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Tokenization Transforming Industries: The Intersection of Digital and Tangible with RWAs



DAte :

April 26, 2024

Real-World Assets (RWA): Bringing Tangible Assets On-chain through Tokenization

"Blockchain? It’s just some digital buzzword," skeptics would say. The general opinion about Web3 and DeFi? "Sounds cool, but not for real-world applications." This is how many viewed these concepts. Yet, something's shifting in the web3 sector.

Real-World Assets (RWAs) are turning the tables. We're talking about tangible assets—like property, commodities, or physical goods—being combined with the decentralized finance (DeFi) ecosystem. It's no longer about just digital coins or tokens; it's about bringing real-world value into the mix. RWAs are showing that DeFi is not just a digital-only concept but a practical solution with real-world applications.

Telecom finance is changing, and RWAs are at the forefront. They're challenging the status quo and making people rethink what digital finance can be. If you thought blockchain was all hype with no substance, you might want to take another look. With RWAs, the future of Defi application just got a lot more interesting.

Understanding Real World Assets (RWAs) in DeFi

Real World Assets are digital tokens in cryptocurrency markets that represents tangible assets existing outside the digital landscape. Imagine a world where you can invest in top-tier real estate or acquire a stake in rare collectible arts without needing full ownership. Instead, you can own a portion of these assets, symbolized by digital tokens.  

Through the utilization of blockchain technology, RWAs can be tokenized, essentially transforming tangible assets into digital representatives of real-world assets. Resulting in, the integration of RWA in DeFi seamlessly blends traditional finance assets with DeFi, accelerating DeFi’s adoption and evolution.  

Real-World Assets (RWAs) facilitate the tokenization of off-chain assets, bringing them onto the blockchain.  However, there remains a lingering concern among many regarding how RWAs can effectively transform the value of assets such as gold, commodities, properties, art, equities, even cars and so on into digital tokens. Well, fiat-backed stablecoins serve as a tangible example in real life, demonstrating how traditional assets like fiat currency can be tokenized on the blockchain.  

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Source: Dune

The Maker Protocol, the issuer and regulator of the most popular DeFi stablecoin DAI, generates most of its revenue from Real World Tokens (RWAs). Data from Dune highlights a significant transformation in MakerDAO’s revenue structure, with nearly 60% revenue attributed to RWAs.  

Advantages of RWAs:

Enhanced Liquidity: TradFi often grapples with the challenges of managing illiquid assets like real estate, art, or commodities, which are not easy to sell quickly. This can result in difficulties in buying and selling assets, prolonging the transaction process. However, by tokenizing real-world assets, DeFi platforms can unlock these illiquid assets, enabling fractional ownership and streamlining trading processes, thus enhancing liquidity. This heightened liquidity has several advantages, including opening doors for smaller investors to participate, as assets become more readily tradable and accessible.

Increased Asset Diversity: RWAs expands the scope of assets available within DeFi beyond purely digital tokens. This diversification enhances investment opportunity, allowing participants to access a broader range of assets classes from anywhere in the world.  

Accessibility and Fractional Ownership:  Tokenization unlocks fractional ownership of RWAs. As a result, high-value assets like real estate or most expensive artwork can be divided into smaller, more affordable unites. This democratizes investment opportunities, making asset classes that were once inaccessible to the broader range of investors are now within reach.  

Transparency and Immutability: Blockchain technology ensures a secure and transparent record of ownership and transactions for Real-World Assets (RWAs) in DeFi. Every transaction involving RWA tokens is securely recorded on a distributed ledger system called the blockchain. Participants can easily access the complete history of assets on the blockchain, fostering trust and significantly reducing the risk of fraud.

Enhance Efficiency and Reduced Costs: The use of RWAs in DeFi can streamline the management and trading of assets. Smart contracts can automate processes, eliminate the need of intermediaries and reducing administrative burdens. This translates to potentially lower transactions costs compared to traditional finance.

Invoice Financing: Businesses can leverage tokenized invoices to access DeFi loans quickly and efficiently.

Realizing the Potential of Tokenized RWAs in Crypto Market

Amidst fluctuations in the crypto market, the market capitalization for tokenized real-world assets soared to nearly $342 billion in September 2023. Looking ahead, the digital assets manager forecasts a compelling outlook, with tokenized assets potentially reaching $10 trillion in optimistic market conditions, and $3.5 trillion in a more conservative scenario.

Presently, the market cap of Real-World Assets (RWAs) stands at approximately $7.43 Billion according to CoinGecko data. As RWAs bridge the gap between real-world assets and DeFi, they present unique opportunities for investors and pave the way for innovative projects to reshape the digital landscape.

The integration of real-world assets presents a transformative opportunity to redefine industry dynamics and unlock avenues of value creation. Through the strategic utilization of Real-World Assets (RWAs), the telecommunications industry can enhance its operational efficiency, financial flexibility, and overall consumer experience.

The telecommunications sector, known for its intricacies, frequently encounters challenges within the traditional financial system, particularly in settling invoices and transactions. However, by leveraging tokenization, the industry can effectively address these longstanding issues and streamline its operations.

Tokenization: A Game Changer for Telecom Industry?

The telecom industry can leverage RWA tokenization for invoice settlements and transactions in a few ways:  

Faster Invoice Settlement: Tokenized invoice can swiftly by settled on the blockchain within minutes, eliminating the need of intermediaries and manual processing. This results in a drastic reduction in transaction times and an improvement in cash flow.  

Cost Efficient: By sidestepping intermediaries like banks, transaction fees and administrative expenses associated with traditional invoice settlements are diminished.

Heightened Security: The inherent security features of blockchain technology ensure the security and immutability of transactions, mitigating the risk of fraudulent activities.

Transparency: Through blockchain, all involved parties in a transaction gain transparent insight into the process, fostering trust and accountability across the board.

Fractional Ownership Opportunities: Telecom enterprises have the potential to tokenize entire infrastructure ventures, granting smaller investors the opportunity to partake and contribute to their development.

To propel the adoption of DeFi and address challenges in the telecom industry, Zeebu, is bringing its blockchain-based platform revolutionizing payments. Zeebu and tokenization exhibit a strong synergy in the telecom industry, particularly in invoice settlement and transactions.

Zeebu: Reshaping Telecom Finance with RWAs

Zeebu, the leading Web3 Neobank catering to the telecom industry, stands at the forefront of revolutionizing how telecom companies handle their financial operations. Through the adoption of tokenization and smart-contracts, Zeebu presents an unparalleled and impactful solution to streamline invoice settlements and transactions, thereby enhancing efficiency and reducing costs within the telecom finance ecosystem. Furthermore, Zeebu addresses all industry challenges by harnessing the potential of blockchain technology and its emerging applications.