What are real world assets (RWA)? The bridge between DeFi and TradFi

Digital asset tokenization refers to the process of converting ownership rights to a real-world asset into a digital token on a blockchain. These tokens can then be easily traded, stored, and tracked on a secure and transparent network.

RWAs are any physical or tangible assets that exist in the real world. This can include things like real estate, artwork, commodities, invoices, and intellectual property.

From the possibility of fractional ownership to increased asset liquidity, tokenizing RWAs unlocks a range of benefits, making ownership of these assets more accessible to the masses and streamlining transactions within the financial system.

There are different ways to tokenize RWAs. The two common approaches include on-chain tokenization, where the underlying asset is directly represented on the blockchain, and off-chain tokenization, where ownership rights are recorded on a digital ledger outside the blockchain, while tokens themselves remain on the blockchain.

RWA tokenization has the potential to revolutionize the way we own, trade, and manage assets. Although there are challenges to overcome, the tool offers significant benefits in terms of efficiency, transparency, and accessibility.