Real-World Assets in DeFi

Tokenized RWAs have the potential to significantly reshape the decentralized finance landscape. Although DeFi has served as a proof of concept for on-chain finance, the vast majority of assets remain outside the blockchain ecosystem. Tokenizing RWAs is essential for expanding the digital asset industry by integrating traditional assets into blockchain frameworks.

The inclusion of RWAs into the digital asset ecosystem will foster a financial system characterized by improved liquidity, increased transparency, reduced systemic risks, and equitable infrastructure that mitigates conflicts of interest.

As of December 2023, the total value locked in RWAs within the DeFi ecosystem stood at approximately $5 billion, according to DefiLlama. Additionally, RWAs enable the development of innovative financial products. For instance, MakerDAO, a leading DeFi protocol, utilizes a variety of real-world assets as collateral for its stablecoin, DAI.

Benefits of Real-World Asset Tokenization

The tokenization of RWAs offers several notable advantages:

• Liquidity: Tokenized RWAs enhance market liquidity by enabling globally accessible trading conditions.

• Transparency: On-chain representation ensures transparency and allows for auditable asset management, reducing systemic risks.

• Accessibility: Tokenized RWAs broaden the user base for certain asset types, facilitating easier access through blockchain applications and enabling fractional ownership.