RWA: The Rise of Real World Assets

RWA stands for Real World Assets, which refers to the digitization and tokenization of real-world assets through blockchain technology, enabling them to be represented and traded within the Web3 ecosystem. These assets include real estate, commodities, bonds, stocks, artworks, precious metals, intellectual property, and more. The core concept of RWA is to utilize blockchain technology to bring traditional financial assets into the decentralized finance ( DeFi ) ecosystem, thereby achieving more efficient, transparent, and secure asset management and trading.

The significance of RWA lies in the ability to liquefy assets with lower liquidity in the real world through blockchain technology, allowing them to participate in lending, staking, trading, and other operations within the DeFi ecosystem. This method of connecting real assets with the blockchain world is becoming an important development direction in the Web3 ecosystem.

RWA is a bridge between crypto-native assets and traditional assets. Crypto-native assets are typically implemented through smart contracts, with all business logic and asset operations completed on-chain, adhering to the principle of "code is law." In contrast, traditional assets such as bonds, stocks, and real estate operate within the legal framework of the real world and are protected by government laws. The tokenization rules proposed by RWA require both on-chain technical support from smart contracts and legal protection for the underlying assets in the real world.

The tokenization of RWA is not just a simple process of issuing tokens on the blockchain, but involves a complex set of processes related to off-chain real-world asset relationships. The tokenization process typically includes: the purchase and custody of underlying assets, establishing a legal framework for the relationship between the tokens and these assets, and finally, the issuance of tokens. Through this process, off-chain laws and regulations, along with relevant product operation procedures, are integrated, granting token holders legal rights to claim the underlying assets.

The development of RWA can be divided into three stages:

1. Early Exploration Stage ( 2017-2019 )
2. Preliminary development stage ( 2020-2022 )
3. Rapid Expansion Phase (2023 to present )

In different fields, RWA has demonstrated its application potential, mainly including:

• Real Estate Industry
• Fiat to Stablecoin
• Lending Market
• Bonds and Securities

The RWA market size is growing rapidly. According to data, the related TVL has reached 6.3 billion USD, a year-on-year increase of 6000%. Several well-known companies predict that the total market value of RWA could reach 16 trillion USD by 2030.

With the entry of traditional capital and Web3 companies, strong projects in the RWA track are gradually emerging. Centrifuge, Maple Finance, Ondo Finance, MakerDAO, and others have become the leaders in the track. Among them:

• Centrifuge is a platform for tokenizing real-world assets on the blockchain.
• Ondo Finance focuses on creating stable asset options beyond stablecoins.
• BlackRock BUIDL is the first tokenized fund on Ethereum

The fundamental goal of the RWA track is to achieve interconnection between real assets and on-chain assets, allowing more real funds to flow into the blockchain, while gradually blurring the boundaries between DeFi and traditional finance. Currently, it mainly focuses on three major areas: securities, real estate, and credit lending, as well as stablecoins.

Although the RWA sector has broad prospects, caution should still be exercised when investing in related projects due to regulatory uncertainties, and one should be prepared to respond to potential risks.