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RWA

 

in crypto refers to Real-World Assets. These are physical or financial assets that exist outside of the crypto space, such as real estate, stocks, or commodities, which are tokenized on a blockchain for easier trading and ownership.

In blockchain and cryptocurrency, tokenizing RWAs allows these assets to be represented digitally. By using smart contracts and blockchain technology, RWAs can be bought, sold, or used for collateral in a decentralized environment. This brings liquidity to traditionally illiquid assets and enables fractional ownership, where investors can buy portions of a large asset like real estate or artwork.

Example: Let’s say a piece of real estate, like an apartment worth $1 million, is tokenized. Through blockchain technology, this apartment could be divided into 1000 tokens, each representing 0.1% ownership of the property. These tokens could be bought and sold just like any other cryptocurrency, allowing people to invest in real estate without needing the capital to buy the whole property.

The tokenized apartment might also be used as collateral for loans or staked in DeFi protocols, providing additional use cases for real-world assets in the crypto ecosystem. This example shows how RWAs bridge the gap between traditional finance and the decentralized world of cryptocurrency.