Recently, discussions about RWA in the market have been gaining momentum. Many well-known large institutions have also entered this field, indicating that RWA may become the next market trend. In fact, data also proves the popularity of RWA. This year, RWA has become the fastest-growing track in the cryptocurrency field, with a staggering 653% increase in Total Value Locked (TVL). As of October, RWA has become the sixth-largest category in DeFi, with a total TVL of $570 billion. Additionally, the number of RWA holders is steadily increasing. Currently, there are over 45,000 token holders of RWA, almost doubling compared to last year.
So, what exactly are RWA assets? What is their current development status? And what are the most representative projects in this track? The following will introduce them one by one.
RWA assets are backed by real-world assets and fully recorded on the blockchain
Real World Assets (RWA) refer to tangible and intangible assets in the physical world, such as real estate, bonds, and commodities. Tokenizing RWA brings these off-chain assets onto the blockchain, opening up new possibilities and potential use cases. Tokenized RWAs can be stored and traced on-chain, enhancing efficiency and transparency while reducing the potential for human error.
With the rapid rise of the RWA sector, various projects are emerging like mushrooms after rain. Currently, over 20 projects have successfully launched and are operating, with countless more in the pipeline.
However, RWA projects differ from traditional crypto projects. Firstly, RWA projects are backed by real underlying assets. To ensure the authenticity and legality of assets, every tokenization of RWA assets must meet two core elements: representation and ownership, both of which must be recorded on-chain.
Representation means the assets must be real and cannot be mere figments of imagination. Additionally, details about the assets, such as whether they are physical, whether they expire, and who the actual owner is, need to be clearly defined and recorded.
Ownership concerns the legal ownership of assets. This means that ownership of assets must be written on-chain through legal means, ensuring consensus among asset holders and providing mechanisms for resolving potential disputes.
Next, we will delve into some of the currently popular RWA projects.
Top 4 RWA projects you need know about: MakerDAO, Frax, TrueFi, Midasys
MakerDAO is currently a leader in the RWA (Real-World Assets) sector and ranks second in Total Value Locked (TVL) among DeFi projects. Its TVL in the RWA business has reached $3.2 billion, with a growth rate of 400% this year. In March of this year, founder RuneKek proposed the “Endgame” plan, aiming to increase platform revenue by investing in real-world assets and money market funds. Currently, 46% of DAI is backed by RWAs as reserve assets, and 66.9% of MakerDAO’s protocol revenue comes from RWAs.
Frax released FraxV3 at the end of last year, allowing users to earn real-world bond yields on-chain through sFrax and FBX. sFrax utilizes AMOs to convert underlying collateral into various RWAs, thereby generating income. Users can earn weekly $FRAX rewards by staking Frax, with an initial annual yield of up to 10%. FXB, on the other hand, is an on-chain zero-coupon bond that users can purchase at a discounted price and redeem for FRAX at face value after a certain period, thus earning profits. Within one day of FraxV3’s launch, over 150 users have deposited over $35 million into the sFRAX collateral vault, with a total staked sFRAX exceeding 11 million tokens.
TrueFi is primarily a B2B unsecured lending platform. It employs an innovative mechanism that connects borrowers, lenders, and professional credit assessments through smart contracts. Currently, only institutions can borrow on the platform. After undergoing credit evaluations by the internal committee within the agreement, approval is determined by $TRU token holders. Recently, it launched a U.S. bond fund, but the minimum purchase amount is $100,000, making the threshold relatively high.
MIDASYS is a “RWA-focused chain” that introduce an innovative protocol that appeals to a broad spectrum of users, including those who are not currently engaged in the crypto sphere, that can solve each of these requirements for tokenized real-world assets while maintaining the high level of security required by financial institutions and capital markets. According to publicly available information from the project team, they are currently accelerating their testing phase and have released a testnet. We have reason to believe that the mainnet will also be launched shortly.
Conclusion: RWA is embarking on a crucial experiment in integrating crypto with reality
As a convergence point between financial technology and traditional assets, RWA is at a pivotal stage of development. While its market share remains limited compared to traditional financial systems, its true potential and advantages have yet to be fully realized. However, we can clearly see that this situation is changing with technological advancements and market maturation.
Traditional financial institutions are gradually recognizing the value of blockchain and decentralized technologies, creating favorable conditions for the further development of RWA. We have reason to believe that over time, RWA will better integrate traditional finance and blockchain technology, bringing unprecedented opportunities and value to investors and market participants.
Let us look forward to RWA bringing more changes and breakthroughs to the entire financial sector in the future.
. Learn about the rising popularity of RWA projects, including MakerDAO, Frax, TrueFi, and Midasys. Explore how these projects are tokenizing real-world assets, revolutionizing decentralized finance, and paving the way for the integration of traditional finance with blockchain technology.){kind=link}