Blockhain technology is being used to make an asset class that was once only available to institutional investors now accessible to retail investors.
Raredex, a blockchain-based platform on the Arbitrium network, is making it possible for investors to access rare earth metals. These metals are used in a wide range of industries, from consumer electronics to renewable energy. However, they have traditionally been difficult for retail investors to access due to the high entry costs — often above $10,000.
Raredex solves this problem by enabling fractional ownership using blockchain-based tokenization, where each token represents one kilogram of physical metal. This allows investors to purchase smaller amounts of the metal and gain exposure to the asset class.
According to Louis O’Connor, chief executive officer of Raredex, this development will benefit early adopters by giving them access to an asset class that was typically reserved for governments or the well-connected, wealthy individuals. Now, investors on a smaller scale can enter the market with far less capital.
Raredex stores its physical metals in a bank-grade vault operated by Tradium in Germany to ensure custody and availability. Each token is tagged with extensive source-of-origin data, allowing investors to verify the provenance of their tokens. Additionally, blockchain technology creates an unchangeable record of ownership, reducing the chances of fraud and increasing transparency.
This launch comes at a time of increased interest in RWA tokenization. The update is part of a larger trend to tokenize real-world assets. In 2023, the RWA asset class grew by 700%, generating $860 million in revenue. By 2030, RWAs are expected to be a $16 trillion market, as reported by Boston Consulting Group and ADDX. The decentralized, tamper-proof nature of blockchain will increase transparency and trust, while fragmentation opens up new ways to access and invest in valuable assets.
Other similar initiatives include UBS Asset Management’s Ethereum-hosted tokenized investment fund and Archax’s $4.8 billion money market fund on the XRP Ledger.
As there is rising demand for rare earth metals due to innovations in technology and clean energy, Raredex's platform could be a model for a wider wave of commodity trading on the blockchain, transforming the interaction of investors with physical assets.
