Many new entrants are completely unaware of what RWA is and what it’s used for. This post mainly serves as a simple introduction to RWA. Gathering information is not easy, so if you find it helpful after reading, a like would be appreciated.

RWA (Real World Assets) has been a hot topic for discussion in recent months, with major institutions laying out their strategies in this area, believing it is time to enter the market and expressing long-term optimism. For example, at the beginning of this year, Goldman Sachs' digital asset platform was officially launched and helped the European Investment Bank issue €100 million in two-year digital bonds; subsequently, engineering giant Siemens also issued €60 million in digital bonds on the blockchain for the first time; Binance published a 34-page in-depth research report on RWA last March; Citibank has been strongly advocating for it, stating in a report that almost anything of value can be tokenized, and the tokenization of financial and real-world assets could be the 'killer application' for blockchain breakthroughs, predicting that by 2030, there will be $40 trillion to $50 trillion in tokenized digital securities.

Thus, it is evident that the RWA sector is set to become a key focus this year.

What is RWA

RWA is the tokenization or NFT-ization of real assets, which can bring real-world assets such as real estate, bonds, and stocks onto the blockchain. Owning a token means you have ownership of that item in the real world, allowing you to conduct loans, rentals, sales, and other transactions on-chain. In fact, this concept has already seen successful RWA cases in the crypto space; the stablecoins we commonly use, such as USDT and USDC, are examples of the tokenization of the US dollar as a real asset.

The Impact and Advantages of RWA + DeFi

The core impact of RWA on DeFi is the connection between traditional finance and crypto finance: RWA brings off-chain financial assets onto the chain, and RWA tokens can be redeemed for off-chain assets, bridging the gap between real assets and DeFi. This way, by increasing the externalities of DeFi and improving the liquidity of various assets, the sustainability of crypto finance can be achieved.

For example, U.S. Treasuries have a yield of 5%, offering high returns with low risk, making them a preferred investment target for many investors after last year's bear market. Through RWA, investors can enter traditional off-chain markets.