// GLOSSARY -- DEFI

What is Real World Assets (RWA)?

1 min read Updated

Real-world assets (RWAs) are traditional financial instruments — such as bonds, real estate, commodities, and private credit — represented as tokens on a blockchain, bridging traditional and decentralized finance.

WHY IT MATTERS

RWA tokenization brings the $600+ trillion traditional finance market on-chain. Treasury bills on Ethereum (Ondo Finance, Backed Finance), tokenized real estate, and on-chain private credit are creating DeFi yield from real-world economic activity.

The appeal: DeFi composability applied to traditional assets. Tokenized treasuries can be used as collateral in lending protocols. Tokenized real estate can be fractionalized. All with 24/7 trading and instant settlement.

RWAs solve DeFi's circular yield problem — instead of yields from token emissions, RWA yields come from real economic activity (interest, rent, dividends).

FREQUENTLY ASKED QUESTIONS

What are the most tokenized RWAs?
US Treasury bills (largest by TVL), private credit, real estate, and commodities. Tokenized treasuries have grown to billions in TVL across protocols like Ondo and Backed.
Are tokenized RWAs regulated?
Yes — RWAs typically involve securities regulations. Issuers need proper licensing, KYC/AML compliance, and legal structures connecting on-chain tokens to off-chain assets.
Can I buy tokenized treasuries?
Some are permissionless, others require KYC. Ondo's USDY and Backed's bIB01 offer different access models. Check each issuer's requirements.

FURTHER READING

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