Concept

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.

Main examples

Being traditional assets (asset classes), real-world assets can be used to form sustainable and reliable digital asset classes that capitalize on decentralized finance (DeFi) 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. 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.

In short, the following is a list of real world assets:

• Art and artworks.
• Precious metals and stones (diamonds, silver, gold).
• Real estate.
• Financial securities- equity type: stocks.
• Financial securities- debt type: bonds, notes, etc.
• Specific types of equity holdings: fund shares.

Tokenizing these assets (see, RWA tokenization) gives them an on-chain representation, often in the form of tokens (hence the name).