Decentralised finance (DeFi)-based developments seem to have raised the question of how tokenisation can be a part of it. From an industry perspective, tokenisation’s influence on DeFi can provide token holders benefits of traditional finance (TradFi).
Insights from MarketsandMarkets, a market research firm, stated that the global tokenisation market will reach a valuation worth $5.6 billion by 2026, at a 19% compound annual growth rate (CAGR) for 2021-26. “Tokenisation in DeFi can help address transparency and security for digital tokens. Currently, sectors including real estate, finance can benefit from it. In 2023, we could see further innovation, more sectors that can use this along with an increase in the number of investors,” Prashant Kumar, founder and CEO, weTrade, a cryptocurrency-based platform, told FE Blockchain.
Market-oriented research has shown that tokenised assets can help provide the benefits of margin trading, derivatives trading, loan products, among others, in a DeFi landscape. According to Tokeny Solutions, a software company, tokenisation in DeFi can help lending protocols attract institutional investors and enhance liquidity of tokenised securities. “I believe tokenisation has been a serious monetisation stream for DeFi. Moreover, tokenisation aims to enable fractional ownership of assets, opening up opportunities for investors to diversify their portfolios with exposure to various asset classes,” Srinivas L, CEO and CTO, Rooba.Finance, a blockchain and smart contract-based platform, stated.
Reportedly, sectors such as financial technology (fintech), venture capital, real estate, among others, can reap benefits of tokenisation in DeFi. In previous developments, Metamask, a software cryptocurrency wallet, revealed that its crypto wallet would permit direct token swaps inside its browser extension. It is believed that the development permitted Metamask to ensure liquidity supply for decentralised exchanges (DEXs) and aggregators.
Moreover, future predictions suggest that DeFi asset tokenisation carries promising blockchain-oriented applications. As mentioned by LeewayHertz, a Web3.0-based software development company, DeFi asset tokenisation can help develop securitisation and provide liquidity for inaccessible asset classes. Furthermore, it is expected that value creation will take place through tokenised applications.
“In the coming years, it is likely that tokenisation will continue to play a significant role in the growth and development of the DeFi ecosystem. Some potential developments in the area of tokenization in DeFi that we may see in 2023 include tokenisation of new financial instruments, increased use of stablecoins and growth of DEXs,” Sathvik Vishwanath, co-founder and CEO, Unocoin, a cryptocurrency exchange, highlighted.