Most real-world assets (RWA) today are separated and underutilized, not becoming flexible building components in the DeFi ecosystem.
Integrating and using RWA as composable blocks ready to support DeFi is a trend that needs to be promoted to optimize value and liquidity for the DeFi market.
KEY CONTENT
Real-world assets (RWA) are currently isolated and underutilized in DeFi.
Transforming RWA into composable building blocks helps increase liquidity.
The trend of integrating RWA into DeFi drives efficiency and innovation in the DeFi market.
What are the benefits of integrating real-world assets (RWA) into the DeFi ecosystem?
DeFi experts assert: Transforming RWA into flexible components helps increase liquidity and expand application ranges in DeFi, thereby enhancing value and diversifying financial products.
RWA are often limited to separate systems, so transforming them into composable assets allows users to easily use, borrow, or trade on DeFi platforms, while increasing transparency and market efficiency.
"Connecting real assets with DeFi protocols will change the way finance operates, making assets more effective and opening up many new creative opportunities."
Jane Mitchell, CEO of FinTech Global, April 2024
Why are many RWAs still isolated and not fully utilized in DeFi?
Blockchain researchers note: More than 80% of RWA are currently not standardized or properly integrated, leading to difficulties in combining with DeFi applications.
The reasons include complex legal regulations, lack of common standards for data and management tools, as well as limitations in technology that enable effective connections between the real world and the broad Blockchain.
Technological and policy challenges
The digitization of real assets requires ensuring safety, accuracy, and compliance with legal regulations. The inconsistency in standards and lack of supporting mechanisms have prevented many RWAs from being deeply integrated into DeFi, isolating assets and limiting their use.
What solutions are applied to transform RWA into composable assets in DeFi?
Leading blockchain technology companies have implemented the standardization of RWA tokenization, creating smart contracts that support cross-platform interactions and developing protocols that enable liquidity creation on DeFi.
For example, using the ERC-3643 token standard or similar standards helps RWA become reusable, distributable, and easily tradable like other cryptocurrencies.
"Standardizing RWA is a key step for traditional assets to integrate and develop in the DeFi environment, creating synergies for the entire ecosystem."
David Liu, Blockchain expert, Crypto Market Analyst, 2024
Real-world examples of composable RWA integration
For example, some DeFi platforms are allowing the conversion of real estate, bonds, or credit certificates into tokens on the Blockchain, enabling users to easily secure assets and trade quickly, thereby increasing liquidity and transparency.
What are the long-term impacts when RWA becomes building blocks of DeFi?
The CEO of a leading DeFi platform stated that this will fundamentally change the structure of global finance, providing more transparent and efficient financial capabilities while diversifying funding sources for the economy.
The expansion of the applicability of real assets in the DeFi environment will encourage innovation, contributing to bridging the gap between traditional and decentralized finance.
Traditional RWA criteria RWA composable in DeFi Flexibility Limited, isolated Combined, easily reusable Liquidity Low, dependent on traditional markets High, thanks to trading on blockchain Transparency Limited, fragmented Synchronized, easily retrievable Accessibility Limited to professional investors More widespread, global
Frequently asked questions about real-world assets (RWA) and DeFi
What is RWA and what role does it play in DeFi?
RWA are digitized real assets that help connect the physical world with DeFi, creating composable assets that support liquidity and diversify financial products.
Why are RWAs currently not widely used in DeFi?
The main reasons are due to lack of standardization, legal barriers, and incomplete connecting technology, making RWA not easily integrated into the DeFi ecosystem.
How to transform RWA into composable assets in DeFi?
Through standardization, tokenization of RWA, development of smart contracts, and protocols that allow connection, trading, and liquidity creation on the DeFi platform.
What benefits does integrating RWA into DeFi bring to the financial market?
Helps increase liquidity, transparency, diversify products, and create significant opportunities for global financial innovation in a decentralized direction.
Source: https://tintucbitcoin.com/rwas-xay-dung-mo-hinh-guong-co-ban/
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