RWAs

Real World Assets (RWA) in the crypto world refer to the tokenization of tangible assets that exist in the physical world, that are brought on chain. They also include the growing issuance of capital market products on-chain, where digital securities are tokenized and offered to retail customers. Examples of these assets include real estate, commodities, art, and even US Treasuries.

The tokenization of real-world assets has become a new source of yield in DeFi, providing opportunities for higher yield and portfolio diversification. However, one concern around real-world assets is the default risks faced by real-world assets protocols due to undercollateralized loans. In the real estate context, tokenization of real estate assets can provide fractional ownership of properties, which can be traded on secondary markets. This can provide liquidity to traditionally illiquid assets such as real estate and reduce the barriers to entry for retail investors. Additionally, tokenization can help reduce the costs associated with traditional real estate transactions such as legal fees and title insurance.