- RWAs are fungible or non-fungible tokens.
- These are the representations of traditional financial assets on the blockchain, such as Polymesh.
- These bridge the gap between decentralized and traditional finance with the help of their benefits.
RWAs are traditional finance token assets on the Polymesh blockchain. These have numerous advantages, such as efficiency, transparency, security, reduced cost, compliance, innovation, etc.
What Are Real World Assets?
These are fungible or non-fungible tokens that represent traditional financial assets on the blockchain. These can represent tangible and intangible assets such as real estate, government bonds and carbon credits, respectively. The RWA tokenization process brings assets on-chain as security tokens to take advantage of blockchain technology.
There is a possibility of tokenizing any asset of value and utilizing it in on-chain transactions. Security tokens are examples that are managed off-chain by custodians and these can serve as RWAs themselves. These can serve as reliable and sustainable digital asset classes that can put decentralized finance in direct competition with traditional finance.
There are numerous benefits to real-world assets (RWAs), such as efficiency, transparency, reduced cost, liquidity, innovation, and compliance.
This immutable ledger serves as the golden source of truth and provides a mechanism for frictionless post-trade reconciliation.
The transparency of the Polymesh blockchain helps participants verify asset collateral quality and systemic risk exposure.
- Reduced Cost
Transactions become faster, significantly less costly, and less risky.
There is a possibility of fractionalizing traditional illiquid or hard-to-access assets with the blockchain.
Digital assets and settlement logic exist at the protocol layer on Polymesh.
Complex compliance rules can be programmed on Polymesh directly into real-world asset tokens at the protocol layer for leveraging applications.
Use In DeFi
The tokenization of real-world assets is bridging the gap between traditional finance and decentralized finance. Businesses can leverage the DeFi ecosystem with real-world asset tokenization for capital and benefit from lower barriers to entry as well as new means for financing.
The DeFi ecosystem gains new investment opportunities, widening customer bases and access to diverse off-chain markets compared to traditional finance. The tokenization of real-world assets is a plus point for every participant, as blockchain brings liquidity, trust, security, transparency, efficiency, and innovation.
Security is the main component of tokenized real-world assets. Participants should prioritize secured lending and offer airtight regulatory compliance. Polymesh is already a step ahead of layer-1 blockchain as it features a highly secure network built with capital markets needs and regulatory compliance in mind.
Issuers can take advantage of the unique identity system of Polymesh to enforce and automate complex compliance requirements to give participants the confidence they need to engage with public blockchain infrastructure.
Hence, real-world asset tokenization via the Polymesh blockchain is a great thing, as it is bridging the gap between decentralized finance and traditional finance. The DeFi ecosystem also gained a lot of opportunities. Participants will get more benefits as blockchain brings security, transparency, efficiency, trust, and liquidity.