RWA (Real World Asset) is one of the latest trend in both DeFi and TradFi , offering the ownership of financial instruments or physical assets registered as tokens on the blockchain. A true bridge between traditional finance, based on phisical assets, and the world of blockchain, RWA might be one of the best things ever happened to blockchain in my opinion. A study by BINANCE Labs states that the current market for RWA is around $600 million and could reach $16 trillion by the end of 2030.
We know since years that blockchains have a disruptive power and their technlogy has the potential to change entire financial ecosystems: but what if instead of using them to trade kitties NFTs we started using them to prove ownership of assets like gold, stocks, buildings? I think these would generate an increbible boost for the whole crypto ecosystem. Maybe being open to other assets then cryptos could help putting a spotlight on blockchains and their incredible technology.
Tokenization is nothing new, but the concept of transferring stock markets or investment funds into a digital and decentralized database has given a new boost and started attracting more advisors and traditional investors: the trend is set, and even The Bank of America said that tokenization is a "key process for digital asset adoption."
The term RWA is used as a achronim for Real World Asset, which are basically security tokens, "tokenized securities", or negotiable financial instruments.
Real World Assets are tokens that represent ownership in the real world, the one we live every day into, of various kind of assets. Among them stocks or bonds, ETFs or commodities that are traded on the blockchain rather than through traditional brokers. In this case blockchain are used for their primary function of distribuited LEDGER and ownership guarantor. In fact, RWAs can be bought and sold like any cryptocurrency by paying gas fee in the currency of the hosting blockchain.
RWAs do not replace securities but represent an alternative way to access, trade and hold them. Their value is strictly linked to the value of the asset underlying it in the traditional market. RWAs are used to reproduce the tangible value of stocks, bonds, ETFs, works of art, commodities such as gold and even in real estate.
The advantage of owning securities throug tokenization on blockachain are easy to unserstand: by eliminating any middleman, blockcahains are able to guarantee security and speed at lower price than any traditional trader. Furthermore traditional assets are less exposed to speculation and volatility, expecially compared to virtual coins: this means more "stable" liquidity on blockchain and less opportunities for whales to manipulate the market, since the value of assets exist outside blockchains.
As an example, RWA is starting to grow in the art field. , a soon-to-be-launched blockchain-based platform, will allow people to invest in fine art, offering fractionalized shares of different artworks: among them, a few prints form Andy Warhol himself.
By creating tokens that represent shares of the work, the company allows anyone to own a fraction of an asset that has a value in the real world.
https://www.coindesk.com/web3/2023/03/29/andy-warhol-artworks-to-be-offered-as-tokenized-investments-on-ethereum/
https://www.coindesk.com/markets/2023/07/25/avalanche-foundation-commits-50m-to-bring-more-tokenized-assets-to-blockchain/
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