What is RWA?

In recent months, Real World Assets tokenization (RWA) has become a hot topic across the internet. It is not only the concept with the most practical application value at present, but also regarded as the core link between traditional economy and Web3. Today, we will use the simplest and most understandable way to dissect this potential track from the definition, importance, implementation methods, typical application scenarios, development status and trends of RWA, and help you quickly understand it.

What exactly is RWA?

RWA， Real World Assets refers to the tokenization of physical assets in the traditional financial system, such as real estate, infrastructure, data, intellectual property, accounts receivable, art, etc., using technologies such as blockchain and smart contracts to enable them to have digital trading, circulation, and financing capabilities. In short, RWA is to issue a “digital ID card” to such “tangible” assets as houses, gold and treasury bond. Each “ID card” represents a specific asset equity. Through this approach, the anchoring of off chain assets and on chain value has been achieved, allowing traditional assets to freely circulate and trade within the blockchain ecosystem.

Why is RWA so important?

On the one hand, it solves the long-standing problems faced by traditional industries. Traditional industries have always had problems with poor asset liquidity, high cost of property rights confirmation, and high financing barriers. RWA has opened a new door for “asset digitization” for governments, enterprises, financial institutions, and small and medium-sized investors. Take real estate transactions as an example. In the past, procedures were cumbersome and liquidity was poor. However, through RWA, real estate tokenization can lower investment barriers and improve transaction efficiency. On the other hand, RWA has also addressed pain points in the cryptocurrency industry. In the past, the cryptocurrency industry mainly relied on virtual assets and had little connection with the real economy, resulting in problems such as single assets, limited capital flows, and a lack of real returns. RWA connects the cryptocurrency field with real assets, expanding the development space.

How to turn real assets into trustworthy ‘on chain tokens’?

The key to making real assets trustworthy on the chain lies in “off chain anchoring+on chain trustworthiness”:

Tokenization: from splitting to circulation
Taking a property worth 10 million as an example: first, split it into 10000 tokens (each corresponding to 1000 yuan of asset equity), and clarify the legal relationship between the tokens and offline assets through a trust or special purpose vehicle (SPV); Then it is traded on the blockchain, and investors can buy and sell at any time. Rent and other income will be automatically distributed proportionally through smart contracts, with transparent and tamper proof rules.

Technical support: the ‘porter’ of data and trust
Oracle is a key link, it is like a “data bridge on the off chain” that can synchronize asset status in real time, such as property ownership changes, bond interest payments, etc.

To summarize the underlying logic: off chain asset custody+legal contracts+on chain tokens+smart contracts+oracle.

Typical application scenarios of RWA

Real estate tokenization
Real estate is the most typical asset type of RWA. Traditional home buying requires hundreds of thousands or even millions of USD, with cumbersome procedures and difficulty in circulation. But with RWA’s real estate projects, you can invest in a real overseas property for just a few tens of dollars and receive monthly rent. By tokenizing real estate equity, the investment threshold has been lowered, allowing more people to participate in real estate investment. At the same time, with the help of smart contracts, automatic distribution of rental income has been achieved, improving management efficiency.

Bonds and credit assets

Government bonds, corporate loans, accounts receivable, etc. have traditionally been mainly controlled by large institutions such as banks and funds. In RWA mode, these assets can be turned into “debt tokens” on the blockchain. For example, after the US treasury bond are tokenized through some platforms, users can subscribe with stable currency, with an annual income of about 4-5%; Small and medium-sized enterprise loans and accounts receivable are packaged into asset pools, and investors can receive regular interest payments; All operations are automatically executed by smart contracts, and repayments are received in real-time. Compared to traditional encrypted assets, these products have stable returns, low volatility, clear credit ratings, and are closer to real economic activities, providing investors with new and stable investment choices.

Artworks, luxury goods, and collectible assets
The traditional collectibles market has high barriers to entry and difficult circulation. For example, if you want to buy a painting at a high price, you need to find a reliable gallery agent, and if you want to sell it, you also need to rely on connections. On the blockchain, items such as paintings, red wine, and watches can be tokenized by splitting a painting into NFTs or tokens, with each holder owning partial ownership or revenue rights. Once auctioned, exhibited, or appreciated, the revenue will be automatically distributed proportionally. This not only makes art investment more accessible, but also facilitates property rights verification, anti-counterfeiting, and transparent transactions. Some platforms also allow token holders to make appointments to visit physical artworks on-site, enhancing the experience and injecting new vitality into the art market.

Commodity assets (gold, oil, etc.)
Commodities such as gold already have stored value functions, and tokenization improves liquidity and transparency. For example, some platforms issue anchored tokens after hosting physical gold (such as 1 token=1 gram of gold), and users can buy and sell gold tokens at any time, as well as withdraw physical goods through “redemption”. In this way, gold investment has shifted from “physical trading” to “digital trading”, eliminating intermediaries and logistics links, greatly improving efficiency, and allowing investors to participate in commodity investment more conveniently.

The Development Status and Trends of RWA

According to the “RWA 2025 Report” by the well-known encrypted data platform CoinGecko, the total locked value (TVL) of the RWA market will strongly exceed the $65 billion mark in the first quarter of 2025. Compared to the same period in 2023, the growth rate is close to 800%, demonstrating an astonishing expansion speed. According to data from professional blockchain data service provider BlockData, as of March 2025, the number of active RWA projects on the market has exceeded 200, a fourfold increase compared to 50 projects in mid-2023. The project scope is extensive, covering multiple fields such as financial assets, physical assets, and carbon credits.

From the perspective of market participants, the strong entry of institutional investors has greatly promoted the development of the RWA market. Worldwide, over 40 traditional financial institutions, including Wall Street giants such as Goldman Sachs, JPMorgan Chase, and BlackRock, have entered the RWA field through investment or direct participation in project operations. This series of actions fully demonstrates that RWA is no longer just at the conceptual stage, but is steadily moving towards practical application, gradually moving from the edge of the encryption industry to the mainstream perspective.
Looking ahead to the future, as Hong Kong actively builds a global RWA innovation hub, traditional large-scale asset classes such as bonds, gold, stocks, real estate, and energy assets, which can easily reach trillions of dollars in size, are highly likely to be “on chain” through the Hong Kong market.

From a technical perspective, the underlying technology of blockchain continues to iterate and upgrade. Polygon sidechains have a transaction processing power (TPS) of millions per second, Chainlink oracle can achieve real-time on chain anchoring of data, and zero knowledge proof privacy protection solutions are constantly being improved. These technological advancements have solved the long-standing problem of on chain and off chain data consistency in RWA. In addition, factors such as gradually improving regulation and increasing investor awareness have led to the gradual maturity of the market. RWA is bound to be applied more deeply and widely in more fields, comprehensively innovating the trading mode and management methods of traditional assets, and reshaping the financial market landscape.

For ordinary Internet practitioners, RWA brings new opportunities. Whether participating in the development of RWA projects or engaging in related operations and marketing work, it is possible to find one’s own development space in this emerging field.