Written by: imToken
Whether it’s PAX Gold and Tether Gold, which have reached all-time highs in market capitalization, or the stock tokens being launched on major platforms, Real World Assets (RWA) seem to be moving on-chain at an unprecedented pace.
Especially as TradFi institutions are making bets one after another—from the booming tokenized gold and US stock markets, to trillion-dollar forecasts by financial giants like BlackRock and Citigroup, and even Nasdaq’s direct involvement—RWA is not only the next major narrative for DeFi, but could also become the historic vehicle linking Crypto to the real world.
Precisely because of this, before discussing this trend, we might need to return to the basics and answer a fundamental question:
Why do Web3 and Crypto so urgently need RWA?
01 The Historical Inevitability of DeFi Breaking the Dimensional Wall
Since Compound/Uniswap ignited the DeFi summer in 2020, the entire Crypto world has made great strides, with the types and scale of on-chain assets achieving rapid cold starts and exponential expansion within the native asset cycle.
According to DeFiLlama statistics, as of this writing, the total value locked (TVL) in DeFi across the network exceeds $160 billions, approaching the historical peak of around $178 billions in November 2022.
Source: DeFiLlama
Within this hundred-billion-dollar empire, lending and staking protocols represented by Aave, MakerDAO, and Lido not only contribute the main share of funds, but have also become the key infrastructure on which countless DeFi Lego protocols depend. It can be said that the vast majority of today’s decentralized trading and derivatives protocols are built on the credit systems of these underlying lending protocols.
In the early stages of DeFi development, the “internal circulation” among native assets was undoubtedly a clever design—it not only solved the seed funding needs for the ecosystem’s cold start, but also greatly stimulated boundless innovations to improve capital efficiency in the Crypto world. However, the limitations of this “internal circulation” model have become increasingly apparent:
First is asset homogeneity, with collateral highly concentrated in a few mainstream crypto assets, leading to high systemic risk. If the price of core assets fluctuates sharply, it can easily trigger cascading liquidations;
Second is the growth ceiling. The scale of DeFi is always limited by the total market value and volatility of the native crypto market, making it difficult to break through its own dimensional wall;
In other words, relying solely on the internal circulation of native assets, DeFi can no longer break through its ceiling. To introduce more stable value anchors, DeFi must look outward, turning its attention to real world assets.
It is against this backdrop that the RWA (Real World Assets) narrative has emerged. RWA, or Real World Assets, refers to “bringing real world assets on-chain,” aiming to introduce assets such as real estate, US Treasuries, consumer credit, US stocks, and art into the blockchain through tokenization, thereby unlocking liquidity and improving trading efficiency.
Objectively speaking, the current DeFi and Web3 markets are still much smaller than traditional financial markets, but the emergence of RWA tokenization brings new hope for Web3 to enter the next trillion-dollar market.
This is also the necessary path for DeFi to move from “internal circulation” to “external circulation,” and from native self-prosperity to mainstream adoption.
02 Boiling Oil: RWA Practices from Gold to US Stocks
Now that we understand the necessity of RWA, let’s take a look at the current market situation—the RWA market is currently booming, with tokenized gold being the most mature and typical example.
According to Token Terminal data, there is currently about $2.4 billions worth of tokenized gold (including XAUT and PAXG) on Ethereum. So far this year, the supply of tokenized gold has grown by about 100%, reflecting not only users’ demand for on-chain safe-haven assets, but also proving the feasibility of the RWA model.
Source: Token Terminal
More notably, traditional financial authorities are also accelerating their layout of RWA tokenization.
According to the Financial Times, the World Gold Council (WGC) is actively seeking to launch an officially recognized digital form of gold: “We are trying to establish a standardized digital layer for gold, so that various financial products used in other markets can also be applied to the gold market in the future.” This move could completely change the $900 billions physical gold market in London.
Of course, objectively speaking, compared to the $231 billions gold ETF market and even the $27.4 trillions total market value of physical gold, tokenized gold is just getting started. But precisely because of this, its future growth potential is immeasurable.
In addition, tokenizing mainstream financial assets such as US Treasuries and US stocks is becoming the hottest direction in the RWA sector. Leading projects like Ondo Finance have successfully brought the yields of short-term US Treasuries on-chain, providing crypto users with compliant and stable sources of income.
Tokenized US stocks have become especially popular recently, providing global users with a 24/7 seamless channel to participate in the value growth of top global companies. From Ondo Finance to Robinhood to MyStonks, more and more institutions are bringing popular stocks like Apple and Tesla on-chain, injecting richer asset types into the DeFi ecosystem.
Currently, mainstream Web3 wallets are also beginning to integrate tokenized US stocks and gold RWA assets. For example, imToken now supports holding and managing stock tokens provided by Ondo Finance, such as Apple (AAPL) and Tesla (TSLA), with token values anchored to their underlying assets and custody provided in cooperation with top financial institutions like J.P. Morgan to ensure compliance and security.
Whether it’s the booming gold tokens or the up-and-coming stock tokens, RWA is no longer a marginal experiment but has moved from behind the scenes to the center stage of mainstream narratives.
03 RWA, Crypto’s Historic Vehicle
From a data perspective alone, the RWA narrative is definitely the most promising “blockchain +” Alpha direction for the next 10 years.
According to RWA research platform rwa.xyz, the current total RWA market size is nearly $30 billions, and BlackRock predicts that the market value of tokenized assets will reach $10 trillions by 2030.
In other words, over the next seven years, the potential growth space for the RWA narrative could be more than 300 times.
These numbers are not groundless; they are based on a simple fact: the total value of global real world assets (real estate, stocks, bonds, credit, etc.) is in the hundreds of trillions of dollars. Even if only a small portion is tokenized, it will bring unprecedented value flows to the blockchain world.
Source: rwa.xyz
In this capital flow revolution, Ethereum is undoubtedly the core battlefield—from technological maturity and asset security to the completeness of the DeFi protocol ecosystem, it is far ahead of other public chains. For this reason, Ethereum co-founder Joseph Lubin even bluntly stated: RWA will be one of the biggest engines driving the growth of the Ethereum ecosystem over the next decade.
From the tokenization of US Treasuries (such as Ondo Finance) to on-chain financing of private credit (such as Centrifuge), various RWA projects are flourishing.
The true significance of RWA goes far beyond simply putting assets on-chain; it marks a financial paradigm shift in the making, one that could simultaneously reshape the underlying structures of both DeFi and traditional finance:
-
For DeFi: RWA introduces high-quality collateral that is stable, low-correlated, and has continuous cash flow. This can fundamentally solve the systemic risks of DeFi’s “internal circulation” and bring unprecedented asset diversity and market depth;
-
For traditional finance: RWA can “activate” highly illiquid assets such as real estate and private equity, enabling fractional ownership and efficient circulation through tokenization, greatly improving capital efficiency and creating entirely new markets;
-
For the entire ecosystem: Ethereum, as the absolute main battlefield of this revolution, is evolving into a “global unified settlement layer”;
Essentially, RWA represents an “incremental capital narrative.” It not only provides DeFi with more stable, low-correlated, high-quality collateral, but also signifies the first true handshake between the blockchain world and the real financial system.
In the next decade, RWA may become the decisive turning point for Crypto to move towards the real economy and achieve mainstream adoption.
