Introduction
What is the Definition of Real World Assets (RWA) in Cryptocurrency?
Real World Assets (RWAs) in the cryptocurrency context refer to physical or tangible assets from the traditional financial world that have been tokenized and brought onto a blockchain platform (which sometimes named as Tokenized Assets). These assets include, but are not limited to, real estate properties, commodities like gold or oil, stocks, bonds, and even fine art or intellectual property rights. By tokenizing these assets, they are transformed into digital tokens that represent ownership or stake in the underlying physical asset.
Why Are Real World Assets (RWA) Gaining Attention in the Crypto Industry?
The collapse of FTX in November 2022, a major cryptocurrency exchange, significantly eroded investor confidence in digital assets, leading to substantial market downturns. Concurrently, the U.S. Federal Reserve's series of interest rate hikes in 2022 increased the attractiveness of traditional financial instruments, such as Treasury bonds, which began offering more stable returns compared to the volatile crypto market. This confluence of events prompted investors to seek more secure and tangible investment opportunities, thereby accelerating the integration of Real World Assets (RWAs) into the cryptocurrency space. Tokenizing physical assets like Treasury bonds and real estates provided a means to combine the benefits of blockchain technology with the inherent stability of traditional assets, offering investors a diversified and potentially less volatile alternative within the crypto ecosystem.
What Are the Key Benefits of Integrating Real World Assets with Blockchain Technology?
Integrating Real World Assets (RWAs) with blockchain technology offers key benefits such as increased liquidity through fractional ownership, making traditionally illiquid assets like real estate or art more accessible and tradable. It enhances transparency and security with blockchain's immutable ledger, reduces costs by eliminating intermediaries, and allows global reach by enabling cross-border asset trading. Additionally, smart contracts automate processes like compliance and dividend payouts, boosting efficiency, while tokenization democratizes access to high-value assets, fostering greater inclusion. By bridging traditional finance and blockchain, RWAs provide diversification opportunities and regulatory innovation, addressing inefficiencies in the current financial ecosystem.
Why Are Real World Assets (RWA) Gaining Traction in the Cryptocurrency Space Now?
Real World Assets (RWAs) are gaining traction in the cryptocurrency space as institutions increasingly recognize the value of blockchain-based tokenization. BlackRock CEO Larry Fink has emphasized tokenization as "the next generation for markets," pointing to its potential to enhance efficiency and transparency in capital markets. This sentiment is backed by BlackRock's launch of the iShares Bitcoin Trust (IBIT), the first spot Bitcoin ETF, and the subsequent introduction of IBIT options trading. These moves highlight a growing institutional shift toward integrating digital assets with traditional finance, further legitimizing the role of RWAs in creating stable and diversified blockchain-based investment opportunities
Additionally, The cryptocurrency industry is experiencing renewed interest in Real World Assets (RWAs) due to recent political developments. President-elect Donald Trump's victory in the 2024 election has significantly influenced this trend. During his campaign, Trump positioned himself as a pro-crypto candidate, pledging to establish the U.S. as a global leader in digital assets. He proposed creating a strategic national cryptocurrency reserve and expressed intentions to replace SEC Chair Gary Gensler with a more crypto-friendly appointee. These commitments have bolstered investor confidence on a progress crypto regulation framework, leading to a surge in cryptocurrency valuations. For instance, Bitcoin's price exceeded $90,000 following the election. This regulatory clarity is anticipated to attract institutional investors seeking to diversify portfolios and enhance liquidity through blockchain technology. The alignment of political support and technological innovation is thus propelling the adoption of RWAs in the crypto space, offering new avenues for investment and economic growth.
How Do RWAs Differ from Other Cryptocurrencies?
Real World Assets (RWAs) differ from other cryptocurrencies primarily through their connection to off-chain, physical world assets. While most cryptocurrencies, like Bitcoin or Ethereum, are entirely digital and derive their value from decentralized networks, RWAs are tokenized representations of tangible or real-world assets such as real estate, commodities, or financial instruments. This off-chain linkage means RWAs are backed by assets that exist outside the blockchain, offering intrinsic value tied to their physical counterparts.
What Challenges Are Associated with Tokenizing Real World Assets?
Tokenizing Real World Assets (RWAs) presents significant challenges, particularly in managing the off-chain aspects linked to physical assets. Unlike native digital assets, RWAs rely on accurate representation and management of real-world assets, which introduces vulnerabilities such as fraud, mismanagement, or disputes over ownership. This off-chain part is not transparency as on-chain data and not managment by smart contract, so ensuring the authenticity and integrity of these assets requires robust legal frameworks, regulatory compliance, and mechanisms to verify and monitor the assets’ existence and condition. The SafeMoon incident serves as an example of off-chain mismanagement, where funds were allegedly mishandled by executives, reflecting the risk of human error or malfeasance.
Key Takeaways
RWA Sector: Early but Promising The Real World Asset (RWA) sector remains in its infancy, yet demand signals strong potential for growth. The potential regulatory progress under a Trump election victory could bolster investor confidence, creating a more conducive environment for RWA adoption. This optimism underscores the sector's capacity to bridge traditional finance with blockchain.
Advantage of Early Movers vs. Non-Crypto-Native Entrants While current top tokens benefit from their early launch advantage, they face the risk of being overtaken by non-crypto-native companies. Firms like BlackRock, with extensive real-world resources and existing infrastructure, could leverage tokenization to dominate the space, potentially outpacing crypto-native projects.
Tracking Growth and Adopting Resilient Investment Solutions To navigate this evolving landscape, investors must closely monitor the real growth of RWA-focused projects, such as adoption metrics, revenue streams, and ecosystem expansion. The best investment approach lies in indices projects that provide comprehensive tracking of the RWA sector, offering resilience against shifts in leading players and enabling exposure to the industry's collective potential.
Top 5 RWA Cryptocurrencies
What is MANTRA?
MANTRA is a a Hong Kong-based Layer 1 blockchain platform dedicated to the tokenization of Real World Assets (RWAs), aiming to integrate traditional financial assets into the blockchain ecosystem. In October 2024, MANTRA launched its mainnet, providing a secure and compliant environment for the seamless fractionalization and on-chain representation of assets such as real estate, commodities, and art.
MANTRA's Core Activities
MANTRA focuses on providing a robust infrastructure for the tokenization of Real World Assets (RWAs) and fostering seamless integration between traditional finance and blockchain technology. The platform's core activities include developing its Layer 1 blockchain, tailored specifically for compliant tokenization processes, and offering modular tools for businesses to tokenize and manage assets efficiently. MANTRA prioritizes cross-chain interoperability, enabling smooth asset transfers across various blockchain networks. Additionally, the platform collaborates with institutions to digitize assets such as real estate, private equity, and commodities, ensuring legal compliance and operational security throughout the tokenization process. These efforts are complemented by MANTRA's emphasis on building a secure ecosystem for developers to create decentralized applications (dApps) that leverage tokenized RWAs.
MANTRA's Achievements
In March 2024, the company secured an $11 million funding round led by Shorooq Partners, with participation from Three Point Capital, Virtuzone, Forte Securities, GameFi Ventures, and Hex Trust. By October 2024, MANTRA successfully launched its mainnet, providing a secure and regulatory-compliant platform for the seamless integration of traditional assets into the blockchain ecosystem. Although the ecosystem is still in its early stages, MANTRA has already onboarded three ecosystem projects and made significant strides in engaging institutional partners, laying a strong foundation for future Real World Asset (RWA) tokenization initiatives.
MANTRA's Token Price Performance
In 2024, MANTRA's native token, OM, experienced a remarkable surge, skyrocketing by over 23,000% from its previous lows. Beyond the macroenviroment factors outlined in the introduction, several critical developments drove this growth. The Mainnet Launch in October 2024 established a secure and regulatory-compliant infrastructure, enhancing the project's credibility. Strategic Partnerships, such as the collaboration with Google Cloud as a validator and infrastructure provider, further solidified MANTRA’s technological capabilities and market trust. Additionally, High Staking Yields of approximately 22.3% attracted significant investor interest, reducing the circulating supply and driving demand.
MANTRA's Future Prospects
MANTRA's future lies in the maturation of its Layer 1 blockchain infrastructure, designed to seamlessly support Real World Asset (RWA) tokenization and trading. As the platform evolves, its focus is on enhancing scalability, security, and compliance to enable a broader range of RWA trading activities. This robust infrastructure aims to attract institutional participants and developers, fostering the creation of decentralized applications (dApps) tailored for asset tokenization and management. A core growth indicator for MANTRA will be the expansion of its ecosystem across multiple dimensions, including the development and adoption of dApps, growth in active user base, increase in transaction volume, and the accumulation of Total Value Locked (TVL). These metrics collectively reflect the health and maturity of the platform, also role in how we value the chain.
What is MakerDAO?
MakerDAO, established in 2014, is a decentralized autonomous organization operating on the Ethereum blockchain. It manages the Maker Protocol, which enables users to generate Dai—a decentralized, cryptocurrency collateral-backed stablecoin pegged to the U.S. dollar. The organization's mission is to provide financial inclusion and stability within the decentralized finance (DeFi) ecosystem by offering an unbiased global currency.
In July 2022, MakerDAO began integrating Real World Assets (RWAs) into its collateral portfolio, starting with a $500 million investment in U.S. Treasury bonds and corporate bonds to diversify its holdings and generate stable yields. This strategic move led to RWAs contributing approximately 80% of MakerDAO's fee revenue by mid-2023. In August 2024, as part of its "Endgame Plan," MakerDAO rebranded to Sky, introducing the USDS stablecoin (which is different from DAI since the contract has frozen function) and the SKY (SKY:MKR exchange ratio is 24,000:1) governance token to enhance the protocol's resilience and scalability.
MakerDAO's Core Activities
MakerDAO's core activities revolve around managing the Maker Protocol, which facilitates the creation and stability of Dai. Users can generate Dai by depositing collateral assets, such as Ethereum or wBTC , into smart contracts known as Vaults. The protocol ensures Dai's stability through a system of incentives, governance, and liquidation mechanisms.
In recent years, MakerDAO has expanded its focus to include RWAs as collateral, investing in assets like U.S. Treasury bonds and corporate bonds to diversify its collateral portfolio and generate predictable revenue.
MakerDAO's Achievements
MakerDAO, now rebranded as Sky, has demonstrated impressive financial growth, driven by its diversified revenue streams and the robust adoption of its products. As of November 2024, MakerDAO's total annualized protocol revenue stands at $360.09 million. Spark Protocol, a lending product within its ecosystem, is the largest contributor, generating $175.55 million—nearly 48% of the total revenue. Core Vaults, primarily powered by ETH collateral types, contribute $95.40 million annually, with ETH-C vaults leading at $34.49 million and ETH-A following with $24.12 million.Additional revenue streams include stablecoins, contributing $45.15 million, and cash RWAs, generating $36.65 million, further diversifying MakerDAO's financial foundation.
Moreover, DAI(+USDS), the protocol’s decentralized stablecoin, maintains a Total Value Locked (TVL) exceeding $5 billion, underlining its pivotal role in the decentralized finance ecosystem and its sustained trust among users globally.
MakerDAO's Token Price Performance
MakerDAO's governance token, MKR, has experienced notable fluctuations in 2024. As of November 29, 2024, MKR is trading at approximately $1,803.21 USD, reflecting a slight decline from the previous close.
In August 2024, MakerDAO rebranded to Sky, introducing the USDS stablecoin and the SKY governance token. This transition allowed MKR holders to convert their tokens to SKY at a 1:24,000 ratio. However, the rebranding faced community resistance, with only 8% of MKR tokens converted to SKY, leading to a 23% decline in SKY's value over two weeks. Despite these challenges, Sky launched USDS on the Solana blockchain in November 2024, marking a significant expansion into Solana's DeFi ecosystem. The successful deployment of USDS on Solana has bolstered investor confidence, contributing to a stabilization and gradual recovery in MKR's price.
MakerDAO's Future Prospects
MakerDAO's future prospects are centered on the expansion of its USDS stablecoin and enhancing value for token holders through revenue sharing. The launch of USDS on Solana marks a significant milestone, paving the way for its integration into a broader range of decentralized finance (DeFi) protocols and applications. As more platforms adopt USDS, its utility in lending, borrowing, and trading will grow, potentially driving further adoption across other blockchain ecosystems. This strategic focus aims to position USDS as a leading decentralized stablecoin in multi-chain environments. Thus the company could generate more revenue from collateral.
Simultaneously, MakerDAO's commitment to aligning incentives with its token holders adds a compelling layer to its governance model. With the rebranding to Sky, the protocol introduced revenue-sharing mechanisms where holders of the SKY governance token are entitled to a portion of the protocol's earnings. This approach not only incentivizes long-term participation but also reinforces the protocol's transparency and sustainability. By expanding USDS use cases and enhancing token holder benefits, MakerDAO is poised to strengthen its foothold in the DeFi space while fostering a more engaged and loyal community.
What is Ondo Finance?
Ondo Finance is a decentralized finance (DeFi) platform that functions as a decentralized investment bank, aiming to bridge traditional finance with the DeFi ecosystem through tokenization. It offers structured financial products (tokenized assets) that cater to varying risk preferences, facilitating connections among decentralized autonomous organizations (DAOs), institutions, and retail investors.
Ondo Finance's Core Activities
Ondo Finance's core activities include creating tokenized financial products such as OUSG, which represents on-chain shares of short-term U.S. Treasury bills, providing investors with blockchain-based access to these instruments; USDY, a fully backed, yield-generating stablecoin pegged to the U.S. dollar, offering investors both stability and returns. A DeFi solution based on those tokenized assets, Flux Finance, a decentralized lending protocol enabling users to earn interest on stablecoin deposits while borrowing against tokenized RWAs.
Ondo Finance's Achievements
In April 2022, Ondo Finance raised $20 million in a Series A funding round led by Founders Fund and Pantera Capital, with participation from Coinbase Ventures, GoldenTree, Wintermute, Steel Perlot, Tiger Global, and Flow Traders. By January 2023, Ondo launched Ondo V2, marking a pivotal moment with the introduction of tokenized financial products such as OUSG, which has now achieved an impressive $199 million in Total Value Locked (TVL). In August 2023, the platform expanded its offerings with USDY, a yield-generating stablecoin that has rapidly grown to $453 million in TVL. Strategic partnerships with major institutions like Circle and Coinbase have played a crucial role in enhancing Ondo's ecosystem, driving seamless integrations, and expanding its user base, firmly establishing the platform as a leader in bridging traditional finance with decentralized blockchain solutions.
Ondo Finance's Token Price Performance
The platform's native token, ONDO, launched in January 2024, serves as a governance token, empowering holders to participate in decision-making processes and contribute to the platform's growth. As of November 29, 2024, Ondo Finance's native token, ONDO, is trading at approximately $1.08 USD, reflecting a year-to-date (YTD) return of 242.26%.
Ondo Finance's Future Prospects
Ondo Finance’s future is poised for growth as it focuses on expanding the Total Value Locked (TVL) of its current flagship products while driving the development of new offerings. Products like OUSG and USDY have already demonstrated significant traction, with combined TVL surpassing $650 million, but there remains ample opportunity to onboard additional institutional and retail users, further boosting adoption by boarder DeFi portocol. Ondo is also in the early stages of scaling Flux Finance, its decentralized lending protocol that allows tokenized Real World Assets (RWAs) to serve as collateral. As Flux matures, it is expected to attract more participants seeking secure and regulated DeFi solutions. Additionally, Ondo is exploring innovative structured financial products that cater to diverse risk preferences, aiming to solidify its position as a leader in bridging traditional financial instruments with blockchain. By maintaining its momentum in product development and growing its ecosystem, Ondo Finance is well-positioned to become a cornerstone of the RWA tokenization space.
What is Pendle?
Pendle is a decentralized finance (DeFi) protocol that enables users to tokenize and trade future yields of various assets, providing enhanced control over fixed and variable returns. By separating yield-bearing assets into principal and yield components, Pendle allows users to engage in strategies such as earning fixed yields, speculating on yield fluctuations, and hedging against yield volatility.
Pendle's Core Activities
Pendle's core activities center on expanding access to innovative yield strategies and enhancing liquidity for DeFi participants. By facilitating a secondary market for trading tokenized yield assets, Pendle unlocks new opportunities for both retail and institutional users to actively manage their yield exposure. The protocol also focuses on integrating with leading blockchain ecosystems such as Ethereum and Arbitrum to ensure seamless compatibility with various DeFi protocols. Additionally, Pendle is committed to driving adoption through partnerships and ecosystem incentives, fostering a thriving marketplace for yield tokenization and trading.
Pendle's Achievements
Pendle has achieved remarkable growth, solidifying its position as a leader in decentralized yield management. As of now, the protocol boasts an impressive $4.27 billion in Total Value Locked (TVL), reflecting the strong adoption of its innovative tokenized yield solutions. Additionally, Pendle has facilitated over $30.87 billion in total trading volume, highlighting the high demand for its secondary market for yield-bearing assets.
Pendle has marked several key milestones since its inception, reflecting its growth and innovation in the DeFi space. In June 2021, the protocol launched on the Ethereum mainnet, introducing its pioneering yield tokenization and trading platform. By February 2023, Pendle expanded to the Arbitrum network, enhancing its cross-chain capabilities and broadening its user base. In August 2023, the platform integrated Real World Assets (RWAs) into its offerings, further diversifying its yield options. Most recently, in January 2024, Pendle collaborated with EtherFi to launch eETH, entering the re-staking sector and providing users with opportunities to earn up to 24% fixed ETH returns, showcasing its commitment to innovation and user-centric development.
Pendle's Token Price Performance
Pendle's native token, PENDLE, has experienced significant appreciation since its listing on Binance Launchpool in July 2023. At that time, PENDLE was trading at approximately $0.85 USD. As of November 29, 2024, the token's price has risen to approximately $5.52 USD, marking an increase of over 500%.
Pendle's Future Prospects
Pendle's future prospects are strongly tied to delivering enhanced value and opportunities for its users. By expanding its ecosystem, Pendle aims to provide users with access to a broader range of yield-generating assets, including Real World Assets (RWAs), and support more blockchain networks, ensuring diversified earning opportunities. Users can benefit from advanced tools for trading tokenized yields, enabling them to hedge risks, secure fixed returns, or maximize variable yields in a seamless and efficient manner.
What is Polymesh?
Polymesh is an institutional-grade, permissioned blockchain specifically designed for regulated assets, such as security tokens. It addresses challenges in governance, identity, compliance, confidentiality, and settlement, thereby streamlining traditional processes and enabling new financial instruments.
Polymesh's Core Activities
Polymesh's core activities include enforcing strict identity verification through Know Your Customer (KYC) processes for all its blockchain participants, embedding compliance measures directly into the protocol to automate regulatory adherence, and ensuring confidentiality of transactions and holdings. Additionally, strategic partnerships have expanded the network's capabilities, introducing diverse investment instruments and enabling various investment strategies. For instance, the collaboration with BDACS focuses on Real World Assets (RWAs) and tokenized securities, aiming to develop a regulatory-compliant digital asset ecosystem. Similarly, the partnership with DigiShares facilitates the integration of Polymesh into white-label tokenization platforms, enhancing the issuance and management of digital securities. These alliances contribute to a dynamic environment that bridges traditional finance with blockchain technology, offering participants a broader array of compliant investment opportunities.
Polymesh's Achievements
Polymesh has made remarkable strides in its network development, reflecting its growing adoption and activity. As of November 29, 2024, the blockchain has finalized over 16 million blocks and processed approximately 98,963 transfers, demonstrating significant growth in transactional activity during November 2024. The network now boasts 11,863 accounts, with 5,714 actively holding POLYX tokens, highlighting strong user engagement and participation in the ecosystem.
Polymesh's Token Price Performance
Polymesh's native token, POLYX, has shown substantial growth from its all-time low. As of November 29, 2024, POLYX is trading at approximately $0.3738 USD, marking a remarkable increase of over 274% from its all-time low of $0.09985, recorded on September 11, 2023.
Polymesh's Future Prospects
Polymesh's future hinges on expanding its ecosystem with more investment instruments and attracting a broader user base to fully realize its potential as a blockchain for regulated assets. While the network has established itself as a robust Layer 1 solution, it remains in its early stages, with relatively few products currently live. To drive growth, Polymesh must onboard additional asset issuers and develop diverse investment options, such as tokenized securities, real estate, and other regulated financial products.
Summary
The Real World Asset (RWA) sector has shown strong performance, underscoring its potential as a key growth area in the cryptocurrency space. According to recent market data (SoSoValue RWA Index), RWA-focused projects have consistently outperformed broader crypto trends, demonstrating investor confidence in this emerging sector.
However, while the RWA space appears promising, it is still in its early stages. Participants are experimenting with various approaches to tokenization, compliance, and user adoption, and the sector faces challenges such as regulatory hurdles and technological constraints. With multiple directions being explored, the path to maturity remains uncertain, and significant evolution is expected in the coming years.
Additionally, the attractiveness of current RWAs highly tied to Treasury bonds may diminish if central banks begin cutting interest rates. A lower-yield environment could shift investor focus away from tokenized fixed-income products, posing potential headwinds for the sector. Nonetheless, the innovation and flexibility of blockchain solutions offer RWAs a unique position in diversifying traditional finance, making this sector worth watching closely.
MANTRA(OM) | MakerDAO(MKR) | Ondo Finance(ONDO) | Pendle(PENDLE) | Polymesh(POLYX) | |
Core Business and Focus | RWAs focused Layer 1 Blockchain, infra for dApps and other tokenize assets solution | Cryptocurrency backed stablecoin; tokenized assets collateral generated revenue | Yield-generating on-chain products, tokenized Treasury Bond, and DeFi solution to them(lending protocols) | Tokenized solution to seperate yield from orginal assets, enable DeFi solution on that. | Regulated asset Layer 1 blockchain, focus on compliance, confidentiality, and settlement. |
Activity and Adoption | Mainnet lived Oct 2024, institute partnership. | More than 5B Dai/USDS on chain. Achieved 167M net revenue in the past year. | More than 600M tokenized assets on chain (USDY, OUSG) | $4.27B TVL; $30.87B trading volume; strong growth in yield adoption. | 11,863 accounts; $16M+ blocks finalized; early ecosystem growth. |
Token Metrics | Market Cap: $3.15B | Market Cap: $1.6B | Market Cap: $1.67B | Market Cap: $920M | Market Cap: $421M |
Future Prospects | Expand institutional onboarding and ecosystem adoption for RWAs. | Expand USDS use cases, enhance token holder revenue sharing, grow ecosystem. | Scale TVL, develop Flux Finance, introduce innovative financial products. | Integrate more yield-bearing assets and blockchains; grow user base. | Develop more investment instruments, attract users to regulated asset blockchain. |
Final Thoughts
The Real World Asset (RWA) sector stands at a pivotal juncture, brimming with potential and challenges as it evolves within the blockchain ecosystem. Major asset management institutions like BlackRock are poised to enter the tokenized asset space, leveraging their vast holdings and influence. Additionally, payment infra company like VISA also explore tokenized assets business, as they are close to user side. As non-crypto-native players with enormous assets under management, their participation could accelerate mainstream adoption and bring unparalleled capital power to the sector.
At the same time, some players may opt to utilize blockchain technology solely to enhance operational efficiency without issuing tokens. Examples include Paxos Gold, which provides tokenized gold, and Figure, which uses blockchain to streamline financial services such as loans and mortgage processing. These approaches showcase the diverse ways blockchain can be adopted to optimize traditional business models.
Meanwhile, companies like Tether and Circle are leading the RWA earnings race, generating substantial revenues through the collateral backing their stablecoins. By capitalizing on traditional financial instruments such as short-term Treasury bonds, these stablecoin issuers exemplify the lucrative potential of RWAs in crypto.
Though early in its development, the RWA space is an exciting frontier full of opportunities. As the industry grows and matures, it will be critical to monitor key players and innovations, understanding how they shape the market. For investors and participants, engaging with the sector through tools like sector indices provides a more strategic opportunity to grow alongside it, ensuring adaptability to market dynamics and resilience against major shifts in leading players.