The Rise of RWA: How Real World Assets are Changing the Encryption Ecosystem

1. Overview of RWA

RWA(Real World Assets) refers to real-world assets represented and traded in a digital and tokenized manner within the blockchain or Web3 ecosystem, including real estate, commodities, bonds, stocks, artworks, etc. The core concept of RWA is to leverage blockchain technology to bring traditional financial assets into the decentralized finance(DeFi) ecosystem, achieving more efficient and transparent asset management and trading.

The significance of RWA lies in enabling the liquidity of assets that are difficult to flow in the real world through blockchain, and participating in operations such as lending, staking, and trading within the DeFi ecosystem. This way of connecting real assets with the blockchain world is becoming an important development direction in the Web3 ecosystem.

The uniqueness of RWA lies in its simultaneous binding by smart contracts and real-world legal systems. RWA tokenization is not just about issuing tokens on-chain; it also involves a series of complex processes related to off-chain asset relationships, such as the custody of underlying asset purchases and the establishment of a legal connection framework. This tokenization process combines off-chain regulations and operational procedures, granting token holders legal claims to 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 RWA concept began to emerge, and projects like Polymath started exploring security tokenization.
   • 2018: Projects like RealT attempted real estate tokenization
   • 2019: The TAC Alliance was established to promote RWA standardization

2. Preliminary Development Stage ( 2020-2022 )

   • 2020: Projects like Centrifuge gained attention, and DeFi projects like Aave introduced RWA
   • 2021: MakerDAO integrated Centrifuge's RWA collateral.
   • 2022: Traditional financial institutions begin to lay out RWA

3. Rapid Expansion Phase ( from 2023 to present )

   • Large asset management companies attempt RWA management
   • Regulatory authorities have begun to formulate relevant frameworks.

3. Major Application Areas of RWA

1. Real Estate: Improve liquidity, reduce personal risk

   • Projects like Tangible and Landshare have achieved real estate tokenization.

2. Fiat stablecoins: such as USDT, etc.

3. Lending Market: Expand the Range of Pledgeable Assets

4. Bonds and Securities: Projects like Maple Finance and Securitize offer tokenization services.

4. RWA Market Size

As of early 2024, the RWA-related TVL reached $6.3 billion, a year-on-year growth of 6000%. Industry forecasts predict that the total market value of RWA could reach $16 trillion by 2030.

5. Major RWA Projects

1. Centrifuge: Real Asset On-Chain Protocol
   • Provide a decentralized asset financing platform
   • TVL reached $497,944

2. ONDO Finance: Leader in U.S. Treasury Tokenization
   • Provide products such as USDY, OUSG
   • TVL reached 538.97m USD

3. BlackRock BUIDL: The first Ethereum tokenized fund
   • Launched jointly by BlackRock and Securitize
   • TVL reached 502.41m USD

6. Conclusion

RWA aims to achieve interoperability between real-world assets and on-chain assets, blurring the boundaries between DeFi and traditional finance. It mainly focuses on areas such as securities, real estate, lending, and stablecoins. Although the prospects are broad, regulatory compliance requirements are strict, and investments should still be approached with caution.