What Are Real World Assets?
Real World Assets (RWAs) are traditional financial assets that have been tokenized—represented on a blockchain as digital tokens. This includes government bonds, corporate debt, real estate, commodities, art, and even invoice receivables.
When you buy a tokenized treasury, for example, you're buying a token backed by actual US Treasury bills held by a custodian. The token represents your claim on that real-world asset, with yield paid in crypto.
Traditional vs. Tokenized Assets
Traditional
- • Requires brokerage account
- • Business hours only
- • Settlement takes days
- • Minimum investments often high
- • Limited composability
Tokenized RWA
- • Wallet-based ownership
- • 24/7 trading
- • Instant settlement
- • Fractional ownership possible
- • DeFi-composable
Why RWAs Matter for DeFi
RWAs solve a fundamental problem in DeFi: where does yield actually come from?
Most DeFi yields come from token emissions—protocols printing new tokens to incentivize usage. This creates a ponzi dynamic where early users are paid by later users and token inflation. Yield farming APYs often collapse as emissions decrease or token prices fall.
RWA yields are different. They come from real economic activity—interest from loans, rental income from property, or yields from government bonds. This creates sustainable returns not dependent on token prices or protocol growth.
RWA Market Growth
Types of Tokenized RWAs
RWAs span a wide spectrum of risk and return profiles:
| Asset Type | Typical Yield | Risk | Examples |
|---|---|---|---|
| US Treasuries | 4-5% | Very Low | USDY, bIB01, USDM |
| Investment Grade Bonds | 5-7% | Low-Medium | Backed, Maple |
| Real Estate | 6-12% | Medium | RealT, Centrifuge |
| Private Credit | 8-15% | Medium-High | Goldfinch, Maple |
Tokenized Treasuries
Tokenized treasuries are the most popular RWA category, offering on-chain access to the "risk-free rate" from US government bonds.
Ondo Finance (USDY, OUSG)
Leading tokenized treasury provider. USDY is a yield-bearing stablecoin backed by short-term treasuries. Available to non-US persons.
Yield: ~5% APY (varies with treasury rates)
Backed Finance (bIB01)
Swiss-regulated tokenized bond ETFs. Backed by actual shares of iShares bond ETFs.
Yield: Tracks underlying bond ETF yield
Mountain Protocol (USDM)
Yield-bearing stablecoin backed by treasuries. Rebasing token—your balance increases as yield accrues.
Yield: ~5% APY (paid via rebasing)
Real Estate Tokenization
Tokenized real estate provides fractional ownership of property, earning rental income distributed as crypto. This enables property investment with lower minimums and increased liquidity.
Leading Platforms
- RealT: US residential properties tokenized on Ethereum/Gnosis. Buy fractional ownership, receive rent in USDC.
- Centrifuge: Infrastructure for tokenizing real estate and other RWAs. Powers multiple originators.
- Propy: Full real estate transactions on blockchain, including some tokenized properties.
Private Credit & Lending
Private credit protocols connect DeFi liquidity with real-world borrowers—companies, emerging market businesses, and asset-backed lenders. Higher yields but also higher risk.
Goldfinch
Emerging market lending to fintech companies. Two-tier structure with senior and junior tranches.
Maple Finance
Institutional lending pools. Delegates assess and manage credit risk. Focus on crypto-native borrowers.
Centrifuge
Infrastructure for multiple real-world lending pools. Integrated with MakerDAO for some pools.
Private Credit Warning
Private credit carries real default risk. Several DeFi lending protocols have experienced defaults. Higher yields reflect higher risk. Understand the borrower, collateral, and recovery process before investing.
Top RWA Protocols
Key players in the RWA ecosystem:
| Protocol | Focus | TVL |
|---|---|---|
| MakerDAO | RWA collateral for DAI | $2.5B+ RWA |
| Ondo Finance | Tokenized treasuries | $500M+ |
| Centrifuge | RWA infrastructure | $300M+ |
| Maple Finance | Institutional credit | $100M+ |
RWA Risks & Considerations
RWAs introduce unique risks that differ from typical DeFi risks:
- Regulatory risk: RWAs often qualify as securities; regulatory action could affect access or value
- Custody risk: Real assets must be held by custodians; custodian failure is a risk
- Legal structure: Understand the legal claim you have on underlying assets
- Credit risk: For lending protocols, borrowers may default
- Liquidity risk: Many RWA tokens have thin secondary markets
How to Invest in RWAs
Getting Started with RWAs
Check eligibility
Many RWAs have geographic or accreditation requirements
Complete KYC
Most RWA protocols require identity verification
Understand the structure
Research the legal structure, custody, and your actual rights
Start small
Test with a small amount before larger allocations
Summary: RWAs in DeFi
Real World Assets (RWAs) bring sustainable yields from traditional finance into DeFi. From tokenized treasuries (5% risk-free rates) to real estate and private credit, RWAs offer returns backed by real economic activity rather than token emissions. Major players include Ondo Finance (treasuries), MakerDAO (largest RWA holder), and Centrifuge (infrastructure). Risks include regulatory uncertainty, custody concerns, and credit risk. As DeFi matures, RWAs are becoming a crucial component of diversified portfolios, bridging traditional and decentralized finance.
Disclaimer: This article is for educational purposes only and does not constitute financial, investment, or legal advice. RWA investments may be securities subject to regulation. Always verify eligibility requirements and understand the legal structure before investing. Past performance does not guarantee future results.