$HBAR’s ‘BlackRock Partnership’ Fail: What’s Next for RWA on Hedera?

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  • HBAR token jumped 73% on April 23 and fell over 20% the next day.
  • Hedera investors mistook a press release to mean a BlackRock partnership launch.
  • Hedera is a public-permissioned L1 blockchain with an invite-only validator set.
  • Hedera is governed by a group of 39 organizations which includes Google, IBM and Boeing.

Enterprise-focused blockchain Hedera (HBAR) saw wild swings in price movement in late April 2024 after investors misinterpreted a Twitter post to be the launch of a partnership with BlackRock — the world’s largest asset manager.

What is going on with Hedera? In this article, we explain the latest Hedera developments, discuss its real world asset (RWA) potential and analyze the HBAR token.

Hedera’s Bizarre Market Movements in April 2024

On April 23, 2024, Hedera’s native token HBAR jumped over 73% after UK-based digital asset exchange Archax announced that it tokenized the BlackRock ICS US Treasury money market fund on the Hedera blockchain.

However, BlackRock was quick to dismiss any “commercial relationship with Hedera.” In a note to Cointelegraph, BlackRock clarified that it had not selected Hedera to tokenize any BlackRock funds.

HBAR’s one-month price chart.
HBAR’s one-month price chart. (CoinMarketCap)

The price surge in HBAR token was due to a misinterpretation of Archax’s announcement that the crypto exchange had tokenized a BlackRock fund on Hedera — BlackRock is not directly involved, and was quick to set the record straight.

HBAR price crashed over 20% on April 24, 2024, following the clarification from BlackRock — although the coin remains 30% higher than it was a week earlier.

What is Hedera?

Hedera is a public-permissioned Layer-1 blockchain that uses a unique consensus algorithm called hashgraph to produce high network throughput and low, predictable gas fees.

Hashgraph is a proof-of-stake consensus algorithm that requires network nodes to stake Hedera’s native token HBAR to participate in consensus. Hashgraph uses the “gossip protocol” to spread information between nodes and swiftly come to a consensus on transactions.

Additionally, the use of hashgraph consensus offers Hedera users a “no-fork guarantee.”

Traditional blockchains can split or fork into two different chains when two blocks are created at the same time. The hashgraph consensus avoids this by accepting each and every block into its ledger. All the branches of the chain are woven together into the main Hedera chain.

Another key differentiator between Hedera and other L1 blockchains is Hedera’s “public permissioned” structure.

Public permissioned blockchains like Hedera allow anyone to deploy applications on their network. However, the nodes that operate the public permissioned blockchains can only join via an invite.

At the time of writing, nodes on Hedera are operated by the Hedera Governing Council.

Hedera has declared its intention to become a fully public and permissionless blockchain in the future.

Hedera’s Real World Asset Tokenization Catalysts

Although BlackRock’s clarification threw cold water on HBAR investors hopes of Hedera’s partnership with the traditional finance behemoth, the fiasco highlighted Hedera’s position as a key player in the real world asset (RWA) tokenization market narrative.

Hedera has been aiding institutions in tokenizing RWAs since 2022.

In June 2023, UK’s largest active asset manager, ‘abrdn’, tokenized money market funds and their payout on the Hedera blockchain. According to Financial News, the Edinburgh-headquartered asset manager tokenized its flagship Aberdeen Standard Liquidity fund with over $17 billion in assets under management on the Archax crypto exchange.

Earlier in 2022, tokenized diamond company Diamond Standard chose the Hedera blockchain to tokenize diamonds for investors. According to the company, only 1% of the global diamond supply is used for investment.

Tokenized diamonds attracted enormous investor interest when three US banks — Silvergate Bank, Silicon Valley Bank, and Signature Bank — collapsed in March 2023. Investors rushed to buy tokenized diamonds to shield their portfolios from crypto market volatility and stablecoin depegging.

According to CoinDesk, trading volume of the tokenized diamond surged almost 300% in mid-March 2023 following the banking crisis.

If you are interested in learning more about the Hedera blockchain, we have put together all you need to know about the Hedera blockchain and the HBAR token below.

History of Hedera

Date Milestone
2012 Dr. Leemon Baird begins work on distributed consensus.
2015 Dr. Leemon Baird and Mance Harmon form Swirlds Inc to commercialize Hashgraph consensus.
2016 The Hashgraph whitepaper is published.
2017 Swirlds raises seed round investment, which is used to fund the creation of Hedera.

Hashgraph Consortium LLC is created.

2018 Hedera main net goes live on August 28, 2018.
2019 Deutsche Telekom, DLA Piper, Magazine Luiza, Nomura Holdings and Swisscom Blockchain are announced as the first Hedera Governing Council members.
2021 Hedara Token Service is launched to enable creation and management of fungible and non-fungible tokens.
2022 The Hedera Governing Council votes to purchase and open source the intellectual property rights to the hashgraph consensus algorithm.

Source: “Hedera’s Journey

Hedera Governance Council

Hedera is governed by a group of organizations and companies collectively known as the Hedera Governing Council.

As of April 2024, there were 39 organizations in the Hedera Governing Council which included Google, IBM, London School of Economics, Chainlink, Boeing, Ubisoft, among others.

Hedera Governing Council members are responsible for managing the network’s treasury, voting on the direction of Hedera’s software and services developments, operating network nodes and electing Hedera’s board of directors.

Organizations can apply to join the Hedera Governing Council. Applications are vetted by the Hedera team.

HBAR Tokenomics

HBAR is the native cryptocurrency of Hedera. HBAR is used to pay gas fees and for staking.

HBAR has a max supply of 50 billion tokens and token holders who stake HBAR are offered a maximum staking yield of 6.5% APR.

As of April 25, 2024, 35.74 billion tokens (71.5% of max supply) were in circulation, data on CoinMarketCap showed.

HBAR Tokenomics

At a current price of $0.11, HBAR was the 25th largest crypto in the world, with a market cap of over $4 billion.

HBAR tokens have been distributed in the following manner:

  • Ecosystem and open source development – 36.5%
  • Purchase agreements – 25.4%
  • Network governance and operations – 16.2%
  • Initial development costs and licensing – 7.7%
  • Unallocated supply – 14.1%

The Bottom Line

The HBAR token’s rise and fall is a reminder to investors regarding the pitfalls of FOMOing into crypto investments. It is important to conduct your own due diligence before making any investment decisions.

Nevertheless, the recent price surge in Hedera has brought back the spotlight on a promising blockchain project that has been overlooked in recent times due to the proliferation of L1 blockchains.

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