Why RWAs: State of Crypto and Imp. of RWAs in Crypto
Last updated
Last updated
Market Capitalization
The cryptocurrency market is valued at approximately $2 trillion. Around 50% of this value comes from Bitcoin, 20% from Ethereum, and the remaining 20-25% from various other blockchain technologies.
Recent Trends and Changes: The Crypto Winter of 2023-2025
The recent downturn in the cryptocurrency market, known as the crypto winter, has been more severe than past downturns for several reasons:
In the past, downturns occurred when the market was smaller and the future applications of cryptocurrency were uncertain. It wasn't until 2020-2021 that decentralized finance (DeFi) and non-fungible tokens (NFTs) emerged as prominent applications that didn't depend on external factors. Despite the downturn, there is now a solid belief in the resilience of cryptocurrencies as a separate asset class.
Previous downturns happened when the broader economy was generally stable. The current downturn, however, is deeply intertwined with broader economic issues, leading to significant valuation drops across both public and private sectors.
Bitcoin, Ethereum, and other major cryptocurrencies have shown signs of recovery similar to major stock market rebounds, which enhances confidence in these digital assets.
The downturn has revealed both the strengths and weaknesses of Decentralized Autonomous Organizations (DAOs), showing that decentralization needs to solve real problems to be deemed necessary.
Creating Sustainable Yields
The drop in token values eliminated many unsustainable yields, highlighting the need for assets that offer stable and good returns. This led to the creation of products like Treasury-Bills on-chain, which provided about a 5% yield in 2024. In traditional finance, assets that offer high yields are in strong demand, and integrating these assets onto the blockchain can make yields more predictable and sustainable. This downturn has clarified the practical utility of DeFi, reinforcing its primary role in the issuance and movement of assets.
Demand for Real Useful Applications
Most of the crypto funding in the last two years targeted infrastructure projects, with few contributing to new financial activities or enhancements in financial workflows. This imbalance is notable and reflects the value dynamics seen in cloud services like AWS, Google Cloud, and Azure, which are essential because they support a broad range of company operations. Similarly, the crypto infrastructure will gain real value only when it supports financial applications that address genuine needs.
While Bitcoin is often viewed as digital gold and Ethereum as a key player in enabling a global financial system, the value of other crypto assets often remains hard to justify when assessed by traditional asset managers based on cost, revenue, and benefit analyses. For the crypto market cap to expand significantly, a large portion of it needs to represent traditional assets on-chain. This would justify the market values of platforms like Ethereum, Binance Coin, Solana, and Uniswap, which facilitate the representation and management of these assets. Reviewing the top projects by market capitalization can reveal how many provide meaningful utility or value to users, emphasizing the need for crypto projects to develop applications that address real financial challenges.
