Concept

A real world asset non-fungible token (RWA NFT) (also, NFT ABT (NFT assets backed token)) is a backed crypto asset (specifically, an asset-backed token) on which non-fungible tokens (NFTs) are issued. These tokens can, per se, provide a category of asset backing, representing ownership of certain digital assets like digital art, collectibles, or virtual real estate. Backed crypto assets are divided into tokenized traditional assets (tokenized assets) and assets backed using a stabilization mechanism (stablecoins). Stabilized assets are grouped as those referring to a single fiat currency and those referring to other assets that provide a stable performance over time. The non-fungible token can be, in turn, backed by certain types of assets such as real world assets (RWAs). A real-world asset NFT (RWA NFT) is a non-fungible token (NFT) that represents ownership of, or rights to, a real-world asset. Real world assets (RWAs) are tangible assets and financial assets that exist outside the digital space. These can range from debt securities (e.g., bonds) to real estate properties, commodities, equipment and machinery. In the blockchain space, digital tokens represent these physical and traditional financial assets. The tokenization of RWAs is seen as one of the largest market opportunities in the blockchain industry, with a potential market size in the hundreds of trillions of dollars.

A real world asset (RWA) is a type of traditional financial assets and certain types of real assets or those digitally tokenized on the blockchain. Real-world assets can be used particularly in finance and other blockchain-based activities. These assets represent physical or tangible assets including those that hold value in the traditional economy, such as real estate, currencies, commodities (e.g., gold, oil, and agricultural products), or financial assets like stocks, bonds, and business equity. Such assets are usually represented in the form of a digital asset (digital token) and cryptoasset (cryptocurrency or cryptocurrency token) that exist as a fungible token or non-fungible token.

Types of assets

Real world assets (RWAs) are tangible assets and financial assets that exist outside the digital space. These can range from debt securities (e.g., bonds) to real estate properties, commodities, equipment and machinery. In the blockchain space, digital tokens represent these physical and traditional financial assets. The tokenization of RWAs is seen as one of the largest market opportunities in the blockchain industry, with a potential market size in the hundreds of trillions of dollars.

Particularly, a specific types of tokens, known as security tokens, can be issued to represent real-world assets in the digital space. These tokenized assets combine the value and stability of traditional assets with the benefits and advantages of blockchain technology, such as liquidity, fractional division of ownership, transparency, and more inclusive access. For example, a bond (as a financial asset) can be issued on-chain as a token representing the bond certificate, or it can be issued and held off-chain.

Effect of tokenization

Tokenization of real-world assets enables holders of such assets to have them in a digital format and trade them on decentralized platforms. This technique bridges the gap between the traditional financial system and the expanding world of decentralized finance (DeFi) platforms, a mixture that provides increased liquidity, transparency, and accessibility. The tokenized assets have significant value and can be used as a form of collateral or investment in both traditional financial markets and the newly emerging blockchain-based markets. Backed by traditional assets, real-world assets can form sustainable and reliable digital asset classes that capitalizes on decentralized finance as a direct competitor to traditional finance. Moreover, real-world assets are recognized and valued in the real-world economy, and their integration into blockchain networks opens up new avenues for value creation in areas such as finance, investment and trading.