Recently, I’ve been paying attention to a topic gaining increasing discussion in the DeFi community—what is RWA, and why is this field considered the next major growth point.

Simply put, RWA (Real-World Assets) means bringing assets from the real world onto the blockchain. This includes USD, gold, real estate, bonds, insurance, and so on. It sounds simple, but the underlying data speaks volumes.

Do you know how large the global fixed income bond market is? About $127 trillion. The total value of global real estate is approximately $362 trillion. The market value of gold is around $11 trillion. Meanwhile, the market cap of native crypto assets is only $1.1 trillion, which is just one-tenth of gold’s value. What does this mean? It means that if only a small portion of these real assets are integrated into DeFi, the entire DeFi ecosystem could experience a qualitative leap in scale.

Currently, there are several main ways RWA is used in DeFi. Stablecoins are the most common—USDT, USDC, BUSD—everyone has used them, and they are backed by real USD reserves. Synthetic assets also fall into this category; Synthetix is a typical example, having locked over $3 billion in assets at its peak in 2021. There are also lending protocols, where users can use RWA as collateral to borrow, and this sector is developing quite rapidly.

Talking about specific cases, MakerDAO is a benchmark in this space. Their RWA business has already exceeded $680 million, contributing over 58% of their revenue. That’s no small number. How do they do it? They established the RWA Foundation to manage this business, set up different management structures for various collateral types, and off-chain liquidation is handled by third parties, ensuring both flexibility and risk mitigation.

Specifically, MakerDAO has three typical RWA cases. About $500 million of U.S. Treasury bonds are managed by Monetalis, providing yield on idle assets for the protocol. They also partnered with a Philadelphia-based commercial bank, HVB, to launch a $100 million loan support vault, which is the first commercial loan case between a regulated U.S. financial institution and DeFi. Additionally, Société Générale borrowed $7 million from MakerDAO, backed by AAA-rated bonds.

Centrifuge takes a different approach—they bring real assets into DeFi via NFTs. Their product, Tinlake, works as follows: asset originators convert real assets into NFTs, then use these NFTs as collateral to create asset pools. The pool generates two types of tokens—DROP and TIN. DROP token holders receive fixed income, while TIN token holders assume higher risk but potentially higher returns. Centrifuge’s TVL has already exceeded $170 million.

However, it’s also important to recognize the risks behind these opportunities. RWA are off-chain assets, and cannot be forcibly liquidated via smart contracts; they still rely on traditional financial institutions’ backing. This means the trustworthiness of RWA may never reach the level of native crypto assets. Moreover, because of this trust assumption, permissionless DeFi protocols find it difficult to support RWA, and most current RWA projects still involve centralized entities.

From another perspective, STO (Security Token Offerings), although often seen as a limited implementation of RWA, are among the few asset tokenization solutions in the blockchain industry that are recognized by regulators. The development path of RWA may also need to learn from STO’s exploration of regulatory compliance.

In summary, the answer to what RWA is has shifted from theory to practice. From MakerDAO’s $680 million scale to Centrifuge’s $170 million TVL, from U.S. Treasuries to commercial loans, this space is gradually proving its value. If you want to understand the next growth point in DeFi, RWA is an unavoidable topic.