The Complete Guide to Real World Assets (RWAs): Everything You Need to Know

Table of contents:

What are RWAs?

Types of RWAs

The asset tokenization process

RWAs in DeFi

How RWA projects can benefit from rollups

Benefits and risks of RWAs

Examples of notable RWA projects

Conclusion

As cryptocurrency evolves beyond just the digital, real world assets (RWAs) are emerging as one of the most significant growth areas in the space. RWAs are bridging the gap between traditional finance and crypto, potentially bringing trillions of dollars in new assets onchain and democratizing access to institutional-level investment products.

According to DeFiLlama, RWA projects are at $10.6 billion in TVL as of April 2025, up from $4.4 billion one year prior. Stablecoins, which also fall into the RWA category as a tokenized form of fiat currencies, represent another $200+ billion worth of RWAs onchain at their current total market capitalization. Traditional financial institutions like Blackrock – the world’s largest asset manager – are especially bullish on the sector, and Boston Consulting Group predicts RWAs will bring $16 trillion in value onchain by 2030.

In this guide, we’ll explain what RWAs are, how real world assets are tokenized, the role they can play onchain, and look at a few prominent projects.

What are RWAs?

RWAs are digital tokens that represent ownership of financial and physical assets that exist outside the blockchain – that is, in the “real world.” These assets have recognized value, ownership structures, and investment products in the traditional finance world already. By tokenizing real world assets, we can allow them to be traded onchain like any other digital token, bringing benefits like transparency, programmability, 24/7 trading, and fractional ownership.

Unlike purely digital cryptocurrencies like Bitcoin or Ethereum, which derive their value primarily from network effects, RWAs derive their value from the underlying real world assets they represent. This connection to tangible value provides a different risk profile and potentially greater stability compared to many native crypto assets.

While stablecoins have been a widely used form of RWAa for many years, crypto natives have long anticipated the tokenization of a wider variety of financial assets onchain. That’s now happening, thanks to growing regulatory clarity and embrace of blockchains by traditional finance. RWAs are now one of the fastest-growing sectors of crypto.

Types of RWAs

There are several different kinds of RWAs that either have been tokenized or theoretically could in the future. Let’s explore a few below.

Tangible, physical assets

Real estate. Perhaps the most significant category by total value, tokenized real estate allows for fractional ownership of properties, from commercial buildings to residential homes. This democratizes access to real estate investment and enhances liquidity in a traditionally illiquid market.

Commodities. Physical goods like gold, silver, oil, and agricultural products can be tokenized, allowing for more efficient trading and ownership.

Art and collectibles. High-value art pieces, trading cards, and other collectibles can be tokenized, enabling fractional ownership and allowing more investors to hold shares in these traditionally exclusive assets.

Infrastructure. Tokenization of infrastructure projects like roads, bridges, and energy facilities could allow for broader investment participation in these essential but capital-intensive assets.

Intangible assets

Bonds and fixed income. Tokenization of government and corporate bonds makes them more accessible to a global investor base and enables more efficient issuance and trading.

Equities. Company shares can be represented as tokens, potentially streamlining settlement processes and enabling 24/7 trading.

Intellectual property. Patents, copyrights, trademarks, and royalty streams can be tokenized, creating new ways to monetize and invest in creative and innovative works.

Carbon credits. Environmental assets like carbon offsets are increasingly being tokenized, enhancing transparency and accessibility in environmental markets.

Stablecoins: Tokenizing fiat currenies

Stablecoins are already one of the biggest and most widely used categories of crypto assets, with most pegged to the U.S. dollar. Stablecoins come in several varieties. Fiat-backed stablecoins like USDT and USDC, for instance, are backed by reserves of the underlying currency held in bank accounts or invested in yield-bearing instruments like treasuries. Others, like Paxos Gold (PAXG), are backed by physical commodities such as gold.

Emerging RWA categories

Emerging forms of RWAs that can be tokenized include:

Insurance policies. Tokenized insurance contracts that can be traded and settled onchain.

Revenue shares. Tokens representing rights to future revenue streams from businesses or projects.

Structured products. Complex financial instruments combining multiple asset types with specific risk-return profiles.

The diversity of RWAs demonstrates the flexibility of blockchains, as virtually any asset can be tokenized in order to enhance its accessibility and liquidity. 

The asset tokenization process in six steps

The process of transforming real world assets into tokenized RWAs is complex and can vary by asset. At a high level though, there are a few key steps that most RWA projects must complete.

Step 1: Asset selection and evaluation

The tokenization journey begins with identifying and evaluating suitable assets:

• Asset identification. Determining which RWA will be tokenized, whether it's real estate, commodities, financial instruments, or other valuable assets.
• Legal assessment. Evaluating the legal status of the asset, including ownership rights, transfer restrictions, and regulatory considerations.
• Valuation. Conducting thorough valuation of the asset using appropriate methodologies to establish a fair market value.
• Due diligence. Performing comprehensive due diligence to verify ownership, identify potential liabilities, and assess any encumbrances on the asset.

Step 2: Legal structure and compliance framework

The next step for an RWA project is to establish a robust legal framework for tokenization.

• Legal entity setup. Establishing appropriate legal entities to hold the underlying asset and issue the tokens.
• Regulatory compliance. Ensuring compliance with relevant securities laws, KYC/AML regulations, and other applicable legal requirements in relevant jurisdictions.
• Token and smart contract legal framework. Developing legal agreements that define the relationship between token holders and the underlying asset, including rights, obligations, and governance mechanisms.
• Tax considerations. Addressing tax implications for issuers and investors across different jurisdictions.

Step 3: Technical implementation

Next is the technical process of creating onchain tokens to represent the underlying RWAs. This includes:

• Blockchain selection. Choosing the appropriate blockchain platform based on factors like security, scalability, cost, and ecosystem support. Ethereum remains popular for RWAs, but alternatives like Solana, as well as purpose-built chains like Plume are gaining traction.
• Token standard selection. Determining the appropriate token standard based on the asset characteristics. Options may include:
  • ERC-20 for fungible assets where each token is identical (e.g. bonds, commodities)
  • ERC-721 or ERC-1155 for non-fungible assets with unique characteristics (e.g. real estate, art)
• Smart contract development. Creating and auditing smart contracts that encode the rights, restrictions, and functionalities of the tokens.
• Security measures. Implementing robust security protocols to protect against vulnerabilities and attacks.

Step 4: Verification and oracle integration

RWA projects need oracles that can provide reliable onchain data feeds in order to maintain the connection between the onchain tokens and offchain assets.

• Oracle implementation. Integrating oracle services with the RWA smart contracts to provide reliable, real-time offchain data regarding the status of the assets. 
• Verification mechanisms. Establishing processes for regular verification of the underlying assets, such as audits, inspections, or attestations.
• Proof of Reserve (PoR). Implementing transparent PoR mechanisms that allow token holders to verify the existence and value of the underlying assets.

Step 5: Issuance and distribution

Once the RWA infrastructure has been built and the connection has been established between the offchain assets and onchain tokens, projects can issue and distribute the tokens.

• Token minting. Creating the tokens on the blockchain representing the offchain assets based on predetermined parameters.
• Primary distribution. Distributing tokens to initial investors through various mechanisms like private sales, public offerings, or auctions.
• Exchange listings. Facilitating secondary market trading by listing tokens on appropriate exchanges or marketplaces.

Step 6: Ongoing management and governance

Once the tokens have been issued and are being traded on secondary markets, RWA projects must manage the assets and onchain infrastructure on an ongoing basis.

• Asset management. Continuing to manage the underlying asset, including maintenance, improvements, or portfolio adjustments.
• Governance mechanisms. Implementing governance structures that allow token holders to participate in decision-making regarding the asset.
• Dividend or yield distribution. Distributing any income generated by the asset to token holders according to their ownership stake.
• Reporting and transparency. Providing regular updates and transparent reporting on the status and performance of the underlying asset.

RWAs in DeFi

The integration of RWAs into DeFi ecosystems is a significant development in the crypto ecosystem, with the potential to create new financial products and expand the number of onchain use cases. These include:

• Collateralization. RWAs can serve as collateral for lending and borrowing in DeFi protocols, allowing users to access liquidity without selling their assets. The greater stability of traditional financial assets can make RWAs a better option for collateral than more volatile cryptocurrencies, as users will be less likely to be liquidated if prices don’t fluctuate as widely.
• Liquidity provision. RWAs can be used to provide liquidity in decentralized exchanges and automated market makers, enhancing market depth and stability.
• Yield generation. Deployment of RWAs in liquidity pools and other yield-bearing DeFi protocols can create new sources of returns for investors.
• Synthetic asset creation. RWAs can serve as the underlying reference for synthetic assets, allowing exposure to RWAs without direct ownership.
• Treasury management. DAOs and other projects can diversify their treasuries by including RWAs, reducing volatility and potentially generating more sustainable yield.

How RWA projects can benefit from rollups

Rollups will have a big role to play in the development of protocols for issuing, trading, and managing RWAs. The benefits rollups can provide for RWAs include:

Scalability. RWAs can bring an exponential increase in the trading volume and number of participants onchain, yet L1s like Ethereum hit scaling barriers even under current conditions. Rollups will be essential to enabling the scaling necessary to bring RWAs onchain without increasing latency or driving up gas fees. This includes both general DeFi ecosystem rollups that can accommodate RWA activity, and also appchains dedicated to specific RWA use cases.

Customization. Like any crypto asset, RWAs and associated applications will come with their own unique usage patterns and data throughput needs. Rollups will allow RWA projects to customize their chains as needed to meet those needs.

Permissioning for traditional financial institutions. RWAs are a perfect mechanism to bring more tradfi activity onchain, as institutions like banks and asset managers are the primary parties interacting with these assets today. However, tradfi institutions will have higher compliance needs than today’s typical crypto user. Rollups can allow tradfi to meet those needs, for instance with mechanisms to control who can and cannot bridge assets to the chain, implement sequencer-level IP blocking of high-risk jurisdictions, enforce KYC rules, and more.

Benefits and risks of RWAs

There are several benefits to bringing RWAs onchain, but there are also potential problems to look out for. Let’s break them down below.

Benefits of RWAs

RWAs and tokenization can improve tradfi in several ways.

Fewer intermediaries for lower fees. RWA tokenization can remove traditional intermediaries like brokers and clearinghouses or replace them with automated onchain equivalents. This would cut down on fees and make investing more cost-efficient.

Democratization of investment opportunities. Tokenizing real world assets can open up access to high-end investment opportunities for more investors. For instance, by getting rid of investment minimums, RWA projects are already opening up institutional-grade investments to a wider audience. Blockchains also remove geographic barriers, allowing investors to access foreign markets via RWAs and giving residents of developing countries access to investments they’ve previously been cut off from. And, by enabling fractional ownership, tokenization of luxury assets like high-end real estate can enable any investor to tap into returns previously available only to the wealthy. 

24/7 markets. While traditional markets have set trading hours, blockchains function round the clock, meaning investors can trade RWAs 24/7. That would give investors flexibility in when to buy and sell tradfi assets that they don’t currently have.

Fractional ownership. Tokenization would enable investors to buy fractional shares of RWAs that can currently only be bought on an “all or nothing” basis, like high-end real estate and art. In addition to democratizing access to these assets, fractional ownership would make the markets for these assets more liquid by enabling more frequent buying and selling of individual shares in smaller transactions. 

Transparency and immutability. RWA tokenization would bring new levels of transparency to traditional assets that are currently opaque. For instance, public blockchains would enable any investor to easily verify an asset’s ownership history and conduct valuation research based on previous transactions. Greater transparency leads to more efficient markets by reducing information asymmetry, and users can trust this information given the immutability of blockchains.

Risks of RWAs

While the potential benefits of RWAs are exciting, there are a few risks to keep in mind.

Regulatory risk. There’s still uncertainty around how RWAs onchain would be regulated. One area of concern is differences in regulation across jurisdiction – RWAs can easily be traded across borders on a technical level, but this may introduce legal problems if different countries impose different rules on how these assets are regulated. 

Security concerns. Protocol hacks and oracle manipulation have been a frequent issue in the DeFi space. RWAs may be at greater risk of theft or loss when tokenized and brought onchain, introducing new risk into the global economy. Even private key management could present problems. However, permissioning mechanisms such as the ability to freeze RWA tokens or limit trading to approved wallets can mitigate these issues. ERC-3643 is one example of such a mechanism. 

Adoption hurdles. Perhaps the biggest obstacle for RWAs is institutional hesitancy. While many in tradfi are clearly warming to the idea of tokenization and conducting more business onchain, these institutions are risk-averse, and many will want to take a slow approach to RWAs. Technical considerations such as integration of blockchains with legacy systems in tradfi may also slow down adoption.

Examples of notable RWA projects

Several RWA projects are already gaining traction and have exciting future plans to tokenize a wider variety of assets. We’ll outline a few examples below.

Plume

Plume is building a rollup with Conduit entirely dedicated to RWAs. Plume’s chain will act as a composable, EVM-compatible environment designed from the ground up for RWA tokenization, trading, and more. Components of the Plume ecosystem include specialized DeFi primitives for RWAs, cross-chain interoperability for broader ecosystem access, compliant asset tokenization infrastructure, and more. Plume boasts nearly $100 million in pre-deposits prior to the launch of the rollup, and has onboarded hundreds of partners to its ecosystem.

Maple Finance

Maple Finance is establishing an institutional credit marketplace onchain. Institutions can go to Maple to borrow funds. Any investor of any size can tap into the yields by adding to the lending pools that power those loans. Maple has facilitated hundreds of millions of dollars’ worth of loans already, and paid out over $68 million in interest to lenders as of April 2025.

ONDO Finance

ONDO Finance is building an RWA platform where a wide variety of traditional assets can be tokenized and trading. So far, ONDO’s focus has been tokenization of U.S. government bonds, but the team also plans to enable tokenization of stocks, bonds, and other securities with its ONDO Global Markets platform.

Centrifuge

Centrifuge is a protocol designed for traditional asset managers to tokenize and distribute their funds onchain, and also supports lending and borrowing against those assets. RWAs on Centrifuge’s 1600+ assets tokenized include treasuries, real estate, private credit, and more.

Securitize

Securitize is another leading platform for RWA tokenization. Most notably, Securitize has partnered with Blackrock to launch its tokenized U.S. treasuries fund BUIDL, which has a $1.9 billion market capitalization as of April 2025. 

RWAs are a key part of crypto’s future

The integration of RWAs into the crypto ecosystem is not merely a technological step forward, but a fundamental reimagining of how we manage assets in the global economy. As we've explored throughout this comprehensive guide, the tokenization of physical and traditional financial assets on blockchain networks is creating unprecedented opportunities for accessibility, efficiency, and innovation.

As RWAs expand and become more prominent in DeFi, more and more projects will need their own dedicated rollups, both for the scalability, customization, and compliance permissioning they enable. If you’d like to learn how Conduit can help you build the perfect rollup for your RWA use case, contact us here.