RWA Tokenization: Introduction to Real World Assets

Hello, in this series of articles we will go deeper into the world of RWA (Real World Assets). In each part of the series, I will try to make the abstract more concrete by making sense of the RWA concept with more concrete examples and through projects implemented in real time. I wish you a good reading in advance. Our journey begins…

Getting started: What does RWA mean?

Real-world asset (RWA) tokenization enables digital management of tangible assets on blockchain and increases investors’ access to liquidity.

When Did RWA Tokenization Take Off?

2018 was a year of increased projects aiming to tokenize real-world assets, from real estate to US stocks. Goal: Bridging the gap between Traditional Finance (TradFi) and DeFi.

Industry Outlook: Potential Value of Tokenized Assets Expected to Be Approximately $2 Trillion by 2030

Real-world asset tokenization has become the second most profitable sector of the crypto economy, after memecoins. In the first half of 2024, RWA tokens returned 214%.

Government bonds, real estate and more can be tokenized, increasing the pace of the economy while offering efficiency and liquidity to investors. By 2030, the real-world asset tokenization market is expected to reach $2 trillion in digital assets.

Analysis of tokenization waves by asset capitalization potential and adoption factors. Source: McKinsey & Company

Although the above study was conducted by a well-established company such as McKinsey & Company, this data does not provide a clear range for the future. Crypto economy is affected by macro and micro factors such as volatility and FUD, causing rapid changes in the world agenda.

Therefore, the market cap of the RWA sector may remain above or below the projected range. It is not possible to make an exact prediction.

Important reminder: This content does not constitute investment advice; Please do your own research and shape your investment decisions accordingly.

Why Do We Represent Physical Assets on Blockchain?

Blockchain and DLT (distributed ledger technology) have revolutionized many fields, including financial markets. These technologies eliminate intermediaries, reducing the need for central authority and making value transfer fast and low-cost. RWA projects and tokenization may continue to add new dynamics to these benefits.

In the future, universal and large markets will be formed with decentralized finance (DeFi). To better understand the benefits of RWAs, let’s examine them through an example.

By enabling the digitalization of real-world assets (RWA) through decentralized finance (DeFi), a real estate company can fragment and tokenize its real estate. These digital assets enable small investors to invest in large projects. By eliminating the high entry barrier, it can overcome the fear of the DeFi and crypto world, paving the way for new initiatives (start-ups).

RWA Trend Is Expected to Mark the Bull Market

(I’m not saying this, the world-famous Coingecko’s latest research report shows that this may happen).

You can guess that Real World Assets (RWA) tokenization attracted attention in the crypto world with the involvement of investment giant Blackrock in the game and the word RWA has been spoken more frequently since then. Blackrock’s creation of a fund in this field excited investors, and with the Domino effect, many different large corporate companies were determined to enter this field, as if they were sending shark missiles. Especially for these reasons, we can say that there is a sharp increase in cryptocurrency projects containing RWA in the first quarter of 2024.

According to CoinGecko’s report, the RWA trend, which started to rise from the end of 2023, continues to maintain its effect in 2024. According to the report showing the interest of countries in this field, a promising picture is drawn about the future of RWA. Türkiye is at the top, ranking third in terms of interest in RWA. A very surprising development, especially for crypto lovers and new crypto users in our country!