The collaboration between Ripple and Axelar represents a strategic advancement towards tokenizing real-world assets. Ripple has joined forces with the Axelar Foundation to enhance interoperability within the XRP Ledger (XRPL) blockchain, aiming to propel the tokenization of real-world assets (RWAs) to the next level.
This partnership will empower developers to utilize Axelar’s General Message Passing (GMP) to interact with smart contracts across more than 55 blockchains, facilitating seamless cross-chain deployment of decentralized applications on the XRPL. Both companies anticipate significant benefits from this integration, including enhanced liquidity for stablecoins and high-value assets.
David Schwartz, Ripple’s Chief Technology Officer and co-creator of the XRPL, envisions RWAs such as real estate, commodities, and bonds playing a pivotal role in the blockchain economy, with potential applications in collateralized loans within traditional lending platforms.
Despite being in existence for over a decade, the XRPL continues to demonstrate growth, with an 8.8% increase in daily activity volume in 2023, driven by a diverse range of transactions, including a significant surge in non-fungible tokens activity.
Axelar, a startup based in Canada, offers blockchain communication overlays, enabling seamless data sharing between networks without the need for intermediaries or centralized authorities. Founded in 2020 by former Algorand team members and graduates from the Massachusetts Institute of Technology, Axelar’s integration is expected to facilitate the adoption of RWAs, according to Schwartz.
Tokenization, the process of digitizing rights to assets on a blockchain, holds immense potential for various real-world assets such as real estate, artwork, and company shares, streamlining their trading and transfer processes.
According to investment bank Citi, RWA tokenization could emerge as a significant use case in the crypto space, with the market projected to reach $4 trillion to $5 trillion by 2030. This growth is anticipated to be primarily driven by the tokenization of private equity, real estate, and debt markets, with private equity emerging as a particularly promising asset class due to its liquidity and fractionation capabilities.