Real-world assets are becoming more of a talking point within the web3 and cryptocurrency industry as traditional financial firms see the advantages. 

RWAs are physical assets that are then tokenized and brought on-chain, allowing them to be traded and held on decentralized blockchain networks.

Real-world assets (RWA) on-chain have benefited from cheaper fees, greater liquidity options, & accessibility that traditional methods are unable to match. Let’s take a look at RWAs and the cryptos that support them.

What are real-world assets (RWA)?

Real-world assets are traditional financial instruments and physicals that are then tokenized and brought onto decentralized blockchain networks.

Greater accessibility, liquidity, and efficiency are granted to tokenized assets, making it easier for companies to manage them and for users to find and gain access to them, opening up new avenues for revenue generation and usability.

Almost anything can be tokenized. Already, real estate, collectibles, luxury goods, and commodities such as gold, silver, and oil have been tokenized. Traditional financial stocks, private equity, licensing rights, and more have also been tokenized. 

On blockchains such as Ethereum and Algorand, users are able to invest in fractionalized real estate, real homes that have been tokenized, brought on-chain, and exposed to a wider audience. 

With fractionalized real estate, users can invest in fractionalized portions of a property, making it easier for the average investor to add real estate to their portfolios. 

Stocks have also been tokenized such as Tesla stock on Binance. For Gold, cryptocurrency traders can invest in a tokenized version such as PAXG by Paxos, which is pegged to the price of Gold. 

The potential of tokenization and real-world assets

Reports suggest that RWAs and tokenized assets have the potential to reach trillions of dollars, split between leading blockchains with the ability to tokenize assets fluidly. 

Ripple, Hedera Hashgraph, Chainlink, Algorand, Cardano, and more are known as top networks for the tokenization of real-world assets.

Firms such as RedSwan and Archax are already leading the industry with real-estate tokenization and financial asset tokenization. 

Today, the total RWA market capitalization in the crypto industry sits at around $13 billion, according to Forbes. Over time, traditional firms believe tokenization could reach $1T within a few years.

With tokenization comes its various benefits such as low costs, faster transaction times, and access to transparent data when using public ledgers. 

Companies such as TravelX on Algroand are tokenizing airline travel, allowing users to hold air tickets as non-fungible tokens that can be traded or held as transparent proof of their flight.

At Archax, tokenization opens new ways for financial accessibility, allowing firms to offer their products and services to a wider clientele at a cheaper price. 

Thanks to the efficiency of tokenized assets, less time is wasted on processing and administrative nitpicking due to transparency with blockchain networks. 

Tokenization & Stablecoins

Another example of tokenization would be stablecoins, especially those pegged to existing reserves of currencies. 

Stablecoins serve as tokenized versions of existing currencies. With 1 USDC being worth $1.00, banks and financial firms can send digital dollars quickly and cheaply.

Blockchains like the XRP Ledger are able to settle payments within seconds, compared to physical currency and banks that take a few days for transactions to finalize. 

Already, the US government led by President Trump and a pro-crypto SEC aim to introduce new regulations such as the GENIUS Act and STABLE Act, to allow financial firms to adopt tokens and stablecoins easily.

The Future of Tokenized Real-world Assets

The tokenization of RWAs is set to increase in the coming years as cryptocurrency regulations are made clear and introduced in the US. 

Financial firms and banking groups on the lookout for ways to get their products and services to users more easily, faster, and cheaper will turn to tokenization solutions. 

Blockchains such as Hedera, XRP Ledger, Stellar Lumens, and Chainlink will benefit from tokenization the most since their networks have been designed to facilitate institutional demands. 

The tokenization of real-world assets will open new avenues for financial inclusion and investment pathways, changing the financial ecosystem as we know it.