2024-2-1 11:02 |
Every successful investor knows that building a profitable portfolio requires certain skills and knowledge. Gladly, in our digital era, you can effortlessly access any information you need. For example, take this Invezz article about portfolio diversification, published a year and a half ago. It’s still relevant because it covers all the basics and answers most of the questions.
However, as time passes new trends appear, so here we are to guide you through one of them.
Real-world assets (RWAs) and their prospectsEven though the article we mentioned above is rather helpful and informative, we couldn’t help but add some information about a relatively new trend, RWAs.
Real World Assets (RWA) refers to a market for assets from the real world issued in the form of tokens on the blockchain. RWAs include real estate, art, commodities, and traditional financial instruments in capital markets.
The concept involves tokenizing already existing assets to transfer value to decentralized financial applications, reduce costs, or improve the efficiency of funds management in traditional markets.
The main argument for the prospects of tokenized “real world” assets is that the value of the global market exceeds hundreds of trillions of dollars of untapped liquidity. As of 2020, the real estate market alone was valued at more than $326 trillion. It is expected that at least a small part of it will move to blockchain.
At the end of November 2023, according to Rwa.xyz, the number of blocked funds in RWA protocols was $4.5 billion with $571 million in loans issued. Since November 2021, there has been over 6700% growth in the amount of loans with $8.5 million.
However, judging by the forecasts of institutional companies, the main growth has not yet occurred, and the market has huge prospects. For example, Coinbase analysts believe that the “tokenization boom” will occur in the next one or two years. Also, according to forecasts by Citigroup and Boston Consulting, growth estimates for the entire RWA market range from $5 trillion to $16 trillion by 2030.
What RWAs to chooseThe “How to diversify your investments” article presented a very truthful point. It says that the contents of your portfolio should depend on your own investment experience. If you already are a seasoned investor, there are various industries to choose RWAs from. Here are some examples of companies:
Real Estate RealT – a platform that allows users to invest in and trade fractional ownership of properties on the blockchain Ekta – a real estate marketplace that connects the real world with Web 3 Blocksquare – a company that provides solutions and APIs to digitize the value of real estate properties Art 10101.art – a revolutionary ecosystem that brings the classic art market to the modern digital era Art de Finance – a platform that curates, uploads, and trades tangible asset-based NFTs ART3 – a platform that allows users to discover, collect, buy, and sell NFT photographic art Commodities Cheniere Energy, Inc. – an energy infrastructure company that primarily engages in liquefied natural gas Wheaton Precious Metals Corp. – a metal streaming company that primarily sells precious metals in Canada and internationally Sweet Futures 1, LLC – premier commodity clearing services provider for major US exchanges and global markets. Pros and Cons of RWA ProsConsUnlike certain traditional assets, RWAs allow investors to achieve a diversified portfolio without substantial capital or an extensive allocation of time.Real-world assets, such as real estate, can be relatively illiquid. It may take time to sell or convert these assets into cash, which can be a disadvantage if you need liquidity quickly.Some real-world assets, such as real estate and commodities, have historically served as a hedge against inflation, as their values may rise with the cost of living.Some real-world assets are sensitive to economic conditions and may not perform well during economic downturns. For example, the real estate market can be influenced by factors like interest rates and economic growth.Art, on the other hand, is not subject to this pitfall.Real-world assets often have different risk profiles compared to traditional financial instruments (stocks, bonds). Including them in a portfolio can help spread risk and reduce correlation to traditional asset classes.Real-world assets are subject to various regulations and legal considerations, such as securities, commodities, banking, and tax laws. Changes in regulations or unforeseen legal issues can affect the value and performance of these assets.Unlike financial assets in the digital world, real-world assets have tangible value and utility, providing a sense of security for some investors.Even though owning and managing real-world assets requires less time, effort, and expertise than traditional ones, it is still associated with some hardships. For example, managing a rental property involves dealing with tenants, maintenance, and property-related issues. Your safe start to the world of RWAOn 10101.art, we sell fragments of real paintings using art tokenization. Art tokenization transforms physical or digital artworks into digital tokens on a blockchain, enabling fractional ownership, improved liquidity, and secure provenance. A smart contract defines ownership terms, and the artwork is uploaded to a decentralized storage system. Minted tokens are listed on NFT marketplaces, and ownership transfers via blockchain record.
First, we select exclusive paintings from top collectors, auction houses, and galleries using our team of experts and by checking all the documents for authenticity. For example, we have Banksy’s ‘Turf War’ and Warhal’s ‘Campbell’s Soup Cans’ with two Picasso paintings and a Dali painting ready to announce.
Each artwork is carefully scanned using specialised equipment to ensure a high-quality image. Then our skilled developers turn artwork fragments into NFT tokens. We sell these tokens using NFT technology both to whitelist members and the general public.
Despite the fact that the RWAs are becoming increasingly popular, the project’s legal underpinnings have taken almost two years to prepare, resulting in two successful sales of Banksy’s ‘turf war’. We have developed a unique legal framework to confirm the legitimacy of ownership of a piece of artwork, which means that with 10101.art, you can become a real owner of an original physical masterpiece.
This unique framework was created by an experienced project team managed by Alina Krot, a seasoned finance professional with over five years of experience at a large financial institution, where she spearheaded high-stakes and sizable investment lending initiatives. The team consists of experts in various fields—from developers to art curators and dealers. These very people are the ones who make the once-restricted world of art accessible.
Every painting from the platform will be available in our partner gallery Monada Art in Dubai, DIFC. Discover these artworks on 10101.art. Become an art collector by owning your piece of world heritage!
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