ChainUp hosted a webinar in partnership with Blockchain Association Singapore (BAS), entitled “Understanding the Web3 Landscape: DeFi, DEXs, and the Future of Finance, delved into the exciting world of decentralized finance and DeFi on business.
A Market Poised for Exponential Growth
The speaker, Paul Lalovich, highlighted the immense potential of the tokenization industry. He pointed out that the Real World Asset (RWA) market cap currently is capped at 10 billion, a number that perfectly illustrates the vast potential for tokenization and the massive potential for growth. This statistic emphasizes the significant opportunity that blockchain technology presents for traditional asset classes.
A study by Boston Consulting Group estimates that real-world asset tokenization will become a $16 to $65 trillion dollar opportunity by 2030. This projected growth underscores the transformative potential of Web3 and its ability to unlock new avenues for investment and asset ownership.
What is Web3?
The internet is constantly evolving, and Web3 is a glimpse into its potential future. Imagine a web built on blockchain technology, where power lies with users, not corporations. This decentralized approach could revolutionize how we interact online, but it's still in its early stages. Many questions remain about Web3's full potential and timeline, but its momentum is undeniable. From finance to job postings, interest is surging as we explore a new way to navigate the digital world.
The Power of Decentralization
This focus on decentralization is a core tenet of Web3. By enabling users to own their own data and participate in peer-to-peer interactions, Web3 has the potential to revolutionize the way we interact with the internet.
Challenges and Considerations
Despite the potential benefits, concerns have been raised regarding the user value proposition of Web3, particularly in the context of real-world asset tokenization. As Paul Lalovich observes, there is a critical need to effectively communicate the advantages for users in this emerging space. Liquidity within the real-world asset tokenization market also presents a challenge. Paul elaborates on this point, stating that the current global market capitalization of this sector is relatively low (under $10 billion) due to a prevalence of "Mickey Mouse deals." These deals, he explains, often involve the tokenization of inconsequential assets, such as pizza shops or nail pilers, which lack significant investor appeal.
On the other hand. Philip Meyer, a key figure in the Web3 space, emphasizes the core tenet of trust in this new iteration of the internet. He argues that "Web3.0 is bringing trust over the wire," highlighting the decentralized nature that empowers users. Philip underscores this point by stating that "the private key, you own your own private key." This ownership, he suggests, is fundamental to Web3. If control over this key becomes centralized, it undermines the very foundation of trust that Web3 aims to establish.
Regulation and Compliance: Building Smart Contracts Even Smarter
Paul Lalovich also emphasizes the importance of regulation and compliance. He aligns with Chee Keong, who highlights the slow adoption of blockchain in Financial Services Industry due to these very concerns. However, Paul offers an optimistic outlook, stating: "And I think if this technology is so smart, the regulation and compliance have to be embedded into the technology. So, if we want to claim that these are, you know, smart contracts, let's make them smart contracts. Let's make it so that we can prevent, like, you know, wrongdoers, and the manipulation that can be built on the lessons learned from the traditional financial industry."
Public Financial Inclusion: Blockchain for All
Paul Lalovich goes beyond financial services, highlighting another key benefit of Web3: public financial inclusion. He indicates that some regions struggle to access traditional capital markets. Blockchain, through its decentralized nature, has the potential to bridge this gap and empower everyone to participate in the financial system.
Realizing the Potential
Overcoming these challenges will be crucial to unlocking the full potential of Web3 and digital asset management. Chee Keong concurs, emphasizing that the true potential of blockchain lies outside of just finance. He cites the example of concert tickets, where blockchain can be used to combat scalping and ensure authenticity, as with Taylor Swift concerts where there were "a lot of scams."
Paul Lalovich offers a solution for the RWA market: "What's going to drive the investors to real-world asset tokenization is great opportunities. You need to give them like 2x, 3x, with very low risk opportunities, and that's going to be an eye-catcher for the investors,” he concludes.
While financial institutions (FSI) are slow to adopt blockchain due to regulatory hurdles, experts like Chee Keong see its potential beyond finance. He highlights applications in supply chain tracking and even ticketing (think Taylor Swift concerts plagued by scams) to illustrate blockchain's versatility. Chee Keong acknowledges the possibility of FSI embracing digital assets, but emphasizes the slow pace of adoption.
On the other hand, Paul focuses on how blockchain can foster public financial inclusion, enabling access to capital markets for underserved regions. He points out the current limitations of the RWA market, attributing its low volume to insignificant assets being tokenized. He sees immense potential for growth, but believes regulators need to find a balance. Loosening regulations could spur development, while embedding compliance measures directly into smart contracts offers an alternative approach.
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