Raredex has launched a blockchain-based platform on the Arbitrum network, making it possible for retail investors to gain exposure to rare earth metals—an asset class that has traditionally been accessible only to institutional investors.
Rare earth metals, crucial for industries such as technology development and renewable energy, have often been out of reach for smaller investors due to high entry costs, typically over $10,000. By leveraging blockchain technology, Raredex allows for fractional ownership through tokenization, with each token representing one kilogram of physical metal, thus lowering the financial barrier for entry.
Louis O’Connor, CEO of Raredex, highlighted the platform’s democratizing effect, stating that “early adopters” would now have access to assets historically reserved for governments and the affluent, marking a significant shift in the market’s accessibility.
How Raredex Works
Raredex’s physical metals are securely stored in a bank-grade vault operated by Tradium in Germany, ensuring proper custody and availability. The provenance of each token is traceable through detailed source-of-origin data, which is embedded in the blockchain, ensuring transparency and reducing the risk of fraud. This use of blockchain technology creates an immutable record of ownership, adding another layer of security and trust for investors.
The platform’s launch coincides with a growing trend in real-world asset (RWA) tokenization, a sector that has seen exponential growth. In 2023, RWA tokenization grew by 700%, generating $860 million in revenue. According to research from Boston Consulting Group and ADDX, RWAs are projected to become a $16 trillion market by 2030. The decentralized, transparent nature of blockchain is seen as key to enhancing trust, while tokenization opens up new investment opportunities in valuable, traditionally illiquid assets.
The Future of Tokenized Commodities
The broader tokenization of illiquid assets, such as commodities, is expected to continue growing, with global tokenized assets projected to reach $16.1 trillion by 2030, representing 10% of global GDP. Raredex, by entering the RWA sector, is positioned for significant expansion within this evolving market. Other similar initiatives, such as UBS Asset Management’s Ethereum-hosted tokenized investment fund and Archax’s $4.8 billion money market fund on the XRP Ledger, also illustrate the rising interest in tokenized commodities.
As demand for rare earth metals grows due to technological advances and the shift towards clean energy, Raredex’s platform could serve as a model for the future of blockchain-based commodity trading, potentially transforming how investors engage with physical assets.
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