RWA: The Rise of Real World Assets on the Blockchain

1. RWA Concept Analysis

RWA (Real World Assets) refers to real-world assets that are represented and traded in a digital and tokenized manner within blockchain or Web3 ecosystems. These assets include 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 liquidity for relatively illiquid assets in the real world through blockchain technology, allowing participation in the DeFi ecosystem for activities such as lending, staking, and trading. This method of connecting real-world assets with the blockchain world is becoming an important development direction in the Web3 ecosystem.

RWA serves as a bridge between crypto-native assets and traditional assets, requiring both on-chain technological support from smart contracts and legal protection of the underlying assets in the real world. The tokenization process involves the purchase and custody of the underlying assets, establishing a legal framework that connects the tokens with the assets, and ultimately the issuance of the tokens. This process combines off-chain laws and regulations with relevant product operation procedures, granting token holders a legal right to claim the underlying assets.

2. 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 projects like Polymath and Harbor exploring security tokenization.
   • 2018: Pilot projects for the tokenization of real estate and commodities emerged, such as RealT
   • 2019: The TAC Alliance was established to promote RWA standardization and cross-platform interoperability.

2. Preliminary Development Stage (2020-2022)

   • 2020: Projects like Centrifuge gained attention, Aave and Compound began to introduce RWA as collateral.
   • 2021: MakerDAO introduced RWA as collateral
   • 2022: Traditional financial institutions began to lay out RWA, the RWA Alliance was established.

3. Rapid Expansion Phase (2023 to present)

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

3. Main Application Areas of RWA

1. Real estate industry: Improve asset liquidity, reduce personal investment risks

   • Representative Projects: Tangible, Landshare, PropChain, RealT, RealtyX

2. Fiat to stablecoin: Introduce fiat as RWA into the Blockchain ecosystem.

   • Representative projects: USDT, FDUSD, USDC, USDE

3. Lending Market: Expand the range of pledgeable assets and increase the loan limits.

   • Representative projects: Maker, AAVE

4. Bonds and Securities: Improve issuance and trading efficiency, ensure compliance.

   • Representative projects: Maple Finance, Securitize, Ondo Finance

4. RWA Market Size

As of early 2024, the TVL related to RWA is approximately $6.3 billion, a year-on-year increase of 6000%. There are over 60,000 RWA asset holders, with nearly 100 issuers, and the total value of stablecoins is $169 billion. Several well-known Web3 companies predict that the total market value of RWA could reach $16 trillion by 2030.

5. RWA Ecosystem Development

Centrifuge: Real Assets on Blockchain Protocol

• Concept: Providing a decentralized asset financing protocol
• Financing situation: A total of $30.8 million was raised in five rounds of financing.
• Technical architecture: consists of Centrifuge Chain, Tinlake, on-chain asset net value calculation, and a layered investment structure.
• Development issues: TVL decline, currently only $497,000

ONDO Finance: The Leader in Tokenized US Debt

• Concept: Provide institutional-level financial products and services, focusing on stable assets
• Financing Development: A total of $34 million was raised in three rounds of financing, with up to 82 partners.
• Product Architecture: The main products are USDY and OUSG
• Market Performance: TVL reached 538.97m USD, ranking third in the RWA track.

BlackRock BUIDL: The first tokenized fund on Ethereum

• Concept: ETF jointly launched by BlackRock and Securitize
• Regulatory Compliance: Establish SPV operations in the British Virgin Islands, in accordance with U.S. securities law.
• Underlying assets: Investments in cash equivalents, such as short-term U.S. Treasury bonds and overnight repurchase agreements.
• Market Response: TVL remains stable at 502.41m USD, RWA TVL ranks fourth

6. Summary

• RWA aims to achieve interoperability between real-world assets and on-chain assets, blurring the boundaries between DeFi and traditional finance.
• The main sectors include securities, real estate, credit lending, stablecoins, and other fields.
• The RWA sector faces significant regulatory pressure, with strict compliance requirements.
• Be cautious when investing in RWA-related projects and pay attention to potential risks.