What Are Real World Assets (#RWA ) in #DeFi & #Crypto ?
Real World Assets (RWA) involve the tokenization of tangible assets with clear monetary value, such as gold, real estate, and carbon credits, into tradable digital formats.
RWAs have found immense utility in the decentralized finance (DeFi) sector. The integration of RWA in DeFi is often lauded as one of the best examples of traditional finance assets blending with DeFi
- Real world assets (RWAs) tokenize tangible real assets by linking physical assets to the blockchain.
- RWAs have found a lot of utility in the DeFi sector.
- RWAs have been lauded for bridging the gap between #TradFi & #DeFi.
- Large financial institutions are getting involved in the RWA space, signaling its expansion.
How Do #RWAs Work?
Before jumping into RWA’s utility in DeFi, let’s look at how they work. Specifically, how do we ensure that RWAs are legitimate tokens of the real-world assets they are representing?
The entire process can be broken down into three phases:
- Off-chain formalization
- Information bridging, and
- RWA protocol demand & supply.
Off-chain formalization-
Before a real-world asset can be integrated into a digital ledger, its value, ownership, and legal standing must be unequivocally established in the physical world.
The asset must also have undisputed legal ownership, documented by deeds or invoices.
Information bridging-
In this phase, we go through the tokenization process, wherein the asset's information is turned into a digital token. Data about the asset’s value and rightful ownership are embedded within the token’s metadata. Due to the blockchain’s transparency, anyone can verify the token’s authenticity based on the metadata.
RWA protocol demand & supply-
It's all about demand and supply, DeFi protocols that focus on RWAs come into play. They have two functions: First, they help bring new RWAs into existence, which means they help make more of these digital assets available. Simultaneously, they also work to get investors interested in buying and trading these assets.
Why RWAs Have Been a Game changer for DeFi-
- Centrifuge:
One of the biggest issuers of on-chain private credit loans.
- Franklin Templeton:
A #TradFi giant that was established in 1947. It manages over $1.5T in assets under management (AUM). They have recently started issuing tokenized treasury tokens.
- WisdomTree:
A market leader in exchange traded products with almost $96B in AUM.
Advantages of Using RWAs in DeFi-
The tokenization of Real World Assets (RWAs) presents several compelling advantages that reshape investment strategies and the landscape of crypto finance.
- Liquidity boost:
Tokenizing assets such as real estate turns traditionally illiquid and slow-moving assets into tokens. These tokens allow a wider pool of investors to engage with the underlying asset.
- Fractional ownership:
Fractional ownership is one of the most fascinating use cases of RWAs. By breaking down assets like real estate into tokens, it lowers the barrier to entry for everyday users.
- Transparency:
The blockchain’s transparent ledger ensures that every transaction and ownership detail of an RWA is recorded and openly verifiable.
- Inclusivity:
The movement of tokenized assets through DeFi channels paves the way for new markets and financial instruments. This not only brings fresh opportunities to existing investors but also attracts new participants, enhancing the overall stability and growth potential of the financial ecosystem.
Limitations of Using RWAs in DeFi-
RWA offers a groundbreaking approach to integrating physical assets with digital finance.
- Regulatory complexity:-
RWAs and DeFi are subject to complicated regulatory requirements. These requirements could change depending on the asset, geolocation, jurisdiction, and even the specific blockchain platform used for tokenization.
- Security concerns:
In RWAs, it is crucial to maintain the link between the physical asset and the digital tokens.
- Scalability:
The platforms underpinning RWA tokenization need to be capable of handling a high throughput of transactions and data.
Top Real World Assets (RWA) Coins by Market Cap
The Real World Assets (RWA) market cap today is $1.87 Billion, a 0.8% change in the last 24 hours.
Market Capitalisation - $1,867,394,662
24h Trading Volume - $157,097,227
Some Top Best RWA Coins Projects-
CFG ($0.55)
POLYX ($0.19)
CTC ($0.52)
CANTO ($0.26)
MPL ($14.89)
PENDLE ($1.03)
RIO ($0.55)
NXRA ($0.123)
GFI ($1.32)
DUSK ($0.15)
IXS ($0.30)
CPOOL ($0.10)
TOKEN ($0.034)
PRO ($0.56)
LTO ($0.07)
STRX ($0.035)
PROPC ($2.43)
BOSON ($0.25)
TRADE ($0.76)
DISCLAIMER -
Always #DYOR before investing in Crypto Currency and Trade Wisely by using StopLoss, as well all data, images with details are collected from Internet, Google, Binance, Coungeeko and coin market cap, just to provide basic informations, and not any intentions to break-out any copyright claims & laws, it is just for educational purpose.
