What Are Real World Assets (RWAs)?
RWAs stands for Real-world assets. RWAs involve the tokenization of ‘traditional’ assets like stocks, bonds, real estate, intellectual properties, commodities through the minting of representative tokens that reflect ownership of the underlying asset. By allowing these assets to be traded on-chain, it infuses them with the game-changing efficiency, accessibility and liquidity opportunities of the blockchain.
As it is, trading classic financial instruments is a costly, baroque endeavour. Getting involved in commodity markets such as gold or stocks is replete with obstacles that hamper the true potential of these markets. The friction created by clearing houses, geographical restrictions, divisibility, transparency issues, custody and settlement risk mean that trading assets like stocks and bonds can become inefficient and expensive to the point of undermining the endeavour entirely.
This is particularly true for low-level retail traders, who can’t access these markets easily — or at all. Yet the problem affects institutional investors too, with the flexibility of their portfolios, and the management of associated risk, hamstrung by the complexity that comes from the painfully mutli-faceted nature of trading through traditional architectures. All this leads to one thing: inefficient markets, poor price discovery, and fiscal drag. Moreover, it creates an opaque market accessible only by elites.
Tokenizing RWAs on-chain streamlines all these processes into a single layer — the blockchain. RWAs inherit blockchain’s security and settlement processes, and make something as complex as buying a house as easy as sending a transaction. Try buying a house with gold IRL — good luck.
With RWAs, these transactions may become an everyday occurrence. The lack of need for a clearing agent, insurance, banker, underwriter, and so on and so forth, creates a far more liquid market, with pricing of assets far more representative of their real value, not just the architecture that supports their trade.
Tokenization also creates opportunities for divisibility of assets that are otherwise impossible. Currently, you cannot buy 1/1000ths of a house (unless you get scammed into a timeshare), and due to its illiquid nature you would be ill-advised even if you could. With RWAs, it would be easy to divide representations of a house’s worth into a single, tradable, fungible token.
The same concept could be applied to all manner of real world assets, such as intellectual property. An artist could, say, sell 1% of their IP in perpetuity, and let it trade on the open market. Something otherwise impossible without a lot of lawyers. Ownership of valuable metals like gold and platinum, something currently difficult for low-level retail traders to do without excessive expense, will become commonplace.
RWAs might well be blockchain’s ultimate use-case, and the one that truly propels adoptions into the mainstream. The potential for trillions of dollars to onboard into blockchain as a result of RWAs is second to none.
With Onomy, we get leagues closer to an on-chain RWA hub. Kicking off by tokenizing the world’s currencies into collateralized, decentralised, and well-pegged assets, and continuing with any other real world assets like commodities, will establish an on-chain, accessible marketplace that’s fit for both retail and institutional traders.
Blockchain, at its heart, is the world’s most secure, efficient, transparent settlement layer. By minting representative tokens on chain, imbuing them with legal right, and using decentralised security to trade them — the global economy doesn’t just become more liquid, it becomes more open. Anyone everywhere can participate in the markets that were once the preserve of Wall Street and Canary Wharf with their crypto wallet. The equalising and wealth-generating effects of this are perhaps the final form of crypto adoption. An on-chain financial system that is inclusive, not exclusive. An economy open to the many, not the few.
