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According to S&P Global, tokenization can eliminate many investment barriers in the private credit market.
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Real-world asset (RWA) platform Tradable has tokenized $1.7 billion in private credit on ZKsync, signaling growing demand for institutional-grade assets.
According to a Jan. 16 announcement, Tradable has tokenized nearly 30 “institutional grade credit positions,” which refers to bonds that are rated highly for their credit quality.
According to Tradable’s website, its portfolio opportunities target yields of between 8% and 15.5%.
Tradable allows institutions to tokenize their assets onchain, potentially opening the door to new investors. The company is banking on the continued migration of wealth advisory services and financial transactions onchain.
Source: ZKsnyc
Tradable’s onchain technology is built on ZKsync, an Ethereum layer-2 protocol developed by Matter Labs. ZKsync was one of the most closely watched blockchain projects of 2024, promising a significant improvement in Ethereum network performance and user experience.
Tradable is one of several tokenization companies vying for a piece of the RWA market. Other major players include Securitize, which has facilitated more than $1 billion in tokenized assets. In September, digital asset platform ParaFi Capital tapped Securitize to tokenize part of its $1.2 billion fund.
US-based Treasury tokenization platform Ondo Finance has also expanded its offerings to include onchain treasury products in the Asia-Pacific region.
Elsewhere, tokenization blockchain Mantra recently signed a $1 billion agreement with investment conglomerate Damac Group to enable token-based finance across the Middle East.
Related: 10 crypto projects that delivered in 2024
The opportunities for tokenization
S&P Global described the tokenization of private credit as a “new digital frontier” for RWAs by helping address the “inherent challenges” of the private credit market.
The firm cited research by Coalition Greenwich showing that the majority of private credit investors are still frustrated by a lack of liquidity, transparency and efficiency in the private credit market. According to S&P Global, tokenization can mitigate all three barriers.
Tokenization can lower the barriers to private credit investment through easier trading, reduced back-office costs and a transparent ledger of record. Source: S&P Global
This was further corroborated by consulting firm PwC, which said tokenization can make it easier to match buyers and sellers in the roughly $1.5 trillion private credit market.
“When private credit starts utilizing tokenization, lenders can “fractionalize” loans, making them into a variety of sizes, increasing the pool of potential borrowers,” said PwC.
Industry research shows that the total market for tokenized RWA currently stands at $12 billion, having grown 85% over the past two years. According to the onchain finance platform Centrifuge, this is a “clear signal that institutional finance is actively moving into the digital asset space.”
Related: Trump-era policies may fuel tokenized real-world assets surge
This article first appeared at Cointelegraph.com News
