Raredex is now live on the Arbitrium blockchain. This marks a significant shift in accessibility to an asset class, which had been long reserved for institutional investors until now.
Raredex, a blockchain-based exchange has launched its tokenized exchange, allowing rare earth and technology metals to be traded on the Arbitrum network, on Jan 8. Rare earth metals, needed for businesses ranging from developing technology to renewable energy, have traditionally been difficult for retail investors to access, hindered by the high entry costs — often above $10,000. Raredex solves this by enabling fractional ownership using blockchain-based tokenization, where each token represents one kilogram of physical metal.
Louis O’Connor, chief executive officer of Raredex, highlighted the democratization potential, saying “Early adopters” will now be able to access an asset class that was “typically reserved for governments” or the “well-connected, wealthy” individuals, meaning that investors on a smaller scale can now enter the market, with far less capital required.
How does Raredex work?
Raredex keeps its physical metals in a bank-grade vault operated by Tradium in Germany to access custody and availability. Investors can verify the provenance of their tokens because each one is tagged with extensive source-of-origin data. By employing blockchain technology, an unchangeable record of ownership is made, thus reducing the chances of fraud and increasing transparency.
The launch of the platform comes at a time of increased interest in RWA tokenization. This update comes on the back of a larger trend to tokenize real-world assets. In 2023, RWAs class had grown by 700%, bringing $860 million in revenue. According to Boston Consulting Group and ADDX, RWAs are expected to be a $16 trillion market by 2030. 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 are 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, thereby transforming the interaction of investors with physical assets.
