The liquidity and financing protocol for onchain Objects 💧🏦

My mental model on tokenization of Real World Assets:

1/ First, some background. I started my career in investment banking and private equity before leaving tradfi to build @metastreet

MetaStreet is an onchain structured credit protocol that creates efficient debt markets for NFT owners via tranched lending pools.

3/ Needless to say, RWAs are a big part of the thesis behind building MetaStreet. 

We built MetaStreet based on a long term vision for a global, permissionless debt capital market that supported every type of collateral from digital art and gaming assets to tokenized domain names and real estate.

4/ That being said, some of these collateral types are much closer to being actionable than others today, and its important to be honest with ourselves about whats really actionable today, vs pie in the sky.

5/ RWAs exist on a what I think of as a “settlement spectrum”. On the left hand side, you have RWAs that see their transactions settled almost 100% onchain (stablecoins), and on the right hand side RWAs that are settled almost 100% offchain (real estate).

6/ While it does not necessarily have to be true, it is generally true that this settlement spectrum also lines up with assets that are digitally native (left) vs physically native (right).

7/ Essentially, this spectrum tells you how much friction there is to bringing that asset onchain. 

Assets that exist entirely in the physical world see transactions settled according to rule of law enforced in a court.

These assets are going to have a much harder time transitioning to a blockchain settlement layer.

8/ This is why real estate is likely years away from seeing any meaningful tokenization. 

For real estate to get tokenized, we need blockchain based financial markets to grow several orders of magnitude, such that the scale and infrastructure is superior to the existing property rights & surrounding capital market.

9/ Things like domain names, on the other hand, are ripe for tokenization. Entirely digitally native, existing market structures are broken with high rent extraction and weak property rights.

10/ Notably, I’ll point to physical luxury goods (watches, high value trading cards, etc) as a potential exception to this rule, as many of these offerings are showing early signs of PMF, but will reserve judgement as they have a long way to go to scale.

11/ Curious to hear what others think of this framing. I know teams building solutions for every single one of these assets, and am hopeful that all of them will succeed.

2/ Put simply, MetaStreet allows lenders to choose a higher risk, higher return position, or a lower risk, lower return position. 

The presence of choice enables a more efficient market, and ultimately creates liquidity where there is otherwise none or very little.