Rolex watches, which have a history of over a hundred years, will be digitized for the first time in June 2023, marking an innovative move in their history. The owner of the watch successfully obtained a loan of over 132000 US dollars through this innovative financial method. This is not a fictional idea, but a true story that happened.


The magic of digital assetization is not limited to watches, it also applies to high-value assets such as paintings and luxury homes. The technology of dividing these assets so that multiple investors can jointly hold them is called Real World Asset Digitalization (RWA). In 2023, RWA has become one of the most hotly discussed applications in the blockchain field.


Entering 2024, with the launch of RWA assets based on new energy charging piles by listed company Langxin Energy, this technology has once again become the focus and attracted widespread market attention. RWA not only provides new financing channels for asset owners, but also opens up new investment areas for investors, heralding a revolution in asset ownership and trading methods.


Recently, the Hong Kong Monetary Authority released four case studies on digital asset-backed assets. Among them, Ant Group and Langxin Technology have collaborated to successfully complete an RWA project based on new energy physical assets, which has opened up new possibilities for physical asset financing.

RWA (Real World Asset Tokenization), also known as the digitization of real-world assets, is an important milestone in the development of blockchain technology. Although RWA's discussion has only gradually increased in the past year, it is actually the result of the long-term development of blockchain technology.

In the early stages of blockchain technology, numerous enterprises explored various commercial applications such as supply chain traceability, anti-counterfeiting, and logistics. In 2021, the industry began to shift its focus to“ Value” In terms of asset circulation, this is also the period when the term "real-world asset" began to appear in the blockchain field, although it was still just an ordinary term at that time

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Until 2022, a detailed RWA industry report titled "An Unreal Primer on Real World Assets (RWAs)" was released, which was 70 pages long and greatly promoted the development of the industry; RWA” The term has formed a consensus in the market. Subsequently, cryptocurrency industry giants including Coinbase, Circle, and Aave announced the formation of the“ Asset Digitalization Alliance; The Tokenized Asset Coalition (TCA) aims to encourage more traditional financial assets to be put on the blockchain and promote the application of blockchain technology in the financial sector, marking the official establishment of RWA as an independent track.


The reason why RWA is popular is that in a bull market, investors tend to put their assets on the chain in order to quickly seize profit opportunities, while also hoping to enjoy stable returns on real assets. Combining the reality and virtuality of assets has become a solution.

The core logic of RWA is to map the income rights of financial and physical assets in the real world to the blockchain, and obtain the liquidity of on chain assets by mortgaging off chain assets. For physical assets such as gold and real estate, they are introduced onto the chain, utilizing blockchain technology to enhance transaction convenience and transparency. As more and more traditional financial institutions and large enterprises begin to explore and adopt RWA, the development of this field is gradually becoming an important component of financial technology.

RWA (Real World Asset Tokenization) has a wide range of application scenarios, covering multiple fields:

1. Supply chain finance: Improve the transparency and transaction speed of supply chain finance through smart contract automatic payment, invoice digital assetization, transparent auditing, and other methods, reduce transaction costs, and provide more democratic financing channels for small and medium-sized enterprises.
2. Real estate industry: The digitization of real estate assets has improved asset liquidity and reduced the risk borne by individuals. For example, projects such as Tangible, Landshare, and PropChain enable small investors to participate in the real estate market through digital assetization.
3. Fiat to stablecoin: Stablecoins such as USDT, FDUSD, USDC, etc. provide a low volatility asset in the cryptocurrency market by being pegged to the value of fiat currency.
4. Lending market: The combination of RWA and credit loan market can bring more collateral options and higher loan amounts, expanding the scope of pledged assets.
5. The digital assetization issuance and trading of bonds and securities have become more efficient and transparent. For example, platforms such as Maple Finance and Securitize provide issuance, management, and trading services for digital asset-backed securities.
6. Alternative funds: Digitalization of assets may drive the growth of managed assets and simplify fund management. Smart contracts and interoperable networks can make managing large-scale autonomous investment portfolios more efficient through automated portfolio rebalancing.
7. Repurchase Agreement: The digital assetization of repurchase agreements can improve operational efficiency and fund utilization efficiency, automate routine operational management, reduce errors and settlement failures, and simplify disclosure.


The potential benefits of asset digitization for investors include:
1. Improve asset liquidity: Through digital assetization, low liquidity assets can be converted into high liquidity assets, providing investors with greater flexibility and a broader buyer ecosystem.

2. Lowering the investment threshold: Asset digitization can be divided into smaller denominations, allowing investors who were previously unable to participate due to high thresholds to participate and bring additional liquidity.

3. Enhance transparency and auditability: As token assets are placed on the chain, the transparency and auditability of assets can be guaranteed, reducing systemic risks.

4. Provide unique investment opportunities: Digital assetization provides investment opportunities beyond traditional markets, allowing investors to access a wider range of asset classes.

5. Improve market efficiency: Through technologies such as blockchain, big data, and artificial intelligence, RWA can achieve rapid asset registration, trading, settlement, and clearing, reduce transaction costs, and improve transaction speed.


To evaluate the risks and benefits of RWA projects, the following aspects need to be considered:
1. Regulatory uncertainty: The future of digital asset regulation in different regions is full of uncertainty, which may pose risks to potential issuers and buyers of digital asset-backed assets.

2. Market adoption and liquidity: The commitment to increasing liquidity through digital asset-backed assets is premised on widespread market adoption. Without investors' trust in digital asset-backed assets, broader blockchain technology, and necessary infrastructure, this may not have happened.

3. Quality and value of assets: It is necessary to consider the quality of RWA's underlying assets, including various factors such as market prices, historical performance, physical conditions, as well as the legal ownership and legal status of the assets.
4. Technical Implementation and Security: It is necessary to evaluate whether the implementation of blockchain technology is secure and reliable, including the security of smart contracts, the accuracy of data, and the system's ability to resist attacks.

5. Compliance of the project: It is necessary to consider whether the project complies with relevant legal and regulatory requirements, including compliance with anti money laundering (AML) and customer identification (KYC).