Whether it's PAX Gold and Tether Gold, whose market capitalizations have reached all-time highs, or the stock tokens launched by major platforms, real-world assets (RWAs) seem to be moving onto chains at an unprecedented pace. TradFi institutions, in particular, are beginning to place bets. From the growing gold token and US stock token markets, to trillion-dollar predictions from financial giants like BlackRock and Citi, to Nasdaq's entry into the market, RWAs are not only the next major narrative in DeFi, but also potentially the gateway for crypto to connect with the real world. Therefore, before exploring this trend, perhaps we should first return to the starting point and answer a fundamental question: Why do Web3 and crypto so desperately need RWAs? DeFi's historical inevitability of breaking through the dimensional wall Since Compound/Uniswap ignited the DeFi summer in 2020, the entire crypto world has ushered in significant development. The variety and volume of on-chain assets have achieved a rapid cold start and exponential expansion in the native asset cycle. DeFiLlama statistics show that as of the time of publication, the total locked value (TVL) of DeFi across the entire network has exceeded US$160 billion, approaching the historical peak level of around US$178 billion in November 2022. In this trillion-dollar empire, lending and staking protocols represented by Aave, MakerDAO, and Lido not only contribute a major share of funds, but also become the key infrastructure on which countless DeFi Lego protocols rely for survival. It can be said that the vast majority of today's decentralized trading and derivatives protocols are built on the credit system of these underlying lending protocols.
In the early stages of DeFi's development, the "internal circulation" between native assets was undoubtedly an extremely ingenious design - it not only solved the seed capital needs of the ecological cold start, but also greatly stimulated various borderless innovations in the Crypto world to improve capital efficiency. However, the limitations of this "internal circulation" model are also becoming increasingly prominent:
First, there is the homogeneity of assets. Collateral is highly concentrated in a few mainstream crypto assets, which poses a high systemic risk. Once the prices of core assets fluctuate sharply, it is very easy to trigger a chain reaction of liquidations;
Second, there is the limitation of the growth ceiling. The scale of DeFi has always been limited by the total market value and volatility of the native crypto market, making it difficult to break through its own dimensional wall;
This is also the only way for DeFi to move from "internal circulation" to "external circulation", and from native prosperity to mainstream adoption.
Burn the Oil: RWA Practice from Gold to US Stocks
Now that we have understood the necessity of RWA, let's take a look at the current market situation - the current RWA market is showing a booming trend, and the most mature and typical representative is tokenized gold. According to Token Terminal data, there is currently approximately $2.4 billion worth of tokenized gold (including XAUT and PAXG) on Ethereum. So far this year, the supply of tokenized gold has increased by approximately 100%, which not only reflects users' demand for on-chain safe-haven assets, but also proves the feasibility of the RWA model. Source: Token Terminal What is more noteworthy is that traditional financial authorities have also begun to accelerate the layout of RWA tokenization. According to the Financial Times, the World Gold Council (WGC) is actively pursuing the launch of an officially recognized digital form of gold. "We are attempting to establish a standardized digital layer for gold so that various financial products used in other markets can be applied to the gold market in the future," a move that could revolutionize London's $900 billion physical gold market. Of course, objectively speaking, compared to the $231 billion gold ETF market and the estimated $27.4 trillion total physical gold market, tokenized gold is still in its infancy. However, precisely for this reason, its future growth potential is immeasurable. Furthermore, tokenizing mainstream financial assets such as US Treasuries and US stocks is becoming a hot topic in the RWA space. Leading projects, such as Ondo Finance, have successfully brought the returns of short-term US Treasury bonds to the blockchain, providing crypto users with a compliant and stable source of income. Tokenized US stocks have become a hot commodity recently, providing global users with a 24/7 access to participate in the value growth of top global companies. From Ondo Finance to Robinhood to MyStonks, a growing number of institutions are bringing popular stocks like Apple and Tesla to the blockchain, injecting a richer range of asset types into the DeFi ecosystem. Currently, mainstream Web3 wallets have also begun to integrate RWA assets such as tokenized US stocks and gold. For example, imToken now supports holding and managing stock tokens provided by Ondo Finance, such as Apple (AAPL) and Tesla (TSLA). The value of these tokens is anchored to their underlying assets, and they are co-custodied by top financial institutions such as J.P. Morgan to ensure asset compliance and security. Whether it is the popular gold token or the stock token that is poised for launch, RWA is no longer a fringe experiment, but has become a mainstream narrative that has moved from behind the scenes to the forefront. RWA, Crypto's Historic Shuttle Bus From a data perspective alone, the RWA narrative is undoubtedly the clearest alpha direction for "blockchain+" over the next 10 years. Statistics from the RWA research platform rwa.xyz show that the current total RWA market size is nearly $30 billion, and BlackRock predicts that the market capitalization of tokenized assets will reach $10 trillion by 2030. In other words, over the next seven years, the RWA narrative has the potential to grow by more than 300 times.
These figures are not groundless. They are based on a simple fact: the total value of the world's real-world assets (real estate, stocks, bonds, credit, etc.) is as high as hundreds of trillions of dollars. Even if only a tiny part of it is tokenized, it will bring an unprecedented value to the blockchain world. In this transformation of capital flows, Ethereum is undoubtedly the core battlefield. From technological maturity, asset security, to the completeness of the DeFi protocol ecosystem, it is far ahead of other public chains. For this reason, Ethereum co-founder Joseph Lubin even bluntly stated that RWA will be one of the biggest engines driving the growth of the Ethereum ecosystem in the next decade. From the tokenization of US Treasury bonds (such as Ondo Finance) to on-chain financing of private credit (such as Centrifuge), various RWA projects are flourishing.
The true significance of RWA goes far beyond simply putting assets on the chain. It marks a financial paradigm shift that is taking shape and may reshape the underlying structure of DeFi and traditional finance at the same time:
For DeFi: RWA introduces high-quality collateral that is stable, low-correlated, and has continuous cash flow. This will not only fundamentally solve the systemic risks of DeFi's "internal circulation", but also bring it unprecedented asset diversity and market depth;
For traditional finance: RWA can "activate" assets with extremely poor liquidity such as real estate and private equity, and realize the division and efficient circulation of ownership through tokenization, greatly improving capital efficiency and creating a new market;
For the entire ecosystem: Ethereum, as the absolute main battlefield of this revolution, is evolving into a "global unified settlement layer";
In essence, RWA represents an "incremental capital narrative", which not only provides DeFi with more stable, low-correlated high-quality collateral, but also means the first real handshake between the blockchain world and the real financial system. In the next decade, RWA may become a decisive turning point for Crypto to move towards the real economy and achieve mainstream adoption.
Brian
Hui Xin
Aaron
YouQuan
Joy