Recently, Chief Crypto Analyst at Realvision, Jamie Coutts, forecasts that between $10 and $30 trillion of traditional assets will be tokenized within the next decade. This bold prediction has given rise to the discussion about the possible consequences on blockchain fee income and the whole crypto ecosystem.
While Coutts’ outlook might be a little grand, a more reasonable prediction, which is based on the present growth rates, indicates that tokenized traditional assets would be approximately $1.3 trillion by 2030. This number, however, is smaller, but it is still an important mark in the finance domain.
To put this in perspective, the entire tokenized asset market currently stands at just over $1.4 billion. Whereas, BlackRock and Franklin Templeton account for $900 million in tokenized U.S. treasuries on Ethereum’s L1 network.
Blockchain Fee Income Potential
The potential for blockchain fee income from this tokenization trend is substantial. Using the S&P 500’s turnover rate as a baseline and assuming a conservative 1 basis point fee. Even a modest $1.3 trillion in tokenized assets could generate significant revenue for blockchain networks.
However, the distribution of this revenue between L1 and L2 solutions remains a point of contention. As activity shifts to permissioned rollups and existing L2s like Base and Arbitrum, Ethereum’s L1 may capture only 1-5% of the total fees generated.
This scenario is what Coutts refers to as the “Ethereum dilemma.” In contrast, Ethereum is still the main choice for traditional finance (TradFi) asset issuers. However, L2 solutions will not be giving up their possible revenue streams to enable Ether to scale at the L1 level.
Nevertheless, the consequences of mass asset tokenization go beyond fee income. $1.3 trillion worth of real-world assets (RWAs) on-chain would be a huge growth driver for the crypto ecosystem, including NFTs, social platforms, and gaming.
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