Huobi Growth Academy: In-Depth Research Report on the RWA Track: The Path of Integration between Traditional Finance and the Crypto Market

Lately, decentralized finance (DeFi) has quickly risen, making a monetary ecosystem that operates with out the conventional banking system. Nevertheless, a core subject going through the DeFi house is that the total market’s operation nonetheless closely depends on crypto belongings (reminiscent of BTC, ETH, and stablecoins), missing ample real-world belongings (Actual-World Belongings, RWA) help, which limits the improvement of DeFi to the volatility of the crypto market itself. The emergence of the RWA monitor is breaking this limitation, combining real-world monetary belongings with blockchain know-how, which not solely enhances the stability of on-chain monetary merchandise but in addition brings vital liquidity increments to the total market. This monitor is changing into a key bridge for institutional buyers and mainstream monetary establishments to enter the crypto business, and it might even drive the total blockchain business into a brand new progress cycle.

The core idea of RWA is to digitize numerous belongings in the conventional monetary market (reminiscent of bonds, actual property, shares, artworks, non-public fairness, and many others.) and convert them into tokenized belongings that may be traded, collateralized, or lent on-chain by way of blockchain know-how. This course of not solely enhances asset liquidity but in addition reduces friction prices in conventional monetary markets, reminiscent of lengthy transaction clearing occasions, excessive middleman prices, and restricted liquidity. Taking the bond market for instance, conventional bond buying and selling usually includes a number of monetary establishments and regulatory our bodies, with cumbersome intermediaries resulting in excessive transaction prices, whereas RWA tokenization can obtain real-time on-chain clearing, vastly bettering transaction effectivity and lowering prices. Moreover, on account of the transparency and traceability of blockchain, the administration of RWA belongings is extra clear, successfully lowering fraud and misconduct in the market.

As blockchain know-how matures and market demand grows, the RWA monitor is attracting extra and extra institutional participation. For instance, one of the world’s largest asset administration firms, BlackRock, not too long ago launched a blockchain-based tokenized fund, BUIDL, which primarily holds secure belongings like U.S. Treasuries and gives extra environment friendly buying and selling strategies by way of blockchain. Furthermore, conventional monetary giants like Franklin Templeton are additionally actively making an attempt to tokenize some of their fund merchandise, permitting buyers to take part in the market extra conveniently. These circumstances point out that the RWA monitor is not only a “crypto narrative,” however is changing into a core pattern in the digitalization of the international monetary market.

From a technical perspective, the improvement of RWA depends on the help of a number of key infrastructures, together with underlying blockchain networks, sensible contracts, oracles, decentralized identities (DID), and compliance administration. First, public chains, as carriers of RWA belongings, decide the safety and operability of the belongings. At the moment, Ethereum stays the most popular community for RWA tokenization, with many establishments deploying sensible contracts on Ethereum to handle RWA belongings, whereas Layer 2 options (reminiscent of Arbitrum and Optimism) are additionally changing into widespread decisions for RWA asset buying and selling to scale back transaction prices and improve throughput. Moreover, public chains like Solana, Avalanche, and Polkadot are additionally exploring utility situations for RWA belongings, striving to seize market share on this area.

In phrases of market dimension, the potential of the RWA monitor is big. Based on analysis by the Boston Consulting Group (BCG), the market dimension of the RWA monitor is predicted to succeed in $16 trillion by 2030, far exceeding the present whole market capitalization of the total crypto market. At the moment, the international actual property market is valued at roughly $300 trillion, however most actual property investments require substantial capital and have low liquidity. If simply 1% of these belongings had been tokenized, it might create a $3 trillion RWA market. Equally, the international bond market exceeds $120 trillion; if 1% enters the blockchain, it could kind a $1.2 trillion rising market.

Institutional funds are quickly flowing into the RWA monitor, indicating that this monitor is not a purely “crypto experiment,” however is changing into an essential half of the international monetary system. With the Trump administration displaying unprecedented help for the crypto business in 2025, this pattern is predicted to proceed and develop. For buyers, the RWA monitor not solely offers a brand new market alternative however may additionally develop into an essential bridge for the integration of the crypto market and conventional monetary markets. In the coming years, as extra infrastructures are improved, regulatory frameworks are established, and mainstream monetary establishments additional format, the RWA monitor is predicted to develop into a brand new progress engine for the blockchain business, even driving the digital transformation of the total monetary market.

Total, the rise of the RWA monitor not solely represents the maturity of blockchain know-how and the growth of utility situations but in addition signifies that the international monetary market is coming into a brand new stage of decentralization and effectivity. For market contributors, the right way to seize the alternative of RWA asset tokenization and format infrastructures and key protocols will develop into a core proposition for the improvement of the crypto business in the coming years.

In the context of rising international financial uncertainty, modifications in liquidity cycles, and the booming digital asset market, the RWA (Actual-World Belongings) monitor is changing into one of the most essential progress factors in the crypto business. With the adjustment of the Federal Reserve’s financial coverage, the ongoing influence of inflation pressures, fluctuations in the debt market, and elevated institutional participation in the crypto market, the improvement of RWA has ushered in unprecedented alternatives. At the identical time, the drawbacks of the conventional monetary system and the maturity of DeFi (decentralized finance) are repeatedly selling the migration of real-world belongings to the blockchain. This text will deeply discover the catalytic elements for the improvement of the RWA monitor from 5 facets: the international macroeconomic state of affairs, liquidity atmosphere, coverage and regulatory traits, institutional entry, and the maturity of the DeFi ecosystem.

2.1 World Macroeconomic State of affairs: Adjustments in Inflation, Curiosity Charges, and Market Threat Aversion

The international macroeconomic atmosphere is one of the core variables affecting RWA improvement. Lately, on account of elements reminiscent of weak financial restoration after the COVID-19 pandemic, escalating geopolitical conflicts, provide chain points, and changes in central financial institution insurance policies, there may be vital uncertainty in international financial progress. Amongst these, modifications in inflation and rate of interest insurance policies straight have an effect on liquidity and buyers’ asset allocation methods, not directly selling the improvement of the RWA monitor.

First, from the perspective of inflation, the Federal Reserve’s aggressive rate of interest hike coverage over the previous two years has had a profound influence on international markets. Since 2022, the Federal Reserve has raised rates of interest a number of occasions to curb excessive inflation charges, resulting in a tightening of international liquidity. In a high-interest-rate atmosphere, buyers’ danger urge for food decreases, impacting conventional monetary markets and inflicting capital to circulate extra in the direction of low-risk, high-yield asset lessons. This has prompted buyers to focus on belongings reminiscent of authorities bonds, gold, and actual property, and the tokenization of these belongings has develop into an essential progress level for the RWA monitor. For instance, the tokenization of U.S. Treasuries (reminiscent of the OUSG token supplied by Ondo Finance) has develop into an essential funding instrument in the crypto market on account of its excessive annualized yield (over 5%), attracting a big inflow of DeFi funds. Secondly, as the international debt disaster intensifies, the RWA monitor has develop into an essential possibility for capital danger aversion. As of 2024, the whole international debt has exceeded $300 trillion, with U.S. Treasuries exceeding $34 trillion and the fiscal deficit reaching a historic excessive. On this context, investor confidence in conventional monetary markets has been shaken, main them to hunt extra clear and environment friendly monetary infrastructures, and the traits of trustlessness, borderlessness, and low price supplied by blockchain know-how make the on-chainization of RWA belongings the greatest answer. Moreover, in a high-inflation atmosphere, the demand for gold and commodities has surged, and gold tokens (reminiscent of PAXG and XAUT) have additionally develop into widespread belongings in the crypto market. Total, the rising uncertainty in the international financial system has heightened buyers’ demand for safe-haven belongings, whereas improvements in the RWA monitor have enabled these belongings to enter the crypto market extra conveniently, driving explosive progress on this monitor.

2.2 Liquidity Surroundings: Federal Reserve Coverage Shift and Adjustments in Market Threat Urge for food

The fast improvement of the RWA monitor is inseparable from modifications in the international liquidity atmosphere. From 2022 to 2023, the Federal Reserve carried out vital rate of interest hikes, resulting in extreme liquidity tightening in international markets. Nevertheless, since 2024, with the easing of inflation pressures, the Federal Reserve has entered the tail finish of rate of interest hikes and could even start a rate-cutting cycle, altering market liquidity expectations, which vastly boosts the RWA monitor.

First, the adjustment of the Federal Reserve’s financial coverage has elevated market demand for stable-yield belongings. The DeFi ecosystem skilled a section of excessive volatility and excessive danger in 2021-2022, however present buyers choose low-risk, predictable yield merchandise, which the RWA monitor exactly offers. For instance, bond tokenization and non-public market tokenization permit buyers to get pleasure from a extra secure and compliant yield mannequin in the DeFi ecosystem, which is one of the essential causes for RWA’s explosion in 2024. Secondly, from the perspective of the crypto market, BTC is predicted to see the approval of spot ETFs in 2024, with institutional capital repeatedly flowing in, increasing the total crypto market’s capital pool. These funds, past BTC, additionally want to hunt extra secure funding targets. RWA belongings, on account of their deep binding with conventional monetary markets, have develop into an essential allocation course for institutional capital. As an example, asset administration giants like BlackRock and Constancy have begun to concentrate to the RWA area and launched associated funding merchandise, additional selling the progress of the RWA monitor. Moreover, as DeFi rates of interest decline, the yield benefit of the RWA monitor turns into more and more obvious. In 2021-2022, the yields in the DeFi ecosystem had been typically above 10%, however in 2024, the stablecoin yields of most DeFi protocols have dropped to between 2%-4%, whereas the yield on RWA belongings like U.S. Treasuries stays above 5%, making RWA belongings a brand new pillar of DeFi yields, attracting a big inflow of funds.

2.3 Coverage and Regulatory Developments: The Compliance Course of of the RWA Observe

In the improvement of the crypto business, regulatory points have at all times been a focus of market consideration, and the rise of the RWA monitor is because of its larger compliance in comparison with different DeFi tracks, assembly the wants of institutional buyers. Regulatory businesses in numerous nations are steadily accepting the modern mannequin of asset tokenization and exploring the right way to help the improvement of the RWA ecosystem by way of authorized frameworks.

First, the U.S. SEC (Securities and Change Fee) and CFTC (Commodity Futures Buying and selling Fee) have begun analysis in areas reminiscent of safety tokenization and bond tokenization, permitting some establishments to subject tokenized belongings inside a compliance framework. For instance, Securitize has obtained recognition from the SEC to subject blockchain-based safety tokens, offering a very good demonstration for the compliance of the RWA monitor. Secondly, areas reminiscent of Europe, Japan, and Singapore maintain a comparatively open perspective in the direction of the RWA monitor. As an example, Switzerland’s SIX Digital Change (SDX) and Germany’s Boerse Stuttgart Digital Change (BSDEX) have supported tokenized inventory buying and selling, whereas the Singapore authorities is actively selling the on-chain improvement of RWA belongings. These favorable insurance policies make institutional buyers extra keen to enter the RWA monitor, offering a strong basis for its improvement.

2.4 Institutional Entry and the Maturity of the DeFi Ecosystem

Along with macroeconomic elements and coverage laws, institutional entry and the maturity of the DeFi ecosystem are additionally essential driving elements for the progress of the RWA monitor. Traditional establishments are starting to concentrate to the integration of DeFi and TradFi (conventional finance), with many main asset administration firms, banks, and hedge funds beginning to analysis the right way to subject and commerce RWA belongings on the blockchain. In the meantime, the DeFi ecosystem is steadily shifting from “excessive volatility, excessive danger” to “secure yield, compliant improvement,” with the RWA monitor being a core beneficiary of this pattern. An rising quantity of DeFi protocols (reminiscent of MakerDAO, Aave, and Maple Finance) are deeply integrating with RWA belongings, making the progress of the RWA monitor extra sustainable.

In abstract, the explosion of the RWA monitor shouldn’t be solely the end result of market demand but in addition a product of the mixed results of international macroeconomics, coverage laws, liquidity environments, and the evolution of the DeFi ecosystem. Pushed by these catalytic elements, the RWA monitor is predicted to develop into one of the most essential engines for progress in the crypto market from 2024 to 2025.

In opposition to the backdrop of the maturing crypto market and the accelerated inflow of institutional funds, the rise of the RWA monitor has develop into a big pattern. The core aim of the RWA monitor is to subject, commerce, and handle belongings from conventional monetary markets, reminiscent of bonds, actual property, commodities, and non-public fairness, in a tokenized method on the blockchain, making them extra liquid, accessible, and in a position to combine with the DeFi ecosystem. This not solely brings the comfort of decentralized finance to conventional belongings but in addition offers a extra secure supply of earnings for the DeFi ecosystem. The utility situations of the RWA monitor are wealthy, and differing kinds of real-world belongings have numerous representations on-chain, which might typically be divided into the following main classes: bond-type RWA, commodity and bulk asset RWA, actual property RWA, fairness and non-public market RWA, and infrastructure and provide chain RWA. On this part, we are going to discover the core logic of these classes intimately and analyze consultant tasks in the present market to achieve a deeper understanding of the format of the RWA monitor.

3.1 Bond-Kind RWA: On-Chainization of U.S. Treasuries, Nationwide Bonds, and Company Bonds

The bond market is one of the most essential asset lessons in the international monetary market, particularly U.S. Treasuries (UST), that are thought of one of the most secure belongings globally and are broadly used for hedging and reserve belongings. As the DeFi ecosystem matures, extra and extra establishments are trying to carry bond belongings onto the blockchain to attain transparency of returns, enhanced liquidity, and the risk of international buying and selling.

At the moment, the international debt market has exceeded $300 trillion, with a big proportion being U.S. Treasuries, whereas the whole market capitalization of the crypto market is simply $2-3 trillion. If RWA monitor’s bond belongings may be efficiently built-in into the DeFi ecosystem, it’ll vastly change the market panorama. The liquidity of the conventional bond market is proscribed by buying and selling hours, market entry thresholds, and settlement cycles, whereas on-chain bonds can present 24/7 buying and selling, borderless entry, and second-level settlement benefits, making them an essential complement to the DeFi ecosystem.

Consultant Mission Evaluation:

At the moment, the important contributors in the bond tokenization area inside the RWA monitor embrace Ondo Finance, Maple Finance, and Backed Finance.

• Ondo Finance: At the moment one of the most lively bond tokenization tasks, focusing on U.S. Treasury tokenization, offering OUSG (Ondo Quick-Time period US Authorities Bond Fund), permitting DeFi customers to earn returns much like short-term U.S. Treasury ETFs on-chain, with an annualized return fee exceeding 5%. Ondo’s tokenized bonds are held by compliant establishments and meet U.S. securities legislation necessities, whereas additionally being freely tradable on-chain.

• Maple Finance: Initially targeted on the DeFi lending market, it later expanded into the RWA monitor, offering on-chain debt financing companies. Maple permits institutional buyers to subject bonds inside the DeFi ecosystem, offering a secure supply of earnings for the crypto market.

• Backed Finance: Launched numerous bond ETF tokenization merchandise, reminiscent of $bIB01 (comparable to iShares Quick-Time period U.S. Treasury ETF), offering buyers with on-chain variations of mainstream bond ETFs in the conventional monetary market, reducing buying and selling thresholds and bettering accessibility.

The rise of bond-type RWA monitor not solely meets the wants of conventional establishments but in addition brings new sources of earnings to the DeFi ecosystem, additional selling the progress of RWA belongings.

3.2 Commodity and Bulk Asset RWA: On-Chainization of Gold, Crude Oil, and Different Commodities

The commodity market is one other essential RWA monitor, particularly gold, which has lengthy served as a retailer of worth and has develop into one of the first belongings to be tokenized on the blockchain. The tokenization of commodities permits buyers to commerce extra conveniently and straight combine with the DeFi ecosystem, enhancing asset liquidity.

Gold has lengthy been a hedge in opposition to inflation, and as international financial uncertainty will increase, the demand for gold continues to rise. Nevertheless, conventional gold markets have excessive transaction prices and advanced supply processes, whereas tokenized gold belongings (reminiscent of PAXG and XAUT) can present seamless cross-border buying and selling, sensible contract administration, and DeFi staking capabilities, making them an essential asset class in the crypto market.

Consultant Mission Evaluation:

• PAXG (Paxos Gold): A gold token issued by Paxos, the place every PAXG represents 1 ounce of bodily gold saved in a London vault, redeemable for bodily gold at any time. PAXG is at present the highest traded gold token on-chain and is broadly used for DeFi staking and buying and selling.

• XAUT (Tether Gold): A gold token issued by Tether, equally pegged to bodily gold, permitting customers to commerce seamlessly worldwide and take part in the DeFi ecosystem.

• Commodities DAO: Exploring the potential for extra commodities (reminiscent of oil, copper, soybeans, and many others.) to be introduced on-chain, enabling the commodity market to function extra transparently and effectively.

The tokenization of gold and different bulk commodities is altering the method commodities are traded, making it extra open and offering the crypto market with a stronger anti-inflation asset class.

3.3 Actual Property RWA: A Breakthrough in Asset Liquidity

The actual property market is one of the largest actual property markets globally; nevertheless, on account of excessive transaction prices and low liquidity, the conventional actual property market struggles to combine with the DeFi ecosystem. The tokenization of actual property in the RWA monitor permits international buyers to take part in the actual property market by way of blockchain, breaking geographical and capital boundaries.

Consultant Mission Evaluation:

• RealT: Tokenizes U.S. actual property belongings, with every token representing partial possession of the actual property asset, permitting buyers to earn rental earnings by holding tokens.

• LABS Group: Focuses on the Asian actual property tokenization market, permitting particular person buyers to take part in high-end actual property investments with very low thresholds.

The improvement of the actual property RWA monitor considerably enhances the liquidity of the actual property market whereas additionally offering new collateral belongings for DeFi, selling the progress of the total ecosystem.

3.4 Personal Fairness and Fund RWA: Making VC Investments Extra Clear

Traditional VC investments and non-public fund markets have lengthy confronted points of excessive thresholds and low transparency, whereas the tokenization in the RWA monitor makes these belongings extra liquid. As an example, well-known asset administration firm Hamilton Lane points tokenized funds by way of blockchain, permitting buyers to take part in the non-public market with decrease thresholds.

Moreover, compliance tokenization platforms like Securitize are serving to extra conventional establishments carry fairness belongings on-chain, enabling them to commerce in secondary markets and enhancing liquidity.

Lately, the RWA monitor has steadily attracted consideration from many in the blockchain business. RWA goals to digitize real-world belongings, reminiscent of actual property, bonds, shares, and commodities, and combine them into the blockchain ecosystem, permitting them to be traded, staked, and lent on decentralized finance (DeFi) platforms. This monitor has huge potential but in addition faces quite a few challenges. Overcoming these challenges might be key to its sustainable improvement.

First, one of the most vital challenges is authorized compliance. Traditional belongings are sometimes topic to the authorized and regulatory frameworks of numerous nations, and bringing these belongings into the blockchain atmosphere after digitization could face scrutiny from regulatory businesses and adaptability points with insurance policies. Many nations’ present monetary regulatory insurance policies don’t clearly outline crypto belongings and blockchain know-how, particularly relating to cross-border asset transfers, the authorized uncertainty will increase the dangers for enterprises. For instance, the right way to legally switch conventional belongings like actual property or bonds onto the blockchain globally and guarantee compliance throughout completely different jurisdictions requires deep involvement from authorized consultants and could necessitate revisions to the authorized frameworks of related nations. Moreover, the administration and possession switch of digital belongings may additionally pose advanced regulatory challenges, involving the right way to confirm the precise existence of belongings and the legitimacy of their homeowners.

Furthermore, technical challenges can’t be neglected. Though blockchain know-how has clear benefits in knowledge immutability and decentralization, successfully changing real-world belongings into digital kinds stays a posh subject. This includes not solely the right way to tokenize bodily belongings (i.e., convert them into digital tokens) but in addition making certain that these tokens precisely replicate the worth and liquidity of the belongings. At the moment, the course of of asset digitization usually depends on conventional third-party intermediaries for analysis and endorsement, reminiscent of banks or authorized establishments, which creates a contradiction between the decentralized idea and conventional centralized establishments. Moreover, the custody and administration of belongings can be a big technical problem. Whereas blockchain can present transparency and automation, making certain the safety and compliance of belongings, particularly in the absence of centralized intermediaries, is a must-solve subject. Good contracts can vastly simplify the asset buying and selling course of, however as soon as vulnerabilities or errors happen, they might result in vital asset losses, making the safety and auditing of sensible contracts essential.

For innovators in the RWA monitor, successfully combining the benefits of blockchain with the wants of the actual world is vital. Particularly concerning asset liquidity, the decentralized nature of blockchain could make belongings extra liquid, however real-world belongings usually face liquidity challenges. As an example, the buying and selling cycle of high-value belongings like actual property is comparatively lengthy, and market contributors are restricted. How one can make the most of blockchain to interrupt the liquidity bottleneck of conventional belongings and permit these belongings to circulate globally, changing into liquid belongings on DeFi platforms, is one of the potential breakthrough factors of the RWA monitor. By introducing asset tokenization, an actual property mission or bond may be divided into a number of smaller shares, reducing buying and selling thresholds, attracting extra buyers, and making the belongings extra liquid. Moreover, asset tokenization can improve market transparency, permitting buyers to trace asset flows by way of blockchain’s public information, lowering info asymmetry in the market.

Along with authorized and technical challenges, market acceptance can be a big barrier going through the RWA monitor. Though blockchain has achieved outstanding success in the cryptocurrency and DeFi fields, for conventional buyers, blockchain and digital belongings stay comparatively unfamiliar ideas. Particularly for these accustomed to conventional monetary programs and asset lessons, digital belongings could not instantly acquire their belief. To interrupt this barrier, the RWA monitor wants to determine nearer collaborations with conventional monetary establishments. A possible breakthrough lies in the incontrovertible fact that as extra conventional monetary establishments start to just accept blockchain know-how and discover cooperation with crypto belongings, the RWA monitor additionally has the alternative to achieve help from these establishments’ sources and credibility. For instance, banks and asset administration firms might help promote the market acceptance of RWA by offering endorsements for digital belongings or collaborating with blockchain platforms.

Moreover, potential breakthrough factors for the RWA monitor embrace multi-chain interoperability and liquidity improvements. At the moment, many RWA tasks rely on Ethereum or different mainstream public chains; nevertheless, interoperability between completely different public chains nonetheless poses vital challenges. If RWA can obtain multi-chain interoperability, cross-chain asset transfers will develop into smoother, and the circulate of asset worth might be vastly enhanced. To realize this, cross-chain protocols and bridging applied sciences will develop into essential breakthrough factors in the RWA monitor. This is not going to solely improve asset liquidity but in addition increase the market share of RWA, attracting extra buyers and customers.

As blockchain know-how continues to mature and develop, the RWA monitor is present process a delicate transformation. The integration of conventional belongings with the crypto world is not going to solely complement digital belongings however may additionally reshape the international monetary system. The future of RWA presents huge market alternatives but in addition comes with advanced challenges. To reach this area, buyers have to have a deep understanding of business improvement traits and design cheap funding methods.

The future outlook for RWA is stuffed with potential, particularly as the bridging position between blockchain know-how and conventional monetary programs turns into more and more evident. As blockchain know-how is steadily accepted by monetary establishments, the tokenization of conventional belongings will develop into extra frequent. It’s anticipated that in the coming years, asset tokenization will develop into mainstream, notably in areas reminiscent of actual property, bonds, equities, and commodities. The rising openness of conventional monetary markets in the direction of digital belongings will speed up the progress of RWA. Banks, insurance coverage firms, and asset administration companies are exploring the right way to leverage blockchain know-how to attain automation and transparency in asset administration whereas lowering operational prices and bettering effectivity. Significantly in capital-intensive industries, the market potential of RWA might be much more vital, as digitized belongings can transcend geographical limitations, offering unprecedented funding alternatives for international buyers.

The future outlook for RWA is carefully tied to the digitalization course of of the total monetary system. As monetary markets more and more transition in the direction of digitalization and automation, RWA will steadily develop into an essential part of international capital markets. With technological developments and market maturation, extra alternatives for business consolidation and mergers could come up in the future RWA monitor, and some main RWA platforms and tasks could develop into “unicorns” in the blockchain business. On this course of, buyers cannot solely acquire direct asset returns however may additionally take part in the “dividends” of blockchain monetary innovation. Due to this fact, funding alternatives in the RWA monitor will develop into more and more plentiful, and buyers have to well timed grasp market dynamics and flexibly regulate funding methods to attain the most returns on this modern market.