Real-world assets (RWAs) are digital tokens representing physical or financial assets outside the blockchain, such as real estate, commodities, bonds, equities, artwork, and intellectual property.
To understand RWAs, you must first understand the concept of tokenization. In short, it is the process of bringing off-chain assets on-chain. It’s achieved by replacing sensitive, private data with a series of non-sensitive, randomly generated data, referred to as the token.
Tokenization is popular in data security and payment processors, not just blockchain ecosystems. It’s a process carried out usually with cryptography.
In the context of cryptocurrencies, this is essentially the creation of a token for a tangible or non-tangible asset (which may be traditionally illiquid), dividing (possibly) it into smaller, more accessible units on the blockchain.
Quick Navigation
- Types of RWA Crypto Protocols
- Top RWA Crypto Projects in 2024
- Benefits of RWAs
- Risks and Legal Challenges for Real-World Asset Cryptos
- The Future of RWA Cryptos
- Closing Thoughts: The Best RWA Crypto Projects in 2024
Types of RWA Protocols
The integration of RWAs into decentralized finance (DeFi) platforms has created new possibilities for financial services.
RWAs can serve as collateral for loans, be included in index funds, or be managed through autonomous protocols, bridging the gap between traditional finance and the crypto world. This convergence has the potential to create a more inclusive and efficient financial system, offering investment products similar to those found in traditional finance but with the added benefits of blockchain technology.
There are various types of Real-World Asset (RWA) protocols, each targeting different asset classes:
Public Credit/Equities
These protocols tokenize traditional financial assets like stocks and bonds. Examples include Ondo Finance and Backed Finance, which allow investments in tokenized US Treasuries and fixed-income products.
Real Estate
Platforms like Tangible enable real estate tokenization, allowing users to mint stablecoins backed by real estate and offering fractional property ownership through NFTs. This increases market access with lower capital requirements and enhanced liquidity.
Debt/Private Credit
These protocols tokenize loans and private credit. MakerDAO and Centrifuge are notable examples, with MakerDAO expanding into real-world lending and Centrifuge tokenizing various debt instruments.
Climate/Carbon Credits
These protocols tokenize carbon credits and other environmental assets, facilitating efficient trading and management of climate-related financial instruments as businesses and individuals seek to offset their carbon footprints.
Precious Metals and Commodities
The tokenization of commodities like gold, silver, and oil allows for fractional ownership and easier trading. Pax Gold is a notable protocol that tokenizes gold.
Emerging Markets
Accessing traditional loans is difficult in these countries because the financial infrastructure is often underdeveloped. However, several protocols, like Goldfinch, focus on providing access to emerging markets, which are often challenging to invest in through traditional means.
Oracle/data feeds
Protocols like Chainlink provide essential infrastructure for tokenizing and managing real-world assets on the blockchain by offering Oracle services that connect off-chain data to on-chain smart contracts.
Top RWA Protocols in 2024
The protocols below were chosen in no particular order rather than innovations, amount of TVL, popularity, and other social and financial metrics.
Let’s look at the best RWA protocols in the crypto industry without further ado.
Ondo Finance
Ondo Finance is the largest RWA protocol in 2024.
As such, Ondo Finance is a blockchain-based protocol that provides institutional-grade financial products and services. It focuses on tokenizing stable, yield-generating assets from traditional finance —such as treasury bonds— to offer individuals the reliability of conventional financial systems mixed with blockchain accessibility.
The protocol has integrated its tokenized products into multiple blockchain networks, including Ethereum, Aptos, and Solana, to expand the accessibility and utility of RWAs.
Key Features
- Asset tokenization: Ondo offers products like OUSG, a tokenized version of a BlackRock short-term US Treasuries ETF, and OMMF, a tokenized BlackRock money market fund, providing on-chain exposure to traditional financial instruments.
- Yield-Bearing Stablecoin: USDY is Ondo’s yield-bearing alternative to traditional stablecoins, combining stability with the potential for earning yield.
- Risk-Isolated Vaults: Ondo introduces Vaults that isolate risks, allowing lenders to specify preferences for collateral, fund usage, and loan-to-value thresholds.
- Security: Ondo Finance has undergone security audits by reputable firms such as Peckshield and Quantstamp.
- Stakeholders: To support and govern its tokenized assets, the protocol runs through ONDO stakeholders and partners through its ecosystem, including the Ondo Foundation and the Ondo DAO.
- KYC: Ondo Finance runs KYC (Know Your Customer) checks to verify identities, maintain transaction records, and report suspicious transactions.
Founders & Investors
Nathan Allman founded Ondo Finance in 2021. He’s the company’s CEO, has a background in traditional finance, and previously worked at Goldman Sachs.
According to Crunchbase, Ondo Finance has raised over $34M in over 3 rounds, with Wintermute, Founders Fund, and Pantera Capital being the leading and most frequent investors.
Centrifuge
Centrifuge is one of the largest RWA protocols. Its primary goal is to lower the cost of capital for small and mid-size enterprises (SMEs) while providing investors with a stable income source.
Centrifuge offers SMEs liquidity through blockchain technology by tokenizing real-world assets into collateral. These assets can be pretty much anything from the real world—bonds, invoices, real estate, revenues, and more.
Overall, Centrifuge seeks to create a trustless, transparent, and accessible financial system by allowing borrowers and lenders to transact peer-to-peer with no intermediary fees or hidden costs.
Key Features
- Asset tokenization: Centrifuge allows businesses to tokenize tangible and intangible assets like invoices, real estate, and royalties, which can be used as collateral for financing on Centrifuge’s pools.
- Liquidity Pools: Centrifuge’s liquidity pools allow investors to provide liquidity to tokenized assets and earn yield. These pools are deployable on any EVM-compatible blockchain and have expanding testnets on layer-2 networks like Arbitrum and Base.
- Decentralized Governance: Centrifuge is supported by the Centrifuge DAO, an on-chain governance system where all parties can issue/vote on proposals
- Regulatory Compliance: The platform uses KYC, sanctions screenings, accredited investor checks, and robust technical audits.
- Integration with DeFi Protocols: Centrifuge collaborates with leading DeFi protocols, such as MakerDAO, to enhance collateral transparency through projects like “Proof of Portfolio,” enabling independent verification of Centrifuge portfolios.
- Yield Generation: Centrifuge provides access to diversified and stable yields backed by real-world assets, including financing options for invoices, real estate, and revenue-based financing.
- CFG Token: Centrifuge’s native token, CFG, is used for governance and incentivizing adoption. The total supply of CFG tokens is 425 million, with allocations for the team, early-stage investors, and ecosystem growth.
Founders & Investors
Centrifuge was co-founded by Lucas Vogelsang, who serves as the CEO. Vogelsang has been instrumental in driving the vision of integrating real-world assets into the DeFi ecosystem.
According to Crunchbase, Centrifuge has raised over $30M in a Series A funding round led by VCs and angel investors Wintermute and Stefan George, the founder of the Gnosis blockchain.
Centrifuge has partnered with some of the industry’s leading crypto projects, including a $220M deal with MakerDAO to bring RWAs on-chain through Centrifuge’s network.
RealT Tokens
RealT is one of the top RWA protocols in the industry. It’s a tokenization platform focusing on fractional real estate investment. The network allows investors globally to buy into the US real estate market through fully compliant, fractional, tokenized ownership.
This approach democratizes access to real estate investments, traditionally a high-barrier market, by enabling fractional ownership and providing blockchain-secured passive income.
Key Features
- Fractional Ownership: RealT enables investors to purchase fractional shares of real estate properties, allowing individuals to invest in high-value assets with relatively small amounts of capital.
- Blockchain Integration: The platform uses blockchain technology to ensure transparency, security, and transaction efficiency. This integration also allows for seamless ownership rights and income distribution management.
- DeFi Integration: RealT’s RMM (RealT Mortgage Market) platform allows users to leverage their tokenized real estate assets within the decentralized finance (DeFi) ecosystem, enhancing liquidity and providing additional financial opportunities.
- Walletless Feature: RealT has introduced a “walletless” feature, simplifying the user experience by allowing investors to participate without needing a traditional cryptocurrency wallet.
Founders & Investors
RealT was founded by brothers Remy and Jean-Marc Jacobson. Both founders have extensive backgrounds in real estate and blockchain technology. Notably, Remy founded Liquid Bits, one of the first commercial Bitcoin mines.
Further, RealT’s specific investors and the amount raised by the protocol are private. However, the platform has formed strategic partnerships to bolster its market position. For instance, RealT has collaborated with WiSEED, a pioneer in crowdfunding in France, and Twenty First Capital, a major player in real estate fund management, to create a consortium and lead the real estate tokenization sector in Europe.
OpenEden
OpenEden is an innovative Real World Asset (RWA) protocol that uses blockchain technology to expose investors to US treasury bills.
Launched in late 2022, its primary product is the TBILL Vault, which allows users to mint TBILL tokens, representing direct ownership of short-dated US treasury bills.
The assets backing TBILL tokens are invested in Reverse Repurchase Agreements, also known as reverse repos, which are collateralized by US Treasuries. Network participants minting these tokens undergo stringent KYC and AML screening processes to ensure individual compliance.
Key Features
- Direct T-Bills Exposure: TBILL tokens are backed 1:1 by U.S. Treasury Bills held in segregated accounts by licensed custodians.
- Instant Settlement: The protocol offers 24/7 instant minting and redemption of TBILL tokens on-chain, providing superior liquidity compared to traditional finance.
- Regulatory Compliance: OpenEden operates under a compliance-first approach. The issuer of TBILL tokens is a professional fund regulated by the British Virgin Islands Financial Services Commission.
- Transparency: The protocol provides daily portfolio reports and monthly attestations and has undergone smart contract audits to ensure security and transparency.
Founders & Investors
OpenEden was founded in December 2021 by Jeremy Ng and Eugene Ng, both former executives from Gemini’s APAC unit.
While there is no information about VCs or angel investors, the project received a $5M investment from UXD Protocol.
The protocol obtained regulatory approval to operate as a professional fund regulated by the BVI Financial Services Commission, a notable achievement. Another milestone for the protocol is reaching over $50M in tokenized US treasury bills.
Maple RWA
Maple Finance is a decentralized finance (DeFi) protocol focused on providing high-quality lending opportunities to institutional and individual accredited investors.
The protocol specializes in overcollateralized lending, which is secured by digital assets. This includes thorough borrower due diligence and on-chain transparency, offering superior risk-adjusted yields and enhancing capital efficiency for digital asset portfolios.
Key Features
- Direct Lending Opportunities: Maple Finance offers lending directly to top-tier institutional borrowers in the digital asset ecosystem, ensuring premium yields and strong balance sheet backing.
- On-Chain Transparency: The protocol leverages blockchain technology for radical transparency in risk management and monitoring.
- Competitive Yields: Maple Finance provides attractive annual percentage yields (APY) across various lending opportunities, such as USDC lending, with a target APY of around 10-11%.
- Cash Management: The platform offers on-chain cash management solutions, allowing users to access US Treasury yields with daily liquidity and a conservative risk profile.
Founders & Investors
Maple Finance was co-founded by Sid Powell and Joe Flanagan in 2021. Both founders have a background in traditional finance and have leveraged their expertise to bridge the gap between traditional finance and DeFi.
The protocol has received around $7.7M in funding over 3 rounds, with the latest funding raised on Aug 22, 0223. Some of its most notable backers are Framework Ventures, BlackTower Capital, and Circle Ventures.
stUSDT
stUSDT is the first RWA protocol for the TRON ecosystem. It aims to tokenize U.S. Treasury Bills and other real-world assets and bring them into the blockchain space.
Operating through the decentralized platform JustLend, stUSDT allows users to earn passive income from tokenized real-world assets,
Key Features
- Tokenization of Real-World Assets: stUSDT tokens represent ownership of U.S. Treasury Bills and other real-world assets, providing a secure investment opportunity.
- Passive Income: Holders of stUSDT tokens can earn passive income, benefiting from the stability and returns of real-world assets.
- Instant Settlement and Redemption: The protocol ensures high liquidity with 24/7 instant minting and redemption of stUSDT tokens.
- Built on TRON: stUSDT leverages the TRON blockchain technology to provide an investment platform for its users.
Founders & Investors
stUSDT is managed by JustLend DAO. The protocol is heavily supported by Justin Sun, the founder of TRON, who envisions stUSDT as the Web3 equivalent of Alipay’s Yu’e Bao, aiming to integrate traditional finance with blockchain technology and broaden the accessibility of financial products.
stUSDT has yet to raise capital from investors formally. The protocol operates under the governance of JustLend DAO, and was once one of the biggest RWA protocols with over $2B in TVL in December 2023.
Tangible
Tangible is a Real World Asset (RWA) protocol that focuses on tokenizing physical assets like real estate, converting them into digital tokens known as Tangible NFTs (TNFTs).
These TNFTs can be redeemed for the physical products at any time, making real-world assets more accessible and liquid.
The protocol also offers a stablecoin called Real USD (USDR), which is backed by income-generating tokenized real estate, providing holders with a daily rebasing yield projected to be between 10-15% APY.
Key Features
- Tokenized Real Estate: Tangible converts real estate properties into TNFTs, allowing for fractional ownership and greater accessibility.
- Stablecoin (USDR): USDR is backed by tokenized real estate, with rental income distributed to holders through a daily rebase mechanism.
- Decentralized Marketplace: Tangible provides a decentralized platform where users can buy, sell, and trade tokenized assets.
- Yield Generation: The platform offers consistent, reliable yields from low-volatility off-chain sources, distributed to token holders.
Founders & Investors
Tangible was founded by Jag Singh, a UK-based tech and finance entrepreneur who previously founded Vid Inc. and Singh Capital. The amount of funds raised and potential investors remain private information.
Notably, the protocol has tokenized over 218 properties, producing a TVL of over $40M
Mountain Protocol
Mountain Protocol is a decentralized finance (DeFi) platform that focuses on providing a yield-bearing stablecoin called USDM, which is backed by U.S. Treasury Bills.
Launched in September 2023, USDM has quickly become one of the largest Treasury-backed stablecoins, offering a stable and regulated investment option in the DeFi space.
Key Features
- Yield Generation: USDM provides a 5% annual percentage yield (APY) by investing in short-term U.S. Treasury securities. This yield is distributed to USDM holders daily.
- Security and Transparency: The protocol emphasizes security and compliance, with USDM reserves held by reputable financial institutions and audited by OpenZeppelin. It is regulated by the Bermuda Monetary Authority (BMA).
- Composability with DeFi: USDM is an ERC-20 token compatible with various decentralized applications, smart contracts, and protocols within the Ethereum ecosystem, facilitating seamless financial interactions.
- Instant Liquidity: USDM can be quickly exchanged for other assets on compatible decentralized exchanges, ensuring high liquidity without significant delays or price slippage.
Founders & Investors
Mountain Protocol was co-founded by Martín Carrica and Matías Caricato. The leadership team also includes board members such as Nic Carter and Firas Habach, who bring extensive experience in finance and blockchain technology.
Nic Carter from Castle Island Ventures led the company’s fundraiser campaign, which included participation from Coinbase Ventures, New Form Capital, and others. In total, the protocol raised over $8M, according to Crunchbase.
Solv Protocol
Solv is a decentralized finance (DeFi) platform that focuses on tokenizing and aggregating high-quality yields from various sources.
This particular protocol aims to revolutionize yield aggregation and liquidity management through its innovative financial NFTs, known as vouchers. These vouchers represent financial ownership and allow for flexible and efficient expression of complex financial contracts on the blockchain.
Key Features
- Liquid Yield Tokens: Solv offers “Liquid Yield Tokens” like SolvBTC, which allow users to participate in Bitcoin-powered DeFi across multiple chains. These tokens are designed to unlock many earning opportunities in the blockchain ecosystem.
- Financial NFTs (Vouchers): Solv’s vouchers are semi-fungible tokens (SFTs) based on the ERC-3525 standard. They enable a new class of digital assets that combine the unique attributes of NFTs with the fungibility of traditional tokens. These vouchers can represent a variety of financial instruments, such as bonds, convertible notes, and vesting tokens.
- Unified Liquidity Gateway: Solv is a gateway to liquidity for major digital assets, reducing barriers and costs for users seeking high-quality investment opportunities.
- Composability with DeFi Products: Solv tokens can interact seamlessly with various decentralized applications, smart contracts, and protocols within the Ethereum ecosystem
Founders & Investors
Solv was founded in 2020 by Ryan Chow and Will Wang.
Solv has raised over $14M from over 20 investors, some of them located in Singapore. The protocol’s backers include Laser Digital, UOB Venture Management, Mirana Ventures, Emirates Consortium, Matrix Partners, and more.
SuperState
SuperState is a blockchain-based protocol focused on the tokenization of U.S. Treasury securities.
It aims to modernize traditional financial products by bringing them onto the blockchain. The protocol uses Ethereum as a secondary record-keeping tool to create and manage financial products.
The protocol has amassed over $130 million in assets under management (AUM) and provides weekly yields of over 5%.
Key Features
- Tokenized Treasury Funds: SuperState’s primary product is the tokenized U.S. Treasury fund, which allows institutional investors to hold and trade shares of government bond funds directly in their blockchain wallets. This fund is designed to offer a yield comparable to short-term U.S. Treasury Bills.
- Regulatory Compliance: The protocol is registered with the U.S. Securities and Exchange Commission (SEC) and operates under the Investment Advisers Act of 1940, ensuring its products meet rigorous regulatory standards.
- Integration with DeFi: By holding tokenized Treasury funds in crypto wallets, investors can manage these alongside other crypto assets, leveraging the existing infrastructure of decentralized finance (DeFi).
Founders & Investors
SuperState was created by Robert Leshner, a tech entrepreneur and investor who co-founded Compound Labs, a decentralized network responsible for the first algorithmic money markets for DeFi.
Further, SuperState has raised over $18M in funding over two rounds, with the latest funding coming from a Series A round on Nov. 15, 2023. The most recent investors are Nascent, The Department of XYZ, and Distributed Global.
Benefits of RWAs
Tokenization offers solutions to various operational inefficiencies across industries. The main benefits include:
- Higher accessibility and liquidity
- Reduced transaction costs with fewer intermediaries
- Increased transparency
- Programmability for new investment features and operational options
Tokenization is particularly beneficial for large asset classes like treasuries and real estate. Real estate, often considered highly illiquid due to limited affordability, regulatory hurdles, and lack of information, can benefit significantly from tokenization. Here’s how:
- Elimination of intermediaries, allowing 24/7 asset transfers
- Complete transparency with all information stored on the blockchain
- Higher accessibility through better frameworks for fractional ownership
Several crypto protocols, such as Chainlink, collaborate with global financial companies to integrate tangible and intangible real-world assets into the blockchain.
Risks and Legal Challenges for RWAs
Investment opportunities in RWAs depend on the tokenization and distribution of assets. Platforms leading the RWA narrative must provide infrastructure and compliance protocols due to varying laws across jurisdictions. This creates challenges and opportunities for a broader investor base.
However, the success of RWAs heavily depends on how well these protocols adapt to regulatory laws. Switzerland is one of the few countries with established crypto laws, highlighting the importance of infrastructure and compliance protocols for mass adoption.
Further, as RWAs gain traction, different types of protocols will play a significant hand in pushing the industry forward:
- Auditors will verify on-chain assets, ensuring trust.
- On-chain oracles like Chainlink have to feed off-chain data to protocols and entities.
- Compliance protocols like Tokeny provide legal guidance and infrastructure for seamless onboarding and asset management.
The Future of Real-World Assets
Industry reports indicate that the tokenization market could reach approximately $3.5 trillion in a worst-case prolonged bearish scenario and up to $9 trillion in a bull market, as per data from 21.co.
Additionally, Boston Consulting Group estimates that tokenizing illiquid assets could represent a $16 trillion business opportunity, accounting for 10% of global GDP.
Closing Thoughts: The Best RWA Protocols in 2024
The integration of traditional assets into decentralized finance (DeFi) platforms has created new possibilities for financial services and increased access to individuals globally.
RWAs can serve as collateral for loans, be included in index funds, or be managed through autonomous protocols, bridging the gap between traditional finance and the crypto world. This convergence has the potential to create a more inclusive and efficient financial system, offering investment products similar to those found in traditional finance but with the added benefits of blockchain technology.
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