Digital currencies are being talked about everywhere these days. From trading and buying and selling digital currency for earning and profit to Telegram airdrops. But this fascinating world always has something new to offer! Suppose you can own a real asset such as real estate, cars or luxury goods by using digital currencies and using them on blockchain platforms. Such an idea, called RWA, is the point of connection and integration of the world of digital currencies and the real world. Always the problem that most capitalists have is that they cannot liquidate a part of their property and have to sell their entire property first. But with the use of RWA, you can have better access and management of your assets. In this article, we examine the concept of RWA and describe its advantages and disadvantages.

What is RWA?

RWA stands for Real World Assets and translates to "Real World Assets". This concept has created a bridge between the real world and digital assets. In the sense that what is considered a real asset is converted into a token so that it is possible to trade them on different digital currency platforms. Perhaps the limitations and difficulties of liquidity of real assets is the main reason for the emergence of RWA.

In general, accessing a part of real assets requires cashing out all of it. For example, if you have a full Liberty Spring coin, you can't cash out just 10% of it. But you have to sell it all! But with the process of tokenization of real assets, it will be possible to access smaller parts. In a word, by using RWA, you turn your real assets into crypto assets and digital currencies that are always available so that you don't have liquidity problems!

What do Real World Assets (RWA) include?

Anything that can be invested and tokenized can be considered in the scope of RWA. From securities and real estate to dollars and gold and oil and machinery and even works of art. Add to this list intellectual property such as patents.

How to tokenize RWA?

First of all, you should pay attention to the recognition and valuation of the property. After this stage, according to the rules and regulations that exist in this platform, smart contracts will be used. After these steps, the investor must choose a specific blockchain to proceed accordingly for the tokenization process of his asset. At the end, the desired token of the investor will be created and its activity will be recorded on the blockchain. All these steps may not take a few minutes. In fact, the RWA tokenization process is very fast and safe and is considered like a digital currency purchase and sale or a transaction in the world of digital currencies.

What are the advantages and disadvantages of RWA?

The process of tokenizing real assets or RWA will definitely become more widespread in the not too distant future. But it is better to have a look at its advantages and disadvantages.

Benefits of RWA Tokens

• Liquidity: Liquidity facilitation becomes possible in the RWA space and every trader can liquidate their real assets in a short period of time.
• Building trust: The blockchain platform will be a factor in building trust between traders due to its security and transparent mechanisms. It should be noted that due to the widespread use of stablecoins, this trust is doubled.
• Transparency: The world of blockchains is inherently transparent, which makes it more trustworthy than the real world.
• Speed ​​and greater access to assets and their transfer: Greater access and high liquidity allow traders to easily take advantage of investment opportunities.
• Reduction of intermediaries and reduction of current costs: simple management of assets allows a trader to invest without problems and does not need intermediaries. It is clear that such a trend leads to a significant reduction in costs.
• The possibility of dealing with customers worldwide: the global platform brings global customers! When you intend to invest in an international platform, you can definitely have unlimited trading and investment opportunities and think of more profitable dollar strategies.

Disadvantages of RWA tokens

• Lack of secondary market: a common and standard platform for buying and selling real assets in the blockchain environment has not yet been announced.
• Risk of Fraud and Hacking: Despite all the advantages we have said, there is still a risk of fraud and hacking for RWA and a significant security mechanism has not yet been introduced in this regard. Fortunately, the security of blockchain infrastructure is such that it solves this problem to a large extent. But there is still a need for security and protection solutions. For example, we should see what process the developers of this space take for the issue of proof of ownership.
• Legal considerations: Since this platform is considered an international space, its rules and regulations should be set and compiled in an international and comprehensive manner to avoid disputes.
• Unpredicted Volatility: Real assets experience high volatility from time to time. These fluctuations may greatly affect their value. An issue that can also affect RWA tokens.

The best RWA cryptocurrencies to invest in

Many projects have used RWA as their main infrastructure and foundation, and it is a platform for the best RWA cryptocurrencies to invest in. Each has introduced a type of real asset backed by RWA tokens. Here we briefly review five of them.

MAPLE project

The MAPLE project is one of the most interesting and at the same time the simplest projects in RWA. In this project, even by providing a guarantee, investors can receive monthly and sometimes annual interest. In fact, this platform is a lending platform based on the RWA token.

MAKERDAO project

The MAKERDAO project quickly became famous for its efforts to provide reliable collateral. This project has released the DAI token for this purpose. The main activity of MakerDao is focusing on the integration of real assets and using them on the blockchain platform.

CREDITCOIN project

One of the best RWA tokens this year is definitely CREDITCOIN. In this project, "loan between blockchains" is proposed. That is, you can take a loan in one blockchain and pay its installments in other blockchains. Of course, the inter-blockchain loan of this project is calculated based on the activity history and total transactions of the investors.

GOLDFINCH project

The protocol focuses on lending to real-world businesses, particularly businesses in emerging markets. Goldfinch covers a diverse range of businesses and offers attractive returns that go up to 30%. In fact, its purpose is to tokenize business assets in the first place and then lend to them.

CENTRIFUGE project

The protocols mentioned above have all been good examples of integrating real-world assets into the DeFi ecosystem. However, they all focus on the credit side. But for more diversity, the CFG centrifuge token brings more forms of real-world assets to the ecosystem and has a different mechanism by using non-fungible tokens (NFT). In this way, the borrower must convert his asset to NFT and then use it in this centrifuge ecosystem.

What will the future of RWA cryptocurrencies look like?

It was predicted that one day RWA would be born and people would be able to convert their assets into tokens in the world of digital currencies. For this reason, it seems that there is a high potential for the continuation of this process and its growth. If the tokens related to these projects grow well, more investors will definitely be attracted to them and their value will increase day by day. Considering the usually positive fluctuations of digital currencies, the possibility of such an event is very high. For this reason, we can say that the future of RWA cryptocurrencies is likely to be promising.

Importance of RWA in DEFI

It is clear that it is possible for RWA tokens to enter DeFi platforms and this will make DeFi more powerful. RWA brings a large number of investors and subsequently capital into the field of DeFi and contributes to the development of decentralized assets. On the other hand, the possibility of getting decentralized loans and quick liquidity, which is available in the platform of RWA, can help the success and expansion of the DeFi field. So, in general, it can be said that RWA is very important in DeFi and helps its expansion and growth.

Restrictions on the use of RWA in DEFI

Of course, as we mentioned earlier, in order for RWA to function well in the DeFi platform, it must upgrade the necessary infrastructure. Also, the lending process in this platform needs stronger mechanisms with stronger supports.

The future and tokenization of real assets

Although the tokenization of real assets is in its infancy, it is an attractive idea and can definitely bring a large number of investors into the world of digital currencies. But it needs a bigger and more general infrastructure to be trusted by all investors around the world. It is expected that this market can have a high growth in the long term. Even now, the digital currencies that operate in this platform have grown well and have been able to gain the trust of investors to an optimal extent. However, it is expected that these cryptocurrencies will become more and more.