- Real World Assets (RWAs) are on the rise in tradFi.
- MANTRA partnered with a major Dubai real estate developer.
- Cosmos is the best chain for RWAs, MANTRA CEO says.
Blockchain technology is spreading its wings, expanding beyond its origins in crypto to even the traditional investment sector. Most recently, markets have seen a rise in the interest in real-world assets (RWAs), marking the influx of traditional capital.
This interest was catalyzed by the recent launch of BlackRock’s fund focusing on the asset class, which attracted millions in investment. This has prompted some market participants to consider asset tokenization as a best-of-both-world solution by marrying traditional investments’ stability with emerging technologies’ potential.
RWA Platforms on the Rise
Though the asset class has been around for some time, the increased interest in RWAs at large started on March 20, when BlackRock launched its BUIDL fund, focused specifically on tokenized assets. The fund was a marked success, attracting $240 million in weekly inflows.
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RWAs tied to real estate and other tangible assets have the benefit of providing investors with stable income. According to KuCoin’s monthly report, this was part of the recent increase in interest in RWAs, which led to a significant increase in multiple RWA-focused projects.
One of these is MANTRA, a Cosmos-based layer-1 blockchain focused on RWAs. MANTRA CEO John Patrick Mullin spoke with DailyCoin journalist David Marsanic about how the project is currently approaching RWAs and where he believes this asset class is going.
Tokenized Assets Will Change the Game
John Patrick Mullin explained that tokenized assets represent tangible or intangible assets on the blockchain, giving them enhanced utility. In this aspect, MANTRA is working on creating a seamless value transaction between the real world and the on-chain world.
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His belief in the potential of these assets is also shared by BlackRock’s CEO Larry Fink, who spoke about it years before the launch of the BUIDL fund.
“The next generation of markets will be the tokenization of securities,” Fink exclaimed. They will provide a distributed ledger for all owners and sellers and instantaneous settlement, among other benefits, which “changes the entire ecosystem.”
MANTRA’s CEO was quick to cool the fire on RWA, expressing that there’s still a distance to go until they’re at their best. “The system isn’t perfect today,” Mullin acknowledged, stating that “many technical and regulatory considerations” need to be addressed.
Still, MANTRA has been working on several major projects within the RWA ecosystem, particularly in and around the burgeoning crypto hub of Dubai.
RWA for Real Estate in Dubai
MANTRA has seen an impressive use case for RWAs in the UAE’s real estate market. For them, the greatest benefit to the class is the flexibility afforded to borrowing with asset tokenization.
“They’ve sold over $1.5 billion of their newest development in six months… Today, they can borrow from a bank for 8%, which is [a] massive [sum] if you are doing a $1.5 billion project,” Mullin explained. With RWA, firms can borrow on a case-by-case basis, simplifying the process and potentially reducing the cost of borrowing.
Other companies are also taking advantage of this potential. Bitfinex Securities, a Tether-linked entity, launched the first such project in El Salvador on April 11th. RWAs will fund the $6.25 million construction of a Hilton hotel near a national airport.
But it’s not a matter of choosing and going. Mullin opined that, for tokenization to work, it needs to “either give improved access, reduce fees, remove friction, increase liquidity,” or create value in some other way.
“Not everything is going to drive significant value increases from being tokenized,” he added. “In some cases, tokenization could make things worse,” he continued. The point is particularly poignant given the regulatory and technical complexities in tokenization.
UAE Regulators Are Very Open to RWA: MANTRA
Regulatory approval, mostly on the application layer, is a key consideration for RWA. Mullin shared that MANTRA is in talks with UAE regulators to obtain a license and believes regulators there are more open to blockchain initiatives.
“It’s been a painful process,” Mullin admitted, but the situation is made easier because “regulators there are incredibly open to constructive feedback and conversations about developing something new.”
‘We believe we're at the last mile stages of that licensing process, which will allow us to set up an on-chain brokerage business and asset investment management in the UAE,” Mulin expressed.
In other jurisdictions, such conversations have not come so easily. Mullin explained that while MANTRA does not operate in the United States, they have a different subsidiary, SOMA.finance, to comply with US rules.
But the U.S. is not alone in its stringent approach, Mullin added, outlining that, due to difficulties in operating and complying with the different rulesets present, “we wouldn’t on-board Singaporeans or Hong Kongers.”
Aside from regulatory hurdles, tokenization also has some significant technical challenges, Mullin explained.
‘Battle-Tested’ Cosmos is Best for RWA: MANTRA
Asset tokenization requires a technically robust network that can handle billions of transactions. For that reason, MANTRA chose the Cosmos SDK for its protocol layer.
The company decided to go with Cosmos because the chain is “incredibly robust” and “battle-tested,” as highlighted by CEO Mullin, who pointed to the rise and fall of algorithmic stablecoin Terra-Luna as one event that tested Cosmos and proved its reliability.
"Look at Terra, which was a Cosmos chain. It was doing tens of billions in volume, handling hundreds of thousands of transactions in a very short window, and it didn’t even flinch. The technology went through the wringer and came out strong," he noted.
Mullin emphasized that Cosmos is so good at enabling projects to scale to such an extent that it even allows them to potentially surpass the platform. This feature, Mullin believes, is unique to the Cosmos.
“Ethereum will never have a project that becomes bigger than Ethereum, and neither will Solana, Mullin asserted.
“Cosmos already had several of its native projects surpass it,” he explained. “Terra-Luna was one of them, and Celestia, at one time, was another.”
On the Flipside
- While RWAs hold significant potential, companies are just starting to explore their use cases. Therefore, it is not entirely clear how RWAs will look in the future.
- Multiple crypto companies have criticized the stringent regulatory environment in the U.S. For one, Coinbase CEO Brian Armstrong stated that US entrepreneurs are moving to UAE and other countries.
Why This Matters
The growing interest in Real World Assets (RWAs) highlights the deepening intersection of traditional finance and blockchain. Platforms like MANTRA are helping bring blockchain technology mainstream, which helps boost its credibility.
Read more about MANTRA’s funding round:
MANTRA Completes $11M Round to Accelerate RWA Tokenization
Read more about Real World Assets (RWAs):
Real-World Assets in Blockchain: How Can RWAs Liberate DeFi?
