In the past, blockchains were mostly known for cryptocurrencies like Bitcoin and Ethereum. These digital tokens created a new way to transfer value online, but they were still detached from most of the assets people use daily, things like real estate, company shares, or government bonds. That gap is now being filled through real-world assets (RWAs), which allow traditional assets to be represented on a blockchain.
In simple terms, RWAs are physical or financial assets that exist outside the blockchain but are brought on-chain through tokenisation. These tokens act as digital representations of the assets and can be traded, transferred, or used within decentralised applications. The idea is powerful: instead of blockchains being isolated from the global economy, they can directly connect to it.
RWAs unlock access, liquidity, and efficiency. They are also attracting attention from institutions that once dismissed crypto as speculative. By combining the trust and transparency of blockchain with the tangible value of assets, RWAs could reshape how money, property, and investments move around the world.
What are Real-World Assets?
Real-world assets are anything outside the blockchain, such as property, commodities, debt instruments, or intellectual property, that can be represented as tokens on a blockchain. These tokens are not just digital placeholders; they usually carry specific rights or claims tied to the original asset.
For example, a company could issue tokens that represent shares in a building it owns. Token holders would then be entitled to a proportional share of the rental income or the eventual sale proceeds. In financial markets, bonds or private credit can also be tokenised, allowing investors to trade them in smaller denominations with fewer restrictions.
The core idea is to create a digital twin of the asset that lives on a blockchain, giving it all the benefits of digital ownership, faster transfers, easier settlement, and programmable automation through smart contracts.
Why RWAs Matter in Web3
- Liquidity for traditionally illiquid assets
Many valuable assets are hard to buy and sell. Real estate, for example, involves lengthy paperwork, intermediaries, and high costs. Art and collectables are often sold in opaque markets with limited buyers. Tokenisation solves this by allowing these assets to be divided into smaller, tradable tokens.
Fractionalization means you don’t need millions of dollars to gain exposure to a commercial property or fine art. Investors can buy tokens worth a fraction of the asset’s value and trade them as easily as cryptocurrencies. This expanded liquidity helps markets operate more efficiently and opens new investment opportunities to more people.
- Broader access and financial inclusion
RWAs lower the entry barriers to owning and investing in high-value assets. Instead of being limited to wealthy individuals or large institutions, smaller investors can participate by buying fractions.
For example, tokenised U.S. Treasury bonds are already being offered on some blockchain platforms, allowing people outside the U.S. to hold small pieces of the world’s most trusted debt instrument. Similarly, real estate projects have begun selling tokenised shares to global investors who would otherwise never access those markets.
This accessibility is one of the strongest arguments for RWAs, because it expands participation in global finance beyond traditional borders and classes.
- Efficiency and automation
Traditional finance is slow. Settlement of bonds, stocks, or property transfers can take days or even weeks because of intermediaries like brokers, clearinghouses, and custodians. Each party adds costs and delays.
RWAs streamline this process through blockchain. Smart contracts automate many of the steps: recording ownership, distributing interest or rent, and enforcing contract terms. This reduces the need for paperwork, lowers costs, and enables near-instant transfers of ownership.
For businesses, this means raising capital more quickly. For investors, it means less friction and more transparency in transactions.
- Transparency and security
Because RWA tokens live on blockchains, all transactions are visible, auditable, and tamper-resistant. This is especially valuable for assets prone to fraud or disputes.
Take supply chains as an example: tokenising goods and raw materials allows every step of their journey to be tracked on the blockchain. Buyers can verify provenance, regulators can audit flows, and fraud becomes harder.
Transparency also applies to finance. Tokenised bonds or loans can be programmed to show repayment schedules, defaults, or collateral levels on-chain, reducing hidden risks for investors.
- Integration with DeFi
Perhaps the most exciting part is how RWAs plug into decentralised finance (DeFi). Once tokenised, assets like U.S. Treasuries, corporate debt, or real estate can be used as collateral for on-chain lending, yield generation, or synthetic products.
This effectively bridges traditional finance and crypto. Instead of DeFi relying only on volatile crypto assets, it can now be built around stable, real-world assets that anchor value. This combination could make DeFi more sustainable and attractive to institutions.
How Tokenisation of RWAs Works
Tokenising real-world assets follows several steps:
- Legal structuring – The asset is placed into a legal entity (like a trust or SPV) that defines the rights of token holders.
- Custody and verification – A custodian holds the physical or financial asset, ensuring it’s secure and verifiable.
- Token creation – Digital tokens are minted on a blockchain that represent ownership or claims. These tokens can follow standards like ERC-20 (fungible) or ERC-721 (non-fungible).
- Smart contract rules – Payments, distributions, and transfers are automated through code. For instance, interest from a tokenised bond can be distributed directly to wallets.
- Trading and use – Tokens can be traded on exchanges or integrated into DeFi applications for lending, staking, or yield generation.
- Redemption – Token holders can redeem tokens for underlying assets or cash equivalents, depending on the terms.
This process combines the trust of legal contracts with the efficiency of blockchain automation.
Examples of RWA Projects
- Centrifuge – Brings assets like invoices and real estate into DeFi, allowing them to be used as collateral for loans.
- MakerDAO – Expanded its collateral types to include real-world assets, such as tokenised U.S. Treasuries, to stabilise DAI.
- Ondo Finance – Provides tokenised versions of traditional financial products, including short-term bonds.
- Maple Finance – A credit platform that connects institutions with tokenised debt markets.
- RealT – Tokenises U.S. real estate properties and sells fractional ownership to global investors.
These projects highlight how diverse the applications of RWAs already are, spanning from DeFi lending to real estate investing.
Challenges Facing RWAs
Despite the promise, tokenising real-world assets is not without its issues.
- Regulation is the biggest hurdle. Tokens that represent securities must comply with financial laws, and these rules vary across jurisdictions. Projects must design structures that satisfy regulators while still being accessible to investors.
- Custodial risk is another issue. Someone still has to hold the physical asset or manage legal ownership. If custodians fail, token holders could lose their rights.
- Valuation and liquidity also pose challenges. Even if assets are tokenised, there may not be enough buyers and sellers to maintain active markets. Pricing accuracy can be difficult, especially for unique assets.
Finally, technical and governance risks exist. Smart contracts can have bugs, and governance models may not always protect investors.
The Future of RWAs in Web3
In 2025 and beyond, RWAs are expected to expand significantly. More institutions are entering the space, seeing tokenisation as a way to modernise their operations. Banks are piloting tokenised bonds, while asset managers explore tokenised funds.
At the same time, infrastructure is improving. New standards are being developed to make RWAs interoperable across blockchains, and oracles are providing better data feeds for pricing.
We may also see tokenisation expand to new asset classes, such as carbon credits, renewable energy, and intellectual property. As rules become clearer, RWAs could transform into a standard feature of both Web3 and traditional finance.
Final Thought
Real-world assets bring something critical to Web3: a bridge to the economy people already understand and trust. By assigning tangible value to blockchains, RWAs make cryptocurrency more relevant, useful, and appealing to a wider audience.
They are not without hurdles; regulation, custody, and valuation remain pressing challenges. But if these can be solved, RWAs have the potential to change finance by making assets more liquid, accessible, and programmable.
In the bigger picture, RWAs could be the key that helps Web3 move beyond speculation and into mainstream adoption. They connect the innovation of blockchain with the weight of the real economy, and that combination may define the next phase of digital finance.
