By clicking “Accept”, you agree to the storing of cookies on your device to enhance site navigation, analyze site usage, and assist in our marketing efforts. View our Privacy Policy for more information.

Why Startups Win the RWA Race

In the landscape of tokenizing Real World Assets (RWA), the dichotomy between startups and traditional financial institutions is more nuanced than a zero-sum game. Analyzing this ecosystem reveals distinctive characteristics shaping the realms of both incumbents and emerging players in the finance sector.

Traditional Finance (TradFi) Incumbents

Predominantly centralized structures define most banks and financial institutions.

Access is restricted to existing clients, reflecting a closed-wall approach.

Exclusive issuance of traditional financial assets characterizes their portfolios.

Assets are priced solely in fiat currencies, limiting exposure to digital currencies.

Utilization of dual share issuance models—paper shares alongside digital tokens.

Implementation of digital forms using private blockchains, posing a paradox.

Adherence to traditional finance constraints with multiple middlemen in transactions.

Sluggish pace, internal resistance, and conflicting interests impede the adoption of new technologies.

Reluctance to onboard new, unproven assets; waiting for extended track records.

Tied to fiat currencies, limiting engagement with digital alternatives.

RWA Startups

Embracing decentralized models, fostering open and inclusive accessibility.

Open and Inclusive:

Digital Currency Pricing:

Pricing assets exclusively in digital currencies and stablecoins.

Token-centric assets with no paper shares, issued exclusively through tokens.

Development of innovative products on public blockchains and protocols.

Alignment with decentralized finance (DeFi) principles, leveraging blockchain innovations.

Rapid innovation, fostering positive market inertia, and adapting to new technologies.

Teams driven by digital native mindsets, focusing on meaningful value increase.

Exclusively building on public blockchains, rejecting private database solutions.

Founding teams propelled by a passion to impact the world, prioritizing meaningful change over financial incentives.

Bridging the Gap

Private markets, unexplored by TradFi, present significant opportunities.

Startups possess the agility to innovate without the burden of legacy infrastructure.

Coinbase Asset Management's Project Diamond stands out as a dedicated, forward-looking platform for tokenized RWAs.

Blockchain startups, operating on transparent and instant settlement models, showcase superiority over traditional systems.

Convergence of TradFi and Startups:

TradFi institutions distribute RWAs in response to user demands, converging with startup-led initiatives.

Blockchain startups rely on utility and platform token sales, reducing dependence on traditional financing.

The Opportunity

The RWA industry remains a vast blue ocean, offering trillions in potential, with much untapped potential yet to be explored. In navigating this evolving landscape, the synergy of innovative startups and established institutions is crucial for the sustained growth and transformation of the RWA industry. As the sector continues to unfold, the trajectory favors those embracing change and driving innovation.