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• The rise of Treasury yields since 2022 has delivered a major boost to the tokenization of real-world assets.

• The total value of on-chain, real-world assets sits at $118.6 billion, according to Fundstrat.

• "It's becoming increasingly likely that blockchains can become the back-end infrastructure for almost every asset class."

The breathless rise of Treasury yields since 2022 has delivered a major boost to the tokenization of real-world assets.

With US bonds paying 5% recently, investment firms like Franklin Templeton have issued more government securities on the blockchain.

"The rising interest rates over the past year has been big," Tom Couture, a Fundstrat analyst, told Insider, noting that yields in decentralized finance previously were much higher than for US bonds. "But obviously over the past year and a half, rates have gone up and you get a risk-free 5% on US Treasurys. So demand has gone up."

And it's not just Treasurys. There is a growing momentum around packaging commodities, currencies and investment funds into tokens and adding them to the blockchain.

Right now, the total value of on-chain, real-world assets sits at $118.6 billion, according to Fundstrat. But experts say that number is expected to explode.

Boston Consulting Group offered what it called a "highly conservative" forecast of $16 trillion by 2030, with a bullish scenario putting it at $68 trillion.

That's still a long ways away from the total market value of real-world assets, which Fundstrat estimates is more than $992 trillion.

But big banks are also jumping in. In October, JPMorgan went live with its Tokenized Collateral Network — a system that allowed BlackRock to tokenize one of its money market funds and transfer it to Barclays in a derivatives trade.

And the global banking network SWIFT is also building a blockchain-based system for financial transactions with the tech company Chainlink.

Perks of tokenization

To be sure, tokenization is not new. ETFs and REITs are earlier examples putting assets into a package – or a token.

But the tokenization of real-world assets onto the blockchain is a newer trend that's picking up steam. That's because investors see a lot of benefits.

For one, it helps assets become a lot more liquid. When an asset is tokenized, it allows for fractionalization — divvying up that token into smaller pieces — which improves affordability.

Also, a token on the blockchain can be traded 24 hours a day instead of the seven and a half hours on a typical stock exchange. Blockchain trades also have faster transaction speeds.