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What are Real World Assets (RWA)?
Learn the basics of Real World Assets and how they are being tokenized on blockchain.
5 min readJanuary 1, 2024(Updated: 1/15/2024)
#RWA#Tokenization#Blockchain#DeFi
What are Real World Assets (RWA)?
Real World Assets (RWA) represent the tokenization of physical or traditional financial assets on blockchain networks. This revolutionary concept bridges the gap between traditional finance and decentralized finance (DeFi).
Key Concepts
What Makes an Asset "Real World"?
- Physical assets: Real estate, commodities, art
- Financial instruments: Treasury bonds, stocks, corporate debt
- Income-generating assets: Rental properties, revenue shares
The Tokenization Process
- **Asset Selection**: Identify suitable real-world assets
- **Legal Structure**: Create appropriate legal frameworks
- **Token Creation**: Issue blockchain tokens representing ownership
- **Trading & Settlement**: Enable 24/7 trading and instant settlement
Benefits of RWA Tokenization
- **Increased Liquidity**: Trade traditionally illiquid assets 24/7
- **Fractional Ownership**: Own portions of expensive assets
- **Global Access**: Invest from anywhere in the world
- **Transparency**: Track ownership and transactions on-chain
- **Efficiency**: Reduce intermediaries and costs
Popular RWA Categories
- **Treasury Bonds**: Government securities tokenized for crypto investors
- **Real Estate**: Property ownership divided into tradeable tokens
- **Commodities**: Gold, silver, and other precious metals on-chain
- **Private Credit**: Access to institutional lending markets