Ripple has formed a partnership with the Axelar Foundation in order to introduce interoperability to the XRP Ledger (XRPL) blockchain, with the aim of advancing the tokenization of real-world assets (RWAs). This collaboration will allow developers to utilize Axelar’s General Message Passing (GMP) to execute smart contract calls on more than 55 blockchains, enabling the cross-chain deployment of decentralized applications on the XRPL. The integration will provide benefits such as increased liquidity for stablecoins and large-cap assets. Ripple’s Chief Technology Officer, David Schwartz, believes that tokenized RWAs will be crucial to the blockchain economy, especially in the areas of real estate, commodities, treasuries, and bonds.
The XRPL has been in operation for over ten years and has experienced significant growth in daily activity volume, particularly in nonfungible tokens. On the other hand, Axelar, a startup founded in 2020 by Algorand team members and graduates of the Massachusetts Institute of Technology, offers a communication overlay between blockchains to facilitate data sharing without the need for intermediaries or centralized parties. The integration of Axelar’s technology is expected to drive the adoption of tokenized RWAs.
Tokenization refers to the process of converting ownership rights to an asset into a digital token that exists on a blockchain. These tokens can represent various real-world assets, such as real estate, art, or company shares, and make them more accessible for buying, selling, and trading. Citi, an investment bank, predicts that RWA tokenization could become a significant use case in the crypto industry, estimating the market to reach a value of $4 trillion to $5 trillion by 2030. This growth will mainly be driven by the tokenization of private equity, real estate, and debt markets, with private equity being the most likely asset class to be tokenized due to its favorable characteristics for liquidity and fractionalization.
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Axelar selected by Ripple's XRPL for RWA and inter-blockchain communication