🤝 Security Token Prime Insights: 7/15/2024

Exclusive Intelligence for Security Token Prime Members

July 15, 2024

Summary and Key Takeaways

1. Goldman Sachs to Launch 3 Tokenization Endeavors in 2024

The 7th biggest bank in the world has brought attention to itself by announcing 3 tokenization initiatives, efforts all deployed on permissioned networks. Matthew McDermott, the Head of Digital Assets at the firm has endorsed public blockchains as the future but as a bank, it doesn’t have the same level of freedom and flexibility as asset managers like BlackRock. 

Still, the projects that are planned are promising despite lacking details. The firm plans to launch marketplaces for tokenized products where institutional investors will get exposure to the US fund market and European debt market. Hints suggest the platform will be focused on execution speed and an expanded library of supported assets for collateral. Future plans also suggest sub-custody or other planned services in the event of an improved regulatory environment. 

Three new institutional products from one of the highest quality issuers in the world with a global focus and asset diversity would mean millions, if not billions of dollars more will be entering the market - albeit on a private blockchain.

2. BlackRock’s BUIDL Grows Past $500M AUM with ~33% Coming From Ondo

Speaking of RWA market growth, BUIDL continues pace after it announced it was the biggest tokenized fund in the world several months ago. Last week, the liquidity fund crossed the half billion mark and will hit $1 Billion before year’s end at this growth rate. The demand for a high-grade liquidity product with yield that is on Ethereum for use in treasury management, collateral for margin trading, and settlement is driving this adoption. 

Interestingly, almost a third of its AUM stems from another asset manager, Ondo. It’s possible that they are able to attract international retail investors and presumably a neglected institutional and accredited investor market due to BlackRock’s high minimum ticket for BUIDL and investor restrictions. However, it’s more likely due to their success in expanding into DeFi, with Drift Protocol already allowing $USDY to be used as collateral for margin trading and with MANTRA launching their own $USDY Vault.

3. MakerDAO’s $1 Billion Push into RWAs

MakerDAO’s Spark Sub-DAO has sounded the alarm for a tokenization race, a grand prix to be exact. The protocol is looking to onboard $1 Billion in treasury RWAs and equivalents. Naturally, heavyweights BlackRock, Ondo, and Superstate have already heeded the call. Spark is focused on Maker’s DAI stablecoin ecosystem which suggests this initiative is designed to select RWAs as collateral for backing the DAI stablecoin to increase stability with exposure to treasuries in an on-chain manner. More details regarding how the competition will work and how proposals will be evaluated will be released in the coming weeks in advance of the application period opening on August 12th next month.

A few weeks ago we saw Arbitrum award 34M ARB ($~24M at the time) to 6 different RWAs. This trend will continue to grow as DAOs push to diversify their income and stabilize their treasury from the volatile nature of crypto cycles that can compress protocol and platform fees. We may even see the rise of RWA-powered DAO’s altogether!

TokenizeThis Workshop Tour Around the US Launches September

Get your tickets today for a full day masterclass around tokenization from A to Z. There continues to be a massive education gap in the industry and off the success of the original workshop in Miami last May, we’ve decided to go nationwide. We’ll be visiting NYC, Houston, Boston, LA, SF, Atlanta, and Chicago, check out workshop.stm.co for more information. Use code PRIME for 15% off.

Notable Market Headlines

Institutional Activity

STM Data

This week the Security Token Market Data Team would like to shine some light on the biggest market movements. In terms of price change, at the top of the list we have Consensys available on Orderbook up 234% from $14.21 to $47.46. The price surged on the same day the MetaMask creator announced their new “MetaMask Delegation Toolkit,” which is supposed to improve the user experience. 

Meanwhile looking at liquidity products, BUIDL once again made waves when it crossed $500M AUM last Monday and has continued to grow with their current AUM sitting just under $525M. This brings them to $52.4M in net inflows for the week. Meanwhile STM recently started tracking Ondo’s OUSG which experienced ~$5M in volume last week, bringing it to ~$229M.

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Hello members,

Summer is usually seen as a slower cycle in business and often crypto markets too. This is not the case for the tokenization industry which is experiencing its most transformative year. As we acknowledged throughout the first half of 2024, we’re seeing institutions validate the technology with BlackRock’s launch on Ethereum putting their money where their mouth is. Meanwhile, crypto markets have surged around utility tokens relating to RWA companies with Ondo’s embrace a signal that this is the beginning of the great merger of RWAs and DeFi. 

Strap in your seatbelts because we’re going to see more product launches, more DeFi integrations, and a whole lot more investors deploying capital into RWAs this year. Maker DAO’s Spark may have announced a $1 Billion tokenization race but I think we’re actually experiencing a $1 Trillion tokenization race now because no asset class or financial service is safe from the technology anymore. Adapt or die. 

Happy tokenizing,
Herwig
CEO, Security Token Group 
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