- Rumor has it that NFTs on Amazon’s Marketplace will be attached to real-world assets (#RWAs).
- The Monetary Authority of Singapore is testing asset tokenization through Project Guardian.
- Goldman Sachs launches the GS Dap asset tokenization platform.
Real-world assets are not just a short-term trend, but a huge field that blockchain applications can bring. Let’s learn about RWA with Defilearn in this article:
Nội dung bài viết
What are real-world assets (RWA)?
RWA is an off-chain existing asset that is tokenized on-chain and can be used in DeFi.
RWA can be tangible assets such as real estate, houses, cars, gold… or intangible assets such as bonds, stocks, carbon credits…
Benefits of RWA
For asset owners
DeFi will bring opportunities and an efficient market to RWA, something that cannot be achieved in traditional financial systems.
- Cost savings (intermediary fees, operating costs, labor costs) compared to traditional financial systems.
- Fast transactions, not delayed by cumbersome procedures
- Assets are not controlled by third parties
Other benefits include:
- Investment opportunities for retailers with low costs: they can buy a small part through tokens => Expand asset liquidity.
- Small businesses in emerging markets may have easier access to loans.
- Transparency: check the value and ownership history of assets in the past.
How does RWA work?
Asset conversion process ===> RWA tokens consist of 3 stages:
Off-Chain Appraisal (value, ownership, legal) => Convert information to on-chain (asset tokenization) => trade on RWA protocols
Some prominent RWA protocols
GoldFinch
GoldFinch provides non-collateral loans to companies in emerging markets such as Africa, Southeast Asia & Latin America.
The protocol’s business operations generate stable revenue and are not dependent on crypto market fluctuations.
As of now, over $100M has been lent by Goldfinch.
Centrifuge
Evaluated companies and organizations can mint tokens representing real-world assets through Centrifuge’s Tinlake Dapp.
These NFTs can be used as collateral assets for borrowing on DeFi protocols such as AAVE, MakerDao.
Currently, there are ~$345M worth of assets tokenized through the protocol.
TrueFi
The market for collateral-free loans.
Loans are approved and passed by the lender and TRU staker.
The protocol has lent over $1.7 billion and earned over $40 million in interest.
Founded by the same team that created the TrueUSD stablecoin.
Maple Finance
Another collateral-free lending protocol, but focused on organizations and businesses.
Maple has issued ~$2 billion in loans and earned ~$46 million in interest.
Swarm Market
Tokenizes traditional financial assets (stocks, bonds, etc.).
Users can invest in stocks like TSLA, AAPL, and bonds through the protocol.
Trading 24/7 even when traditional financial markets are closed.
Legal and licensed in Germany.
Ondo Finance
Ondo Finance is bringing institutional-grade financial products to Defi.
Users can deposit USDC to invest in:
- OUSG – US Silver Treasury Bonds
- OSTB – Short-term Investment Bonds
- OHYG – High Yield Corporate Bonds
MakerDAO
MakerDAO has begun participating in real-world assets (RWAs) to diversify collateral support for the protocol’s stablecoin, DAI.
- ~$680 million in MakerDAO’s RWAs vault
- RWAs currently contribute 56.7% of the protocol’s revenue.
Challenges of RWA adoption
- Complex process: For assets that require physical ownership rights => Protocols in this area, in addition to executing on-chain transactions, must also have the ability to store and transfer ownership rights off-chain (legal, procedural, storage, etc.).
- Hack risk: On-chain asset loss leads to off-chain asset loss.
- Bad debt – Cryptocurrency collateral can be liquidated quickly. RWA cannot.
- There are no clear legal regulations for Crypto and RWA.
Conclusion
RWA is a field with great long-term potential for development and is gradually becoming a bridge between traditional finance and Defi: Bringing the convenience and transparency of Defi to Tradfi and making Defi applicable in the real world.
RWA will gradually move towards mass adoption when there are clear legal regulations and operating procedures that provide seamless information connectivity between the physical and digital environments.
