Financial Market

Turning real assets into tokens on blockchain has $15 trillion market potential

In this week’s episode of Yahoo Finance Future Focus, our host Brian McGleenon explored the anticipated growth in the tokenization of real-world assets with Outlier Ventures Research Lead Jasper De Maere. This includes sovereign bonds, bank-issued debt, and real estate on the blockchain.The estimated total addressable market for real-world asset tokenisation is projected to reach between $10 trillion to $15 trillion by the end of the decade, according to Outlier Ventures’ Tokenising Real World Assets 2024 Thesis. De Maere highlighted the transformative impact this technology will have on industries like financial markets, manufacturing, healthcare, and infrastructure over the next decade. He emphasised the benefits of tokenisation, including increased accessibility and liquidity for financial products, real estate, and art, along with improved transparency and security through blockchain features.

Video Transcript


BRIAN MCGLEENON: The tokenization of real world assets like sovereign bonds, bank-issued debt, and even real estate on the blockchain is reckoned to be a growth sector for 2024. Now, joining us in the studio to discuss this exciting new development is Jasper De Maere, research lead at Outlier Ventures. Jasper, welcome to the show.

JASPER DE MAERE: Thank you, Brian.

BRIAN MCGLEENON: So Jasper, let’s begin. What is a real world asset?

JASPER DE MAERE: I think it’s a very interesting but critical question to answer at the very beginning. Real world assets are your everyday assets. Its assets which we touch in our daily lives. These assets can be tangible or intangible. Tangible assets can be these chairs, can be anything really we touch in the physical world. And the intangible assets are assets which are generally represented in a digital version.

BRIAN MCGLEENON: These real world assets, we’re going to tokenize them. What is meant by the word tokenization?

JASPER DE MAERE: Yeah. So tokenization is actually a very fancy word of saying we’re creating a digital copy of these real world assets. So we’re taking these real world assets. We create a digital copy of these. And we’re putting them on the blockchain. So you actually have a digital representation of these assets on a database, which is the blockchain in this case.

BRIAN MCGLEENON: OK. So to go to all this sort of bother of doing this, there must be a benefit.

JASPER DE MAERE: Yeah, exactly. So by having these digital copies or these tokens representing the real world assets on the blockchain, you leverage the benefits of having data stored in a specific way. So with a blockchain, you’re storing data trustless immutable, with a high degree of transparency. And these can all be leveraged into new use cases.

BRIAN MCGLEENON: So when we say like trustless and stuff like that, what is meant by that?

JASPER DE MAERE: Trustlessness is the idea that there’s no central entity which oversees the governance of the database, so there’s no trust that needs to be put into a central entity in order to make sure that the data is accurate, timely managed, and all that stuff.

BRIAN MCGLEENON: OK. So for financial markets and things like that, traditional markets, what are the benefits? How is this going to change and make these markets adapt?

JASPER DE MAERE: Yeah. Financial markets are actually touted as one of the strongest industries which will adopt blockchain tokenization. And there’s a multiple facets of benefits here. It depends on which verticals you look at. Generally, we believe that outlier that there’s two big benefits. First of all, there’s the efficiency gains. So by having increasingly real world assets populated on the blockchain, you’ll actually unlock efficiency. So the financial market itself will become more efficient.

BRIAN MCGLEENON: OK. So as this sort of progresses, are some of the big incumbent players in the financial system recognizes the value in this and are taking this on board?

JASPER DE MAERE: Yeah, very much so. And we actually see this by the slew of headlines we’ve seen over the past two, three years of big financial players. These are banks, asset managers, some of the institutional players all exploring this through pilots. And there’s multiple ways on how these actually play out.

You have the likes of Franklin Templeton, for example. They’re tokenizing debt and treasury, and they’re putting them on chain for like execution efficiencies and transparency gains. You have other asset managers like WisdomTree and recently Brevan Howard as well who are looking to tokenize their funds. So what they are doing, they create a representation of their funds on the blockchain for easy distribution and transparency. So loads of different examples.

BRIAN MCGLEENON: So there are other kind of intangible financial assets. Are there any examples of tangible assets, possibly real estate being tokenized?

JASPER DE MAERE: Real estate is a very interesting example. And it’s something we’ve already explored with the space in like 2016-17. But back then the infrastructure was difficult. And the idea of real estate, I think, there’s multiple ways you can like increase efficiency in real estate. But one that excites me a lot is around capital formation.

By having your assets represented on the blockchain, you can have something which is called fractionalization. And you actually split up the asset ownership of your asset, which is a house, which usually belongs to one person into multiple pieces, which allows you to like sell off specific percentage points of your house to other people.

BRIAN MCGLEENON: At Outlier Ventures, what areas are you focusing on when it comes to the tokenization of real world assets?

JASPER DE MAERE: Yeah. It’s actually an area which we’ve been excited about for many years. We have experienced accelerating companies like Boson Protocol and OraBase, which we still work with very closely. And we’ve identified the tokenization of real world assets as a very exciting trend into the next cycle as well. So ultimately, our job here is to really help grow and accelerate these companies to the next stage for them to potentially run pilots with the large incumbents to see what they can do.

BRIAN MCGLEENON: OK. So Jasper, thank you very much for coming on this week’s episode of Yahoo Finance Future Focus.

JASPER DE MAERE: Thank you, Brian.

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