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As we emerge from a deep crypto winter, web3 must negotiate a delicate balancing act. On one hand, we need to fund the space; if we are to achieve our vision, then we need adoption. Therefore, the advent of Bitcoin ETFs pumping billions of dollars into crypto is a positive development. Likewise, we welcome pronouncements from major traditional finance figures such as Blackrock CEO Larry Fink stating, “The next generation for markets, the next generation for securities, will be tokenization of securities.”

I don’t often agree with Fink, but in my recent article, I agree that tokenizing Real World Assets (RWAs) is a multi-trillion-dollar crypto opportunity, which will form the backbone of the next bull run and unlock the transfer of trillions of dollars of value into crypto.

Resist the Faustian Pact

That’s where the agreement ends. Web3 must not be blinded by the numbers. We must remember what we stand for. Satoshi’s inclusion of the message “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks” reminds us that crypto was designed to disrupt and replace the traditional financial system. Bitcoin and blockchains were created to build an alternative financial system, which returns power to the people and enables us all to share in the value we create.

In stark contrast, traditional finance is inherently a system of mass control and extraction designed, built, and maintained by financial elites. It is structured to enable the continued extraction of value from the masses through control of assets and infrastructure.

Are We Sleepwalking into a CeFi Horror Movie?

It’s no coincidence that much of what is being built in this new wave of adoption, especially within RWA tokenization, is merely traditional finance rebuilt on blockchains. Such on-chain centralized finance, or CeFi, is part of an explicit plan by Blackrock and major financial institutions to tokenize all the world’s assets onto a single, universal, centralized ledger—which they control.

Envision a new reality where even physical assets, including those currently beyond the grasp of central platforms, are controlled by elites who will further tighten their grip and extraction from the public. This presents a dystopian future, which is precisely the one heralded by the World Economic Forum’s infamous article “Welcome to 2030. I own nothing, have no privacy, and life has never been better.”

It’s Time to Make a Stand

If we are to bring all the world’s assets on-chain into a single, global digital market, we need more robust promises than web2’s “Don’t be evil.” When a system is properly decentralized, it is owned and governed by its users, ensuring that it “can’t ever be evil.” As I assert, “Web3 is the best safeguard of public liberty,” as web3’s decentralized infrastructure protects against control and extraction.

What we need to resist centralized control of all our physical assets is open, decentralized infrastructure for tokenizing and trading real-world assets.

How to Make the Future Computable

As I recently argued in an academic paper with blockchain economist Prof. Jason Potts: “Web3 has the potential to enable a new computable economy and unlock exponential wealth.”

But this future is only possible if we can bring all assets on-chain, including RWAs, with the same strong commitments as native on-chain assets. In simple terms, if you hold a token, then you must have assurance that in return, you will receive the asset or your money back. Physical RWAs are bound by the physical asset oracle problem: If Alice tokenizes her car and Bob buys the token, how can Bob be sure he will receive the car?

This leap forward is crucial for transitioning to a computable economy, as it allows the seamless integration of all forms of capital into the economy with similar trust assumptions.

Enter the Physical RWA Supersystem

My personal mission is to support the emergence of a web3 computable economy by building the decentralized infrastructure to bring all physical RWAs on-chain. The hard problem of tokenizing physical assets has already been solved for commerce assets via the Boson Protocol. In mid-2024, we will launch the Fermion Protocol to provide a higher level of verification for physical RWAs in the $1 trillion collectibles and art market. This protocol has the potential for real estate, property, luxury wine and whisky, commodities, carbon credits, and even the tokenization of nature itself.

Together, Boson and Fermion enable the decentralized tokenization and exchange of the full spectrum of physical RWAs, optimizing efficiency for commerce assets and verification for high-value assets.

Constructing the Base Layer

The physical RWA supersystem plays a foundational role in transforming the landscape of RWA management and exchange. It forms a decentralized base layer that enables anyone to tokenize and sell RWAs or build applications on top, eliminating the complex task of developing a proprietary protocol.

The supersystem advances the original Satoshi vision of a new financial system that is owned and governed by its users, who share in the value it creates. Additionally, it defends against the subversion of crypto by financial elites and on-chain CeFi, ensuring a more equitable distribution of power and benefits.

The battle lines are drawn. The very future of web3 is at stake. Let’s not wonder if we could have done more.

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Justin Banon, co-founder of Boson Protocol, is a World Economic Forum Technology Pioneer and web3 thought leader. Banon founded Boson Protocol, the decentralized trust layer for real-world assets. As a partner at Outlier Ventures, a leading web3 accelerator, he mentors startups, helping shape the future of web3. Justin holds a bachelor’s degree in physics and two master’s degrees in digital innovation and crypto technology. He is actively involved in research, currently focusing on the web3 computable economy, in partnership with blockchain economist Professor Jason Potts. Justin’s mission is to aid humanity’s progress and prosperity by fostering the development of a ‘Web3 computable economy’. He has recently written about ‘Web3 washing’ and the risks associated with on-chain centralized finance developments.

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