I. Introduction

The concept of Real World Assets (RWA) refers to the tokenization of real-world financial assets or physical assets using blockchain technology, allowing them to circulate on the chain. RWA not only brings deep breakthroughs in technology, capital, and applications to the blockchain ecosystem, but also has the potential to become an important supplement to the traditional financial market.

Currently, the total market value of RWA assets on the chain exceeds $14 billion, while the corresponding assets in the traditional financial system are in the hundreds of trillions of dollars. This high growth rate from a low base makes RWA seen as the "new blue ocean" in the digital asset field. Traditional financial giants such as Goldman Sachs, BlackRock, and JPMorgan Chase have already deployed in this field. According to the forecast of the global consulting firm McKinsey, the RWA market will reach a scale of about $4 trillion by 2030. In the next few years, RWA will drive the digital asset market to a new stage of development by continuously absorbing the stock assets and capital from the traditional finance.

This article aims to provide readers with a comprehensive understanding of the unique value and huge potential of RWA by deeply analyzing the core logic, market status, mainstream application scenarios, and future trends of the RWA track.

II. Core Logic and Market Value of RWA

1. Core Logic of RWA

The core logic of RWA (Real World Assets) is to map real-world financial assets or physical assets to the blockchain and realize on-chain transactions and management through tokenization. Its value lies in using blockchain technology to transform the inefficient links in the traditional financial system, ultimately improving the transparency, liquidity, and security of assets.

The implementation process of RWA mainly includes the following steps:

• Asset Evaluation and Certification: Evaluate the value of real assets (such as government bonds, real estate) and ensure their legality and authenticity. This step is usually completed by professional institutions.

• Asset Digitization: Use blockchain technology to digitally represent the ownership or income rights of assets in the form of tokens. Tokens can represent equity-type assets (such as equity) or fixed-income assets (such as bonds).

• Smart Contract Design: Write the rules for asset use, profit distribution, and circulation into smart contracts to achieve fully automated management and transparent transactions.

• On-chain Transaction and Circulation: Tokenized assets are traded through the blockchain, and buyers and sellers can complete asset transfers and settlements without relying on intermediaries.

• Rights Realization: Investors holding tokens can obtain income distribution through smart contracts, such as bond interest, rental sharing, etc.

2. Market Value of RWA

The market value of the RWA track is mainly reflected in the following aspects:

(1) Improve Asset Liquidity: Many traditional assets (such as real estate, commodities, etc.) have high transaction thresholds and low liquidity. RWA achieves asset fragmentation through tokenization, allowing more investors to participate, greatly improving asset liquidity. For example, a real estate property worth hundreds of millions of dollars can be tokenized and divided into millions of shares, allowing small and medium-sized investors around the world to have the opportunity to purchase and trade.

(2) Reduce Transaction Costs: In the traditional financial system, asset transactions usually require the payment of intermediary fees (such as banks, brokers, etc.), and involve complex cross-border procedures. RWA, relying on the decentralized nature of the blockchain, directly connects buyers and sellers through smart contracts, greatly reducing transaction costs.

(3) Break Down Geographical and Market Barriers: The borderless nature of the blockchain endows traditional assets with global trading capabilities. For example, an investor in the United States can easily purchase real estate tokens located in Asia, without going through the cumbersome cross-border transaction procedures in the traditional market. This cross-border accessibility makes RWA highly attractive to international investors.

(4) Improve Transparency and Security: The transparency and immutability of the blockchain solve the problem of information asymmetry in traditional finance. All transaction records are publicly stored on the blockchain, and the authenticity, historical records, and transaction details of assets can be traced in real-time, greatly reducing the risk of fraud and misconduct.

(5) Promote Financial Innovation and Inclusive Finance: RWA not only provides institutional investors with efficient asset management tools, but also creates more opportunities for individual investors by lowering thresholds. Many assets that were previously only available to high-net-worth clients (such as private credit, gold) are now entering the vision of ordinary investors through tokenization, realizing the democratization of the financial market.

III. Main Application Scenarios of the RWA Track

The diverse characteristics of RWA make it applicable to multiple application scenarios. The following are several representative areas and their practical cases:

1. Stablecoins: The Benchmark for Traditional Currency Digitization

Stablecoins have become the most mature field in the RWA track. Stablecoins represented by USDT and USDC, with their peg to fiat currencies, have become the most widely used digital assets globally.
The development of stablecoins will rely more on improvements in transparency and regulation. For example, Circle has enhanced audit transparency by collaborating with Deloitte, which may drive more institutional adoption in the future.

2. Private Credit: The New Fusion of On-chain Financing and Traditional Credit

The total market value of the private credit sector is about $5 billion, accounting for a major share of the RWA market. Maple Finance provides corporate loans through tokenized credit protocols, attracting a large number of on-chain lenders. Centrifuge helps small and medium-sized enterprises obtain financing at lower costs through accounts receivable and real estate mortgages.

3. Government Bond Products: Low-risk, High-yield Investment Tools in DeFi

Government bond products provide investors with safe and stable income choices through on-chain tokenization, while significantly reducing transaction costs in traditional financial markets. The tokenized government bonds (such as OUSG) launched by Ondo Finance offer investors an annualized yield of over 4.5%. The BUIDL fund co-launched by BlackRock and Securitize has already exceeded $500 million in market value.

4. Commodities: Successful Practices Represented by Gold Tokenization

The global market value of gold has exceeded $13 trillion, with huge market potential for tokenization.

PAX Gold (PAXG): Each token is backed by physical gold reserves, and the market value has been steadily growing.

Tether Gold (XAUT): Focuses on the holding and trading of low-volatility assets, attracting risk-averse investors.

5. Real Estate: Achieving Digitization and Global Investment

RealT allows users to purchase tokenized equity in US real estate, with rental income distributed on-chain. Through platforms like RealT, investors can hold partial ownership of properties and receive rental income. However, the complexity of real estate transactions and lack of liquidity remain major obstacles.

IV. Current Status and Representative Projects of the RWA Track

1. Ecosystem Status and Market Potential

With the development of blockchain technology and the growth of market demand, the RWA track has transitioned from concept verification to gradual implementation in the past few years. As of December 20, 2024, the RWA market size has reached $13.9 billion, but compared to the global traditional asset scale (over $300 trillion), this figure is still in the initial stage.

Source:https://app.rwa.xyz/

Among them, US government bonds are the most important asset type in the RWA track, accounting for 66.83% of the market share. Commodities are the second largest, with a market share of 22.53%.

Source:https://app.rwa.xyz/

Multiple authoritative institutions have made positive forecasts for the growth of the RWA track in the next ten years: Bitwise predicts that by 2025, the RWA market size may reach $50 billion, and may grow exponentially in the future. According to McKinsey's forecast, by 2030, the global tokenized asset market size may reach $4 trillion, with RWA expected to occupy a core share. The Global Financial Markets Association also predicts that the market size in 2030 may reach $16 trillion. This indicates that RWA is not only a hot spot in the current market, but also an important part of global financial innovation in the next decade.

2. Representative Projects in the RWA Track

(1) MakerDAO

As a veteran project in the DeFi field, MakerDAO has included U.S. Treasuries and other real-world assets as collateral for DAI, and the introduction of RWA has made the underlying assets of the protocol more diversified and stable. Currently, RWA assets contribute more than 50% of the protocol's revenue. It is worth noting that MakerDAO plans to gradually reduce the proportion of U.S. Treasury assets according to its Endgame plan, and is expected to reduce the proportion of RWA assets to 15% by around 2025.

(2) Aave

Aave launched an RWA market in 2021, allowing users to borrow and lend using real-world assets as collateral, and has included RWA as collateral for its native stablecoin GHO. This strategy helps Aave to organically integrate lending and stablecoin issuance, thereby expanding its presence in the RWA field.

(3) Ondo Finance

Founded in 2021, Ondo Finance initially focused on LaaS (Liquidity as a Service), but pivoted to the RWA track in early 2023. Its products mainly revolve around U.S. Treasuries and related short-term financial instruments (such as OUSG, USDY), and it has collaborated with the BlackRock BUIDL fund to enhance yield and compliance.

(4) USUAL

USUAL tokenizes U.S. Treasuries, allowing investors to directly trade U.S. Treasuries on decentralized markets and earn stable returns. Through USUAL, investors can manage and trade Treasury assets quickly and efficiently on DeFi platforms without traditional intermediaries.

(5) Maple Finance

Established in 2019, Maple Finance originally focused on unsecured credit lending, providing financing for trading companies and market makers, but encountered setbacks due to partner defaults. It has since pivoted to RWA-backed lending and cash management pools, investing USDC in U.S. Treasuries, and launched new products such as Maple Direct and Syrup.fi.

(6) Centrifuge

Centrifuge is a Polkadot parachain built on Substrate, with the core focus of on-chaining traditional assets such as accounts receivable and real estate mortgages, using NFT technology to map these real-world assets as collateral. It is deeply integrated with mainstream DeFi projects like MakerDAO, providing support for asset liquidity and diversification.

V. Opportunities and Challenges in the RWA Track

1. Opportunity Analysis

The RWA track is in the early stages of rapid development, and with the maturity of blockchain technology, the changing demands of the traditional financial market, and the digital transformation of the global capital market, RWA faces the following important opportunities:

(1) Acceleration of the global capital digitalization trend: The digitalization of traditional financial assets is an inevitable trend. Blockchain technology provides an efficient tool for asset tokenization, making RWA an important bridge for the digitalization of the global capital market. Investors can access asset classes that were previously difficult to participate in, such as cross-border real estate investment or private lending, more conveniently through RWA.

(2) Expansion of diversified asset categories: From stablecoins to Treasuries, the asset types covered by the RWA track encompass almost all mainstream traditional financial assets. With the development of technology and the increase in market acceptance, more innovative asset categories such as art, intellectual property, and natural resources will become new drivers of future growth. Particularly in the field of environmental protection and sustainable development, the demand for the tokenization of assets such as carbon credits is gradually increasing, opening up new growth areas for the RWA track.

(3) Further enhancement of financial inclusiveness: The high-threshold problem in the traditional financial system is effectively solved through RWA. The realization of partial ownership allows ordinary investors to participate in asset classes such as high-end real estate and Treasuries. Financial inclusiveness will drive more users to enter the RWA market, promoting capital flows globally.

(4) Deep integration with DeFi: Decentralized finance (DeFi) provides RWA with entirely new application scenarios, such as using tokenized assets as collateral for lending and liquidity mining. The combination of DeFi and RWA not only enhances the liquidity of assets, but also provides users with more sources of yield, stimulating the vitality of the crypto-financial ecosystem.

(5) Attention from high-net-worth clients and institutional investors: Traditional financial giants such as BlackRock and Goldman Sachs have begun to actively layout the RWA market, indicating that this track is being recognized by mainstream institutions. The participation of high-net-worth individuals and institutional investors will bring more capital inflows and promote the standardized development of the market.

2. Challenge Analysis

Although the RWA track has broad prospects, its development also faces multiple challenges that require the joint efforts of the industry and market participants.

(1) Technical Risks

• Smart contract vulnerabilities: The core logic of RWA relies on smart contracts, and if smart contracts have vulnerabilities, it may lead to major asset losses. For example, the multiple DeFi protocol attacks in 2023 have already sounded the alarm.

• Stability of blockchain networks: Congestion or instability of public chain networks may affect the transaction efficiency and security of RWA assets, especially in the case of surging transaction volumes.

(2) Regulatory Uncertainty

• The cross-border nature of RWA requires it to navigate the legal and policy differences of multiple jurisdictions. For example, the attitude of the U.S. Securities and Exchange Commission (SEC) towards tokenized securities may directly affect the legality and operability of the RWA market.

• The lack of a unified global regulatory framework may lead to market fragmentation and increased compliance costs, limiting the widespread adoption of RWA.

(3) Asset Valuation and On-chain/Off-chain Coordination Challenges

• Evaluation complexity: The valuation of many real-world assets requires the participation of professional institutions, but on-chain transactions require a clear and transparent definition of asset value, and the coordination between these two aspects is challenging.

• Authenticity verification: How to ensure that the off-chain physical assets corresponding to on-chain assets are real and traceable is a problem that the RWA track must solve. Fraudulent behaviors such as repeated collateralization across multiple platforms may also undermine market trust.

(4) Market Acceptance and User Education

• High threshold: Although RWA has lowered the participation threshold for traditional assets, its technical complexity and compliance requirements may deter ordinary investors.

• Lack of user education: Many potential users are still at a basic level of understanding of blockchain and RWA, and the lack of comprehensive awareness may hinder further market penetration.

(5) Liquidity and Ecosystem Limitations

• Although RWA has improved the on-chain liquidity of assets, the overall market size is relatively small, resulting in insufficient liquidity for many assets.

• The lack of a well-developed secondary market and supporting infrastructure has clearly constrained the liquidity of the RWA track.

  • The real-world asset (RWA) track has evolved from a concept verification to initial implementation within a few years, gradually becoming a key bridge between blockchain and traditional finance. Its core logic revolves around "asset tokenization", using blockchain technology to map real-world assets onto the chain, endowing them with higher liquidity, transparency, and security.
  • Although the RWA track is still in its early stages, the participants in its ecosystem, the scale of assets, and technological innovations have all exhibited strong growth momentum, laying a solid foundation for future development. The main trends in RWA development in the coming years are:

  (1) Exponential growth in market size: By 2030, the RWA market size may exceed $4 trillion. Stablecoins will continue to dominate the market, while private credit and real estate are expected to become larger incremental markets in the future.

  (2) Deep integration with DeFi: RWA assets will be more embedded in DeFi protocols, such as collateralized lending and liquidity mining. By combining tokenized assets with decentralized finance, RWA can further unlock on-chain value, while injecting real asset support into the DeFi ecosystem.

  (3) Accelerated institutionalization and compliance: The continued entry of traditional financial institutions will further drive the compliance and institutionalization of RWA. The demonstration effect of institutions like BlackRock and Goldman Sachs will attract more financial giants to the field. As the EU's MiCA legislation and the US SEC's policies become clearer, the regulatory barriers in the RWA track will gradually be broken down.

  (4) Technology-driven innovation: The maturity of Layer 2 solutions and cross-chain technologies will improve the transaction efficiency and user experience of RWA assets. The application of technologies like zero-knowledge proofs will bring higher privacy protection to RWA asset transactions, while maintaining transparency.

  (5) Diversification of asset classes: In addition to the existing stablecoins, bonds, and real estate, RWA may further expand into areas such as carbon credits, art, agricultural products, and intellectual property, bringing more innovative products to the market.

  RWA is not just an extension of blockchain technology, but a profound transformation of the global financial system. It not only changes the way assets are managed and traded, but also injects new growth momentum into the global capital market. In the coming years, with the maturity of technology, the improvement of regulations, and the widespread adoption of the market, RWA will transition from a "new blue ocean of digital assets" to the "new normal of global finance". For investors, technology developers, and policymakers, grasping this trend is both a challenge and an opportunity.