ZChains

In this article, we will walk you through the concept of RWA Tokenization and the key roles it plays in the blockchain ecosystem.You might have come across the keyword Real World Assets, or more commonly abbreviated as RWA Tokenization. To put it simply, real world assets are any tangible and intangible (Both physical and digital) assets with intrinsic value. This includes anything from real estates like housing, commodities like gold, collectibles like Van Gogh art, government bonds to an artist&#39;s song. While Tokenization is the process of tokenizing the RWAs into the form of digital tokens on blockchains.Non Fungible Token (NFT) is a prime example of tokenization. When an artist creates a painting, it lives as a physical art form, inks on a canvas. Due to its physical form, without an exhibition and the actual transfer the painting is not accessible to art collectors around the world. When the artist tokenizes the painting into NFT, it lives as a digital form, on the blockchain. Once the NFT is purchased, each NFT has an owner and the ownership details are encoded in the blockchain, it helps prove the authenticity of the ownership and improve the transferability of the NFT (In the physical world, a counterfeit painting might be circulated for sale without an actual means of identifying the authenticity). In theory, the artist may tokenize the painting into multiple shares, while each of the shares still remain unique to each other albeit they may look identical. This is because they each have their unique identification codes on the blockchain. NFT has thus immediately increased the liquidity of the actual painting (More painting shares available to more art collectors).Most importantly, increased liquidity means increased accessibility and tradability of the assets in the market. This is of stark importance in the financial market.<h3 id="strong-the-concept-of-tokenization-strong">The Concept of Tokenization</h3>While RWA Tokenization might gain its buzz in recent years, its concept was not. The concept of tokenizing (Or breaking) illiquid assets (Such as a company) into small fractions so that public investors can have access existed long before the blockchain technology. One example is company shares. By breaking what would otherwise be too expensive to own, investors can own a fraction of them (Think of buying a company worth $100 million vs. buying a company shares for $1,000). It didn’t stop there. Mutual funds, REITs and ETF are all similar asset classes that let investors own a fraction of them, all through similar means of tokenization.Since blockchain technology was conceived, tokenization has since moved on-chain. RWA Tokenization moves assets on-chain, making the asset tokens accessible to the public which would otherwise be too illiquid. The benefits can be clearly seen.Improved Affordability: By breaking the RWAs into small fractions allow participation and investment be made into highly valuable and expensive assets (Refer to the company shares example above).Borderless Accessibility: RWAs in their digital form (tokens) are accessible from anywhere, allowing seamless trading across borders (Refer to the NFT example above).Immutable Transparency: Boosting authenticity by offering clear transactional records and ownership details governed by the smart contracts on blockchain (Refer to the NFT example above).Improved Efficiency: Transactions run on blockchains are fast and cost efficient, cutting out intermediaries required in the traditional financial markets.What’s happening around the world shows evidence pertaining to the rising prominence of on-chain RWA Tokenization. It’s gaining stronger positive sentiments among corporations. One of biggest asset management company, BlackRock launched their tokenized asset fund, BUIDL which has seen its AUM crosses the $500 million mark to become the largest tokenized treasury fund. Along with other funds, this has sent the value of the US tokenized treasury market to over $1.3 billion, that’s more than 1,000% since the beginning of 2023! This happens under a conducive environment set by the governments. Across the globe from the US, the Monetary Authority of Singapore (MAS) launched Project Guardian, a RWA Tokenization pilot project, in collaboration with financial institutions like JP Morgan Chase and DBS Bank. The project will involve the Singapore government investigating DeFi applications in wholesale funding markets by creating a liquidity pool of tokenized bonds and deposits to execute borrowing and lending on a public blockchain based network.<h3 id="strong-creator-accommodator-enabler-strong">Creator, Accommodator, Enabler</h3>With proven history and such a track record, it’s not hard to see why RWA Tokenization could potentially be worth so much for the coming years. According to research from BCG and ADDX, tokenization of global illiquid assets is estimated to be a $16 trillion business opportunity by 2030. In such a huge market, it is common to find more than one key player, serving different demands and needs of the market. A “Creator” may tokenize their assets on-chain, offering their token assets to the market. We have seen how BlackRock did that and become the largest tokenized fund. Ondo Finance, a company promoting RWA adoption, emerges as a market leader with $536 million TVL. This positions Ondo Finance as a key player in the growing tokenized finance sector, offering a bridge between traditional assets and decentralized finance (Through its digital token form).Then there is “Accommodator”, providing a platform as a service for tokenized assets to be invested and traded on. All major centralized exchanges (CEX) play the key role of accommodating tokens to be traded through their intuitive user interface, facilitating the deposits, withdrawals and trading processes. Often these CEXs support fiat money like USD or EUR in exchange of the tokenized assets.So how to tokenize an asset? Through “Enabler”, usually a platform known as launchpad for token creation and issuance. Inputting some necessary information through a simple step by step interface, token launchpad creates a token on the underlying blockchain in a matter of minutes. FractionZ is the launchpad project currently developed on ZChains. The company foresees a myriad of tokens to be created, anything from RWAs to meme tokens.RWA Tokenization is poised to be part of the global trends in the blockchain ecosystem and ZChains is built ready for it. Build on ZChains, where the possibilities are limitless.Visit <a href="https://www.zchains.com/" rel="noopener noreferrer nofollow">zchains.com</a>; Follow <a href="https://x.com/zchains_io" rel="noopener noreferrer nofollow">zchains_io</a>

Real World Asset (RWA) Tokenization, What Is It?

Table of Contents

ZChains

Other articles published on Aug 27, 2024

Yang Bin, China’s Former Billionaire, Sentenced for Crypto Crimes

What is the New Ethereum Layer-2 Network Corn?

Mac Users: AMOS Malware Steals Crypto

Price analysis 8/26: SPX, DXY, BTC, ETH, BNB, SOL, XRP, DOGE, TON, ADA

Top White House Official Invested In This Surprise Altcoin!

Are NTFs Making A Recovery After Almost Hitting Rock Bottom?

Join our free newsletter for daily crypto updates!