In the search for a stable, scalable yield on chain, assets in the real world (RWAs) have become a cornerstone of digital asset strategies. Tokenized treasuries and private credit brought the yield on the chain, delivered much needed stability and quickly emerged as one of the strongest priesting segments in crypto.
Top Crypto categories after market cap
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However, much of this early RWA activity simply has mirrored traditional funding. The next stage of development requires more. Capital is moving rapidly and investors expect more of their assets. They are looking for returns that are not bound to cycles, access that does not depend on intermediaries and assets composed across the defi -ecosystem.
A new example is tokenized reinsurance that brings some of the world’s largest and illiquid industries into the fund’s streams of defi.
Reinsurance is a form of structured funding that helps insurance companies manage large or unexpected losses. For most investors, it has been inaccessible – held by outdated infrastructure, opaque processes and high access barriers. Despite that, it is a global market of $ 784B+that generates returns from both insurance surplus and investment income, where capital is expected to grow to $ 2T in the next decade.
Let’s put it into perspective:
- Today, $ 770B in capital supports $ 460B in property and accident prizes.
- In 10 years, the capital base is expected to be more than doubled when $ 2T and writes estimated $ 1.2T in prizes.
- That’s $ 740b in additional prizes that are expected to flow through the market in the next decade.
The opportunity will be available through new infrastructure built on chain re-building of access to reinsurance from scratch and opened the door to a wider class of investors. Pair a yield stableecoin like ethenas Susde with a tokenized pool of reinsurance risk, and you have a structured product that serves insurance yield in all markets, catches security outcomes in Tyrcycles and connects the rest of DEFI.
This shift takes place with a broader transformation in how capital moves in the market. While Legacy Reinsurance Markets rely on private offers and Siled systems, web3 makes it easier to move capital faster and with more transparency so that capital markets can flow more easily in and out of such positions depending on reinsurance benefit. Composability opens the door to new integrations across defi, and together these features allow for a more accessible model.
The introduction of tokenized reinsurance signals how far RWAS has emerged. The focus shifts from simply replicating traditional financing on the chain for establishing new, crypto-native forms of structured yield. More broadly, RWAs begin to unlock economic structures, which would be difficult, if not impossible, to implement in traditional markets. For capital allocators, on-chain reinsurance offers wider access, greater transparency and potentially more resilient returns.
As Structured Finance continues to cross each other with web3 infrastructure, reinsurance offers a preview of where the next wave of RWA innovation is on the way: markets in the real world reintroduced to speed, scale and open participation. The larger option lies in connecting decentralized and traditional systems in a way that is scalable, transparent and durable.
