Recently, I’ve been exploring a very interesting topic—the concept of RWA (Real-World Assets). Honestly, this could be the next biggest growth point for DeFi, but many people haven't realized it yet.

Let me start with a number to give you a sense of the scale difference. The global bond market size is about $127 trillion, the total value of real estate is approximately $362 trillion, and gold alone is worth $11 trillion. In contrast, the entire crypto market is only $1.1 trillion, less than one-tenth of gold. What does this mean? It means that if just a small portion of these traditional assets flows into DeFi, the growth potential we’re talking about is not a matter of hundreds or thousands of times.

So, what is RWA? Simply put, it’s about tokenizing real-world assets—such as USD, gold, real estate, bonds, insurance—via smart contracts and bringing them onto the blockchain. This isn’t a new concept; stablecoins (like USDT, USDC) are actually the earliest applications of RWA. But what’s really interesting is that now some projects are doing more complex things.

The progress I’m most focused on is MakerDAO. This protocol’s RWA business has now exceeded $680 million, and importantly, this segment contributes over 58% of its revenue. In other words, MakerDAO has evolved from a purely DeFi protocol into a bridge connecting traditional finance and the crypto world. Their approach is quite interesting—they’re not simply locking assets but have established a comprehensive liquidation mechanism, including off-chain executors, multi-layer risk control modules, and even a dedicated RWA Foundation to manage these operations.

Looking at specific cases, MakerDAO holds about $500 million in RWA in the form of U.S. Treasury bonds, providing a stable income source for the protocol. They also partnered with a U.S. commercial bank (Huntingdon Valley Bank) to provide $100 million in loans, marking the first commercial loan case between a regulated U.S. financial institution and DeFi. Additionally, Société Générale borrowed $7 million from MakerDAO, using AAA-rated bonds as collateral. These aren’t virtual transactions—they’re real financial institutions conducting actual business with DeFi.

Another noteworthy project is Centrifuge. They bring real assets into the crypto ecosystem via NFTs, with a TVL exceeding $170 million. Their logic is to use the Tinlake dApp to allow asset originators to convert real assets into NFTs and then create asset pools. Investors can buy DROP Tokens (which guarantee returns) or TIN Tokens (which carry higher risk and higher returns) based on their risk appetite. This layered design is quite clever, attracting risk-averse investors while also providing opportunities for risk-takers.

Of course, RWA isn’t without issues. The biggest challenge is the trust assumption. Since these assets still exist off-chain, liquidation and enforcement rely on traditional financial institutions’ backing, so the level of trust for these assets can never match that of native crypto assets. Moreover, because of this, fully permissionless DeFi protocols find it difficult to support RWA, so most current RWA projects still have some centralized elements.

But the opportunities are clear. The yields in traditional finance (for example, 3.5% on U.S. Treasuries) are currently higher than DeFi lending protocols (around 2%), providing DeFi protocols with a sustainable revenue stream. If this trend continues, the RWA track could become the fastest-growing area in DeFi. Projects researching this direction are likely preparing for the next cycle.