Real-World Asset (RWA)
A traditional off-chain asset — property, bonds, equity, commodities — represented as a token on a blockchain.
Real-World Assets (RWAs) refer to tokenised versions of traditional financial and physical assets: government bonds, corporate credit, equity, real estate, commodities, and private fund interests. The token represents legal ownership or a beneficial interest in the underlying, with the blockchain providing programmable settlement and 24/7 transferability.
The RWA sector grew dramatically from 2023 onward, driven by high interest rates making tokenised Treasury products attractive as on-chain yield alternatives to zero-yield stablecoins. BlackRock's BUIDL fund ($2.9B+ AUM), Ondo Finance's OUSG, and Franklin Templeton's FOBXX collectively brought billions of institutional capital onto public blockchains.
Key challenges include legal enforceability (the token must map to real-world legal ownership), custody of the underlying asset, oracle reliability for valuations, and regulatory compliance. RWA tokens add traditional counterparty risk (issuer, custodian) to the existing smart-contract risks of DeFi.