RWA (Real World Asset) refers to physical assets, also called real world assets. Such assets usually refer to items with actual use value, such as real estate, machinery and equipment, raw materials, commodities, etc. Unlike digital assets (such as Bitcoin, Ethereum and other cryptocurrencies), RWA is an asset that actually exists and can be touched.
In the financial field, RWA is usually used to refer to physical assets that can be used as collateral for loans or other debt instruments, such as real estate, cars, boats, etc. These physical assets can be used to reduce risk because their value is relatively stable and can be sold when needed to pay off debt.
Real World Assets (RWA) have recently appeared in the market as the next theme narrative, telling a better story for the close connection between the real world and the crypto world. Whether it is the ASX's consideration of listing tokenized real-world assets in the off-chain world, or MakerDAO's attempt at a new RWA vault type with DAI, they have brought some excitement to this long bear market.
RWA, a game for the big players?
The principle of RWA is the transformation of asset carriers, mapping real-world assets to the blockchain in the form of tokens, and users can conduct buy and sell transactions. In this concept, which is not new, holding RWA tokens represents the income rights of owning assets. Real estate REITs, gold ETFs and U.S. Treasury bonds can all be mapped to on-chain assets in this way. You can also do this It is better to expand the channels for crypto users to purchase traditional assets with tokens. Of course, our best-known and most successful RWA case should be USDT, which maps U.S. dollars to the blockchain and circulates them in the form of crypto-asset U.S. dollar stablecoins, firmly anchoring real-world value.
Especially today, traditional financial institutions’ attempts in the field of encryption are constantly intensifying. In Hong Kong, Nanhua Securities has become one of the first licensed virtual asset financial institutions, while in the United States, established institutions such as Fidelity are also applying for financial products that are relatively new to traditional finance such as Bitcoin ETF. It is even conceivable whether these large financial institutions, which already have strong off-chain scenario endorsements, can solve the oracle problem in a traditional way and use the existence of their trusted entities to endorse on-chain mapping of off-chain assets. and impact, even if this is not in line with the decentralized and trustless nature of web3.
This problem is very likely to exist. Behavior on the chain can be restricted or stipulated by smart contracts. Even if the digital property rights of physical assets can be decentralized and freely circulated without intermediaries, can they really be transformed offline? The solution must not rely solely on constraints on the chain, but also requires conditions in the real world. However, this problem is still a bit far away. We can start this chapter with real financial products.
If RWA is only regarded as a specific form of asset securitization, it is still a bit conservative to put financial assets on the chain. After all, the ownership value and accompanying related interests in any asset can be converted into digital tokens. Most of these applications are currently expressed in the form of DeFi, especially income-generating projects based on off-chain real assets such as U.S. bonds, stocks, and real estate. Of course, DeFi will be restricted by its native assets, and RWA does expand this marginal range. Powerful expansion.
Classified according to asset categories, RWA can be divided into the following types:
Stablecoin RWA: The USDT released by Tether itself is a project built with the US dollar as the underlying asset. It has now become an important infrastructure in the crypto market. We also know that this type of stablecoin is always anchored to 1 stablecoin in a non-decoupled state. =1 USD. Whether it is CNYG or the Hong Kong dollar stablecoin project recently called for by celebrities in Hong Kong's political and academic circles, their essence is to issue on-chain assets using legal currency as the underlying asset.
Fixed income RWA: In this category, most are based on off-chain assets such as U.S. bonds, stocks, real estate, and loans. The most common ones include bond projects such as U.S. Treasury bonds, as well as credit assets based on structured financing instruments. U.S. Treasury bonds are also the largest RWA asset at present. After all, their stable yields are quite impressive this year. Of course, the principles of these products and protocols are no different from other DeFi lending products, except that the collateral is replaced by real assets. This is also traditional asset securitization, and more essentially it can be called asset tokenization. MakerDAO A large number of real-world collaterals including real estate tokenization have been added to the collateral.
Real estate RWA: The real estate field is the first to practice asset chaining. In the relatively mature real estate trading market in the United States, it is not a problem to use REITs and other tools for diversified investment. There are also decentralized real estate asset management and property system management. All have become popular. Investment solutions such as fragmentation based on property ownership have been attempted both on and off the chain. On the chain, the simpler way is that investors only need to mortgage the tokens on the exchange chain to obtain corresponding income rights (such as rental income) and distribute them daily, which greatly reduces people's fragmentation. The threshold for investing in real estate also provides convenience for real estate owners to raise funds.
These are not the only categories of RWA. For example, equity RWA and art RWA have corresponding products. However, the supervision of listed companies and the scale restrictions based on some high-value luxury goods were not discussed one by one.
LABS Group: How RWA empowers real estate
LABS Group is a digital real estate investment platform that uses blockchain technology to fragment real estate and trade it on a regulated, legal and compliant real estate stock exchange. His slogan is to "revolutionize real estate through blockchain" and conduct digital asset transactions in real estate. Currently, its native token $LABS has been launched on Kucoin, BitMart and Gate.
The project has currently launched two products, one is the LABS liquid asset brokerage system and the other is Staynex’s membership platform for resorts.
LABS makes it easier for property owners to raise funds. Its principle is to tokenize real estate assets, so that funds can be raised without financial intermediaries. For investors, tokens allow everyone to invest in real estate projects around the world, thereby building their own global real estate investment portfolio. Partial ownership reduces entry barriers and can be traded instantly on the chain.
Staynex is a vacation membership platform that allows members to gain annual access to resorts around the world and earn rewards for holding memberships. By tokenizing the "accommodation" behavior and embedding it into NFT, the due membership and the number of nights allocated to the hotel are allocated. For resort and hotel owners, exclusive passes can be created and customized by allocating a percentage of the year’s nights across their entire property portfolio as NFTs.
For the real estate market, it is only necessary to confirm the property rights off-chain, plan the income that can be obtained for this, and package it on the chain for mortgage and distribution of its own products. This can realize the real estate market in a relatively easy way. Centralized investment and fundraising can also provide more ways to play NFT. For real estate RWA projects, it can not only lower the threshold and facilitate fragmented investment, but also provide a more convenient way of real estate lending.
Is RWA starting the next round of bull market narrative? Don't worry yet
Recently, it can be felt that the interaction between the real off-chain world and the on-chain world and traditional financial institutions are increasingly exploring the encryption market. RWA, DePIN and other related concepts and projects appear from time to time. Many people's imagination about the bull market is also based on the large influx of traditional funds.
Don’t worry about this. At least judging from the current situation, some funds have indeed tried to get in touch with the crypto world, but it is essentially the same as getting various traditional licenses. They all first establish a stable footing and then test it out, such as many traditional licenses. Financial institutions still have concerns about the issuance of tokens. This is why the author found in recent exchanges that many institutions will not choose those well-known old exchanges for cooperation, but would like to choose exchanges with more real influence such as Hashkey. intention.
There is another hot topic in reality recently, DePIN (Decentralized Physical Infrastructure Networks), which is "decentralized network hardware infrastructure". According to the existing explanations on the Internet, it can be called "a technology that uses blockchain technology to Token-incentivized coordination of physical hardware across multiple individual units in a permissionless, trustless and programmable manner.” In this new model with scale effect, decentralized distribution of hardware facilities can be better realized, and it is also a prospect that interweaves reality and encryption.
We look forward to a deeper integration of the real world and the crypto world, where future opportunities may lie.
Finally, I would like to recommend the new book "Metaverse Real Estate: Business Scenarios Integrating Data and Reality" written by Go2Mars consultant - in this book, the author skillfully combines the real estate industry with the virtual world, systematically describes the digital economy, and also Made new scenario planning for the combination of real estate and RWA. In the near future, we will also carry out book club activities on this topic, and everyone is welcome to buy and read.
