on the Ethereum blockchain. The initiative aims to streamline digital payments and foster the adoption of tokenized currencies, with Visa playing a pivotal role in integrating traditional financial institutions with blockchain technology.

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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.A