RWA: The Rise and Development of Real World Assets

1. The Concept and Characteristics of RWA

RWA(Real World Assets) refers to assets from the real world that are represented and traded in a digital and tokenized manner within the blockchain or Web3 ecosystem. These assets include real estate, commodities, bonds, stocks, artworks, precious metals, intellectual property, and more. The core concept of RWA is to bring traditional financial assets into the decentralized finance(DeFi) ecosystem through blockchain technology, enabling 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 participation 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.

As a bridge between crypto-native assets and traditional assets, RWA requires both on-chain technical support from smart contracts and legal protection for the underlying assets from real-world laws. The tokenization process of RWA includes the purchase and custody of the underlying assets, establishing a legal framework for the relationship between tokens and assets, and finally, the issuance of tokens. Through this tokenization, off-chain laws and regulations can be integrated with relevant product operation processes, granting token holders legal rights to claim the underlying assets.

2. The Development History of RWA

The development of RWA can be divided into three stages:

1. Early Exploration Stage ( 2017-2019 )

   • 2017: The concept of RWA began to emerge, with some pioneering projects like Polymath and Harbor starting to explore security tokenization.
   • 2018: Pilot projects emerged in the field of real estate and commodity tokenization.
   • 2019: The TAC Alliance was established to promote RWA standardization and cross-platform interoperability.

2. Preliminary Development Stage ( 2020-2022 )

   • In 2020: Projects like Centrifuge gained attention, and well-known DeFi projects began to experiment with introducing RWA as collateral.
   • 2021: Centrifuge brought RWA to the MakerDAO lending platform
   • 2022: Traditional financial institutions begin to布局RWA, RWA Alliance established

3. Rapid Expansion Phase ( From 2023 to Present )

   • Large asset management companies are beginning to attempt managing part of their asset portfolios through tokenization.
   • Regulatory agencies have begun to intervene, attempting to establish a regulatory framework related to RWA.

3. Main Application Areas of RWA

RWA has demonstrated application potential in multiple fields:

1. Real Estate Industry

   • Improve real estate liquidity, reduce investment thresholds and risks
   • Representative projects: Tangible, Landshare, PropChain, RealT, etc.

2. Fiat to Stablecoin

   • Stablecoins represented by USDT will link fiat currency value with blockchain assets.
   • Facing systemic risk, regulatory risk, collateral risk, and liquidity risk

3. Lending Market

   • Expand the range of pledgeable assets to provide more financing channels for enterprises.
   • Representing projects: Maker, AAVE, etc.

4. Bonds and Securities

   • Need to align with real laws and regulations
   • Representative projects: Maple Finance, Securitize, Ondo Finance, etc.

4. RWA Market Size and Prospects

According to the data, the TVL related to RWA has reached 6.3 billion USD, a year-on-year increase of 6000%. There are over 60,000 RWA asset holders, and nearly a hundred asset issuers, with a total stablecoin value of 169 billion USD. Multiple institutions predict that the total market value of RWA could reach 16 trillion USD by 2030.

However, the development of RWA projects is highly related to reality, and different laws and regulations in various regions may become constraints on their development.

5. Representative Projects in the RWA Ecosystem

1. Centrifuge
   • Provide decentralized asset financing agreements
   • The core architecture includes Centrifuge Chain, Tinlake, on-chain asset net value calculation, and hierarchical investment structure.
   • Facing challenges such as a decline in TVL

2. ONDO Finance
   • Committed to providing institutional-grade financial products and services
   • Main products include USDY and OUSG
   • The market is performing well, with a TVL of $539 million.

3. BlackRock BUIDL
   • ETF launched jointly by BlackRock and Securitize
   • Relatively complete in terms of compliance
   • The market response is good, and the TVL remains stable at around $500 million.

6. Conclusion

The RWA track aims to achieve interoperability between real-world assets and on-chain assets, blurring the lines between DeFi and traditional finance. Currently, it mainly focuses on areas such as securities, real estate, credit lending, and stablecoins. Compared to other tracks, RWA is subject to stricter regulations and higher compliance requirements. Despite the broad prospects, one should remain cautious when investing in related projects and pay attention to potential risks.