RWA: The Rise of Real World Assets

1. Overview of RWA

RWA(Real World Assets) refers to the representation and trading of real-world assets 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 leverage blockchain technology to bring traditional financial assets into the decentralized finance(DeFi) ecosystem, achieving more efficient, transparent, and secure asset management and trading.

The significance of RWA lies in enabling relatively illiquid assets in the real world to achieve liquidity through blockchain technology, and based on this, be able to participate in the DeFi ecosystem for activities such as lending, staking, and trading. 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 generally realized through smart contracts, with all business logic and asset operations completed on-chain; while traditional assets such as bonds, stocks, and real estate operate under the legal framework of the real world, protected by government laws. The series of tokenization rules proposed by RWA requires both the on-chain technical support of smart contracts and the protection of underlying assets by real-world laws.

In fact, under the framework of RWA, tokenization is not just a simple process of issuing a token on the blockchain; it involves a whole set of complex processes that relate to asset relationships in the real world off-chain. The tokenization process typically includes: the purchase and custody of the underlying assets, establishing a legal framework for the relationship between the tokens and these assets, and finally, the issuance of the tokens. Through this tokenization process, off-chain laws and regulations and relevant product operational processes are integrated, allowing token holders to have legal claims over the underlying assets.

2. Development History of RWA

The development history of RWA can be divided into three stages: early exploration, preliminary development, and rapid expansion.

Early Exploration Stage ( 2017-2019 )

• 2017: The concept of RWA began to emerge, with projects like Polymath and Harbor starting to explore the tokenization of securities.
• 2018: Projects like RealT attempted real estate tokenization.
• 2019: TAC Alliance was established to promote RWA standardization and cross-platform interoperability.

Initial Development Stage ( 2020-2022 )

• 2020: Projects like Centrifuge gained attention, Aave and Compound began to introduce RWAs as collateral.
• 2021: Centrifuge introduced RWA to the MakerDAO lending platform.
• 2022: Large financial institutions such as JPMorgan and Goldman Sachs began research and pilot programs related to RWA.

Rapid Expansion Phase ( from 2023 to present )

• 2023: Asset management companies such as BlackRock and Fidelity begin attempting to manage part of their asset portfolios through tokenization. The SEC and ESMA start to develop regulatory frameworks related to RWA.

3. Main Areas of RWA

RWA has demonstrated application potential in multiple areas, including:

real estate industry

Tokenization of real estate can enhance asset liquidity and reduce individual investment risks. Related projects include:

• Tangible: Focused on the tokenization of real estate and precious metals.
• Landshare: Enabling small investors to participate in the real estate market through tokenization.
• PropChain: A global real estate investment platform based on blockchain.
• RealT, RealtyX: Allow investors to own a fractional ownership of real estate through tokens.

fiat stablecoin

Fiat currency enters the blockchain in the form of stablecoins, becoming programmable digital assets. Taking USDT as an example:

• Operating mechanism: Tether holds reserve assets to support the value of USDT.
• Stability and Risks: Facing systemic risk, regulatory risk, collateral risk, and liquidity risk.

Lending Market

RWA has expanded the range of pledgable assets, providing more financing channels for enterprises, and allowing ordinary investors to invest in businesses.

bonds and securities

Relevant projects need to align with real-world laws and regulations. Representative projects include:

• Maple Finance: Provides a way to create and manage loan pools on-chain.
• 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, as of the time of writing, the RWA-related TVL reached 6.3 billion USD, a year-on-year increase of 6000%.
• According to RWA.xyz data, there are over 60,000 asset holders, 99 asset issuers, and a total value of stablecoins of 169 billion dollars.
• Multiple institutions predict that the total market value of RWA could reach $16 trillion by 2030.

5. RWA Ecological Representative Projects

Centrifuge

Centrifuge is a platform for tokenizing real-world assets on the blockchain, providing decentralized asset financing protocols.

• Financing situation: A total of $30.8 million was raised in five rounds of financing.
• Technical Architecture: Composed of Centrifuge Chain, Tinlake, on-chain asset net value calculation, and hierarchical investment structure.
• Development Issues: The TVL data continues to decline, currently only at $497,944.

ONDO Finance

ONDO Finance focuses on providing institutional-grade financial products and services, with an emphasis on stable asset selection.

• Financing situation: A total of $34 million was raised in three rounds of financing.
• Product Structure: The main assets are USDY( dollar yield tokens ) and OUSG( short-term U.S. government bonds ).
• Market Performance: TVL reached 538.97m USD, ranking third in the RWA track.

BlackRock BUIDL

The first tokenized fund on Ethereum launched by BlackRock in collaboration with Securitize.

• Regulatory Compliance: Relatively complete in terms of compliance, open only to qualified investors.
• Underlying assets: Invest in cash equivalents, such as short-term U.S. Treasury bills and overnight repurchase agreements.
• Market response: TVL stable at 502.41m USD, RWA TVL ranked 4th.

6. Summary

• RWA aims to achieve interoperability between real-world assets and on-chain assets, blurring the boundaries between DeFi and traditional finance.
• Focused primarily on securities, real estate, credit lending, stablecoins, and other areas.
• Subject to stricter regulations, compliance requirements are high.
• Exercise caution when investing in related projects, and be prepared to respond to potential risks at any time.