RWAs

2.2 RWA’s, DeFi and the Future of Asset Ownership

Real-world assets (RWA’s) in blockchain are digital tokens that represent physical and traditional financial assets, such as currencies, commodities, equities, and bonds.

RWA tokenisation is one of the largest market opportunities in the blockchain industry, with a potential market size in the hundreds of trillions of dollars. In theory, anything of value can be tokenised and brought on chain.

Tokenised RWAs have the potential to fundamentally change the landscape of decentralized finance (DeFi). In many ways, DeFi served as a proof of concept for on chain finance as the superior technological layer for facilitating financial and economic activity.

Bringing assets from outside of the digital asset ecosystem ‘on chain’, will create a financial system with better liquidity conditions, more transparency with decreased systemic risks.

A conflict-of-interest-free infrastructure enables a more equitable investment environment where a select few can’t take advantage of the system for their own benefit.

The future of finance is on chain, and it’s likely to feature hundreds of blockchains supporting trillions of dollars of tokenised RWAs on a common substrate consisting of blockchain and distributed ledger technology-based networks connected by a universal interoperability standard.

Tokenised real-world assets have been a growing segment of the DeFi ecosystem, with RWA total value locked sitting at ~$8B commencing January 2025, according to DefiLlama.

Real-world assets can also help enable novel financial products. For example, MakerDAO, one of the largest DeFi protocols by total value locked, uses a variety of real-world asset collateral to collateralize the stablecoin DAI, which represents a novel way of creating new financial assets using both traditional and blockchain-based assets and technology.

In the case of financial assets, the tokenization of RWAs also consolidates the distribution, trading, clearing, settlement, and safekeeping processes into a single layer, enabling a more streamlined on chain financial system with decreased counterparty risk, where capital can be more efficiently mobilized.