RWA (Real World Assets) is becoming a highly anticipated topic in the cryptocurrency world. As a derivative of DeFi, the emergence of RWA has enhanced the connection between cryptocurrencies and the real world. It uses blockchain technology to map real-world assets to the cryptoworld, making these assets more liquid and conducive to the composability of DeFi, thereby generating more and more complex financial assets. Therefore, some predict that this will be the next trillion level track in the encryption industry.

What is RWA

RWA (Real World Assets), also known as Real World Assets, refers to assets with real value that are tokenized through blockchain technology. Owning a token represents ownership of the asset in the real world, and you can engage in transactions such as borrowing, renting, and buying and selling on the chain. The underlying assets that support its value are usually real estate, stocks, bonds, etc. In fact, there have been successful cases of RWA in the encryption industry, and our commonly used stablecoins such as USDT and USDC belong to RWA.

The reasons for the rise of RWA

RWA may attract market attention for the following reasons. In the short term, under the wave of interest rate hikes, the risk-free interest rates of major economies have risen to 4% or even higher, which is attractive enough for investors in the cryptocurrency market. Therefore, more and more projects are trying to introduce real-world assets into the cryptocurrency industry.

In the long run, the integration and development of encrypted assets and traditional assets is an inevitable trend. With the continuous transformation and innovation of traditional financial markets, RWA can bring more opportunities and competitiveness to them. And blockchain technology is also being accepted and adopted by a more mainstream audience. Digitizing real assets can effectively reduce transaction costs, improve asset liquidity and transparency, and provide new impetus for the development of the world economy.

The advantages and potential of RWA

Firstly, RWA can bring more real asset support to the cryptocurrency market, thereby increasing investor confidence and market value. Secondly, RWA can bring higher liquidity and lower transaction costs to traditional financial markets, while also providing more investment opportunities. Especially for DeFi, the digitization of RWA can provide more asset types for DeFi and expand its market size. In addition, RWA can improve asset transparency and security, reduce fraud and risk through digital management and transactions. With the continuous development and application of blockchain technology, the potential of RWA will continue to expand.