Startup Tokenizes US Treasury Bonds on Bitcoin's Layer 2 Network

2024-07-17, 07:53

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## [TL; DR]
The tokenized asset cumulative market capitalization may reach $16 trillion by 2030.

Hamilton has become the first crypto start-up to tokenize the United States treasury bonds.

Tokenized RWAs will increase liquidity in the Web3 economy.

## Introduction 
The advancement of the blockchain technology is now more evident than before as more digital products come on to the market. For example, there has been an expansion in the real-world asset tokenization sector. During the past two years new RWAs came onto the market. This analysis looks at how the tokenization of treasury bonds will bring more liquidity and utility in the web3 economy.

## Expansion of Bitcoin DeFi as More Innovative Products Come onto the Bitcoin Blockchain
Hamilton, a crypto start-up that focuses on the tokenization of Real-World Assets (RWAs), has announced its proposed issuance of tokenized United States Treasury bonds on the <a href="/price/ethereum-name-service-ens" target="_blank" class="blog_inner_link">ens crypto</a> blockchain. The tokenized treasury bonds will exist on bitcoin’s 3 layer-2 platforms, <a href="/price/ethereum-name-service-ens" target="_blank" class="blog_inner_link">ens crypto</a>, Core and Build on Bitcoin (BoB). No doubt, the tokenization of U.S treasury bonds will close the gap between decentralized finance (DeFi) and traditional finance (TradFi).

The first tokenized United States Treasury bonds (HUST), launched on the Bitcoin layer-2 blockchains, were first traded on 4 July 2024. Their launch on the United States Independence Day is significant as it may indicate that a new era has begun which may offer financial freedom to the people of the U.S.A. Hamilton’s main focus in introducing tokenized treasury bonds is to democratize investors’ access to government-backed assets. These will be tradable and accessible within bitcoin’s decentralized finance (DeFi) market.

Hamilton’s initiative to tokenize treasury bonds came after realizing growth in the asset tokenization sector. [Boston Consulting Group](https://web-assets.bcg.com/1e/a2/5b5f2b7e42dfad2cb3113a291222/on-chain-asset-tokenization.pdf "Boston Consulting Group") has predicted that the RWA sector will likely have a cumulative market capitalization of around $16 trillion by 2030 as the next graph indicates. 
![](https://gimg2.gateimg.com/image/article/1721202670img_v3_02cs_8322f578-05a3-41d5-94cf-9c43b22841ix.jpg)
Real-World Asset Tokenization Forecast – Boston Consulting Group

As observed on <a href="/price/ethereum-name-service-ens" target="_blank" class="blog_inner_link">ens crypto</a>, the tokenized market will likely be 10% of the global GDP by 2030. In comparison with the other sectors it may be the largest investment asset class  by that time. This estimation simply shows the growth potential of the sector and the level of innovation expected to occur within it.

## Hamilton’s Strategic Move: The Choice of Bitcoin’s Layer-2 Networks
It is unsurprising that Hamilton has chosen bitcoin layer-2 network protocols for hosting its tokenized treasury bonds. There are several reasons for such a strategic choice. First, since HUST has less risks but better yield than most stablecoins many investors will likely invest in the asset. To complement the suitability of tokenized treasury bonds as a new investment asset class a secure and reliable blockchain such as bitcoin was the best choice. The three-bitcoin layer-2 solutions- Stacks, Core, and BoB - provide the scalability and functionality that will support HUST the most.

According to a recent Cointelegraph publication, several crypto experts have hailed Hamilton’s strategic move to launch tokenized treasury bonds on bitcoin layer-2 solutions. First, [Kasstawi, the CEO & Co-founder of Hamilton has this to say](https://cointelegraph.com/news/crypto-startup-tokenized-us-treasury-bonds-bitcoin-layer-2 "Kasstawi, the CEO & Co-founder of Hamilton has this to say"): “Combining US Treasury bills with Bitcoin’s security and transparency marks a historic step towards financial independence, providing crucial exposure to emerging markets.”

On the other hand, [Brendon Sedo, a contributor to Core DAO, said](https://cointelegraph.com/news/crypto-startup-tokenized-us-treasury-bonds-bitcoin-layer-2 "Brendon Sedo, a contributor to Core DAO, said"), “Seeing US Treasury bills tokenized on the Core Chain is a significant milestone. By leveraging Bitcoin’s security and the scalability of Core, we are helping bridge the gap between traditional finance and Web3.”

Basically, layer-2 networks can support Hamilton’s initiative in a big way. First, the layer-2 network protocols, which are cost-effective and scalable, enhance security and promote transparency. That creates confidence in their product which may lead to a rise in its demand. In addition, these networks have low transaction time since they do not have congestion. The network stability will also likely to promote high participation from DeFi digital asset investors.

## Deciphering the Role of RWAs: Their Contribution in the Web3 Economy
Tokenized real-world assets, which are digital assets that represent tangible assets such as real estate and bonds, can be transferred, swapped and traded on-chain which adds liquidity to the DeFi ecosystem. The liquidity benefits the investors, asset owners and the entire decentralized digital sector.

Also, the contribution of RWAs in the web3 economy is unique. For example, they enable fractional ownership of real-world assets such as debts, real estate and bonds. In addition, tokenization makes it possible for asset owners to access a global market without the need to transfer them to every buyer. Generally, tokenized RWAs contribute to the growth of the decentralized finance sector as well as the adoption of blockchain technology. In the case of Hamilton’s tokenized treasury bonds, HUST will increase the utility of the bitcoin blockchain which may help to stabilize the <a href="/price/ethereum-name-service-ens" target="_blank" class="blog_inner_link">ens crypto</a>.

## Conclusion 
Hamilton has become the first crypto firm to tokenize United States treasury bonds which will increase their accessibility. The stability and scalability of bitcoin layer-2 protocols will likely lead to the high adoption of the tokenized bonds. Also, Bitcoin’s layer 2 solutions will result in low transaction cost as well as enhance transparency.

<a href="/price/ethereum-name-service-ens" target="_blank" class="blog_inner_link">ens crypto</a>
<a href="/price/ethereum-name-service-ens" target="_blank" class="blog_inner_link">ens crypto</a>Author:* Mashell C.*, Gate.io Researcher
<a href="/price/ethereum-name-service-ens" target="_blank" class="blog_inner_link">ens crypto</a>\*This article represents only the views of the researcher and does not constitute any investment suggestions.
<a href="/price/ethereum-name-service-ens" target="_blank" class="blog_inner_link">ens crypto</a>\*Gate.io reserves all rights to this article. Reposting of the article will be permitted provided Gate.io is referenced. In all cases, legal action will be taken due to copyright infringement.
<a href="/price/ethereum-name-service-ens" target="_blank" class="blog_inner_link">ens crypto</a><a href="/price/bitcoin-btc" target="_blank" class="blog_inner_link">Bitcoin</a>

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