RWA: The Rise of Real World Assets

1. Definition and Characteristics of RWA

RWA stands for Real World Assets, which refers to real-world assets represented and traded in a digitalized and tokenized manner within the blockchain or Web3 ecosystem. This includes real estate, commodities, bonds, stocks, artworks, precious metals, intellectual property, and more. The core idea of RWA is to bring traditional financial assets into the decentralized finance ( DeFi ) ecosystem through blockchain technology, achieving more efficient, transparent, and secure asset management and trading.

The significance of RWA lies in enabling the liquidity of assets that are difficult to move in the real world through blockchain technology, allowing them to participate in operations such as lending, staking, and trading within the DeFi ecosystem. This connection between real assets and the blockchain world is becoming an important development direction in the Web3 ecosystem.

As a bridge between crypto-native assets and traditional assets, RWA needs to satisfy both the on-chain technical support of smart contracts and the legal protection of underlying assets in the real world. The tokenization process of RWA includes the purchase and custody of underlying assets, the establishment of a legal framework connecting tokens and assets, and finally, the issuance of tokens.

2. The Development of RWA

The development of RWA can be divided into three stages:

Early exploration phase ( 2017-2019 ):

• The RWA concept began to emerge in 2017, with projects like Polymath starting to explore security tokenization.
• In 2018, pilot projects for real estate tokenization emerged.
• The TAC Alliance was established in 2019 to promote RWA standardization.

Preliminary development stage ( 2020-2022 ):

• In 2020, multiple projects including Centrifuge introduced RWA
• In 2021, MakerDAO joined the RWA market.
• In 2022, traditional financial institutions began to layout RWA.

Rapid Expansion Phase (2023 to present ):

• Large asset management companies are attempting to manage part of their asset portfolios through tokenization.
• Regulators have begun to intervene, attempting to establish a regulatory framework related to RWAs.

3. Main Application Areas of RWA

real estate industry

Real estate tokenization can enhance asset liquidity and reduce individual investment risks. Major projects include:

• Tangible: Focus on tokenization of physical assets
• Landshare: Allowing small investors to participate in the real estate market
• RealT: Gain partial ownership of real estate through tokens.

Fiat to Stablecoin

Stablecoins like USDT bring fiat value into the blockchain, becoming low-volatility assets in the DeFi ecosystem. However, they also face challenges such as systemic risk, regulatory risk, and collateral risk.

Lending Market

RWA has expanded the scope of pledgeable assets, providing more financing channels for enterprises and allowing ordinary investors to invest in companies to obtain returns.

bonds and securities

Main projects include:

• Maple Finance: On-chain creation and management of loan pools
• Securitize: Provides issuance, management, and trading services for tokenized securities
• Ondo Finance: Provides tokenized short-term government bond funds

4. RWA Market Size

According to defillama data, the TVL related to RWA reached 6.3 billion USD, a year-on-year increase of 6000%. RWA.xyz data shows that there are 62,487 asset holders, 99 asset issuers, and a total value of stablecoins of 169 billion USD.

Multiple institutions predict that by 2030, the total market value of RWA could reach $16 trillion. However, the development of RWA is closely related to regulations in various regions, which may become a limiting factor.

5. Major Projects in the RWA Ecosystem

Centrifuge

Centrifuge is a platform for tokenizing real-world assets on the blockchain, providing decentralized asset financing protocols. Its core architecture includes Centrifuge Chain, Tinlake, on-chain asset net asset value calculation, and a layered investment structure.

Although Centrifuge ranks first in the RWA project attention, its TVL has significantly declined due to market influences, currently standing at only $497,944.

ONDO Finance

ONDO Finance is committed to providing institutional-grade financial products and services, focusing on developing stable asset options beyond stablecoins. Its main products include USDY( dollar yield tokens ) and OUSG( Ondo short-term U.S. government bonds ).

ONDO Finance has performed well in the market, with the current token price significantly increasing compared to the financing price. The TVL has reached $538.97 million, ranking third in the RWA sector.

BlackRock BUIDL

BlackRock BUIDL is an ETF launched jointly by BlackRock and Securitize, investing in cash equivalents. It has a relatively complete regulatory compliance, high market recognition, and a stable TVL of 502.41m USD, ranking fourth.

6. Conclusion

The RWA track aims to achieve interoperability between real assets and on-chain assets, blurring the boundaries between DeFi and traditional finance. Key areas include securities, real estate, credit lending, and stablecoins. Compared to other tracks, RWA faces stricter regulatory requirements, and caution should be exercised when investing.