Blockchain technology giant Ripple has announced a partnership with Archax, a UK-based crypto exchange, broker, and custodian, to bring real-world assets (RWAs) to the blockchain via the XRP Ledger (XRPL). The collaboration between both firms will tokenize hundreds of millions of dollars worth of RWAs on the XRPL over the coming year.
Ripple Will Help Archax Expand the Traditional Market Via Blockchain
Through this partnership, RWAs like real estate, financial assets, commodities, government bonds, and artwork will be available on the XRPL so that all interested persons can easily trade the items regardless of physical location. Tokenizing RWAs also contributes to cryptocurrency adoption because buyers and sellers may use digital assets to trade these RWAs.
Ripple and Archax will open the traditional market to new income streams, like staking, which is common in the crypto sector. In addition to depositing funds in a liquidity pool after finding the best crypto to stake, users can also participate in staking with liquidity pools controlled by firms in charge of these RWAs.
According to Markus Infanger, the SVP at RippleX, Ripple’s platform for developers creating blockchain solutions using the XRPL, the crypto industry is ready for the next major stage of adoption, where blockchain technology will be crucial in financial markets.
“Ripple is excited to see Archax’s vision of driving the adoption of blockchain and digital assets technology amongst financial institutions come to life, while further underlining the credentials of the XRPL as one of the leading blockchains for RWA tokenization.”
Archax CEO Graham Rodford believes the world has “hit the tipping point for mainstream adoption of digital assets for real-world use cases.” The CEO explains that the benefits of RWA tokenization include increased operational efficiency, better transparency, and improved access to liquid markets.
According to the official announcement, the partnership is not Ripple’s first collaboration with Archax. The agreement is an extension of a relationship established between Archax and Metaco, a crypto custody firm based in Switzerland. Ripple acquired Metaco in May 2023 for $250 million.
However, the partnership will make RWA easy because Archax already works with several top financial institutions trying to tokenize their financial RWAs. Archax will now offer these institutions a way to create new use cases by bringing these assets to the blockchain.
More Blockchain Tokenization of RWAs
Tokenization has a wide range of uses that are beneficial to the traditional market. For instance, the world of crypto gambling, which already allows casino players to benefit from cryptocurrencies, can also enjoy increased liquidity for withdrawal of earnings, governance that promotes a community-driven approach, and fractional betting.
Generally, the tokenization of RWAs is gradually becoming more commonplace as many companies recognize the benefits. For instance, crypto and blockchain solutions firm Paxos has decided to expand its involvement with tokenization and stablecoins. According to a The Block report, co-founder and chief executive officer Charles ‘Chad’ Cascarilla said the company laid off 20% of staff to “best execute on the massive opportunity ahead in tokenization and stablecoins.”
In addition to the defunct BUSD stablecoin, Paxos issues the Pax Dollar (USDP), Pax Gold (PAXG), and PayPal’s PYUSD stablecoin. Paxos also recently launched the Lift Dollar (USDL), touted as the first stablecoin to offer holders daily yield. However, regardless of these commitments, plus the company’s $500 million balance sheet, Paxos considers it necessary to reduce its headcount, probably to free up more funds to invest in RWA tokenization.
The CEO also explained the company’s focus on stablecoins. Cascarilla said stablecoins will increase 10x in the next few years, expanding the global financial system via tokenization. Since launching and scaling new tokens takes time, Paxos hopes to consolidate its focus on this core and “de-prioritize adjacencies.” He specifically referred to relegating new products and features that the company previously considered important or interesting.
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