Original Article Title: "Huobi Growth Academy: RWA Track In-Depth Research Report: The Road to Integration of Traditional Finance and the Crypto Market"
Original Source: Huobi Growth Academy

1. In-Depth Analysis of RWA Track: The Growth Engine of the 2025 Crypto Market

Over the past few years, Decentralized Finance (DeFi) has rapidly emerged, creating a financial ecosystem that can operate without the traditional banking system. However, a key issue facing the DeFi space is that the entire market's operation still heavily relies on crypto assets (such as BTC, ETH, and stablecoins), lacking sufficient support from real-world assets (RWAs), which has constrained DeFi's development to the volatility of the crypto market itself.

The emergence of the RWA track is breaking this limitation. It combines real-world financial assets with blockchain technology, not only enhancing the stability of on-chain financial products but also bringing significant liquidity growth to the entire market. This track is becoming a key bridge for institutional investors and mainstream financial institutions to enter the crypto industry and may even drive the entire blockchain industry into a new growth cycle.

The core concept of RWA is to digitize various types of assets from the traditional financial markets (such as bonds, real estate, stocks, art, private equity, etc.) and transform them into tokenized assets that can be traded, collateralized, or lent on-chain through blockchain technology. This process not only enhances asset liquidity but also reduces the friction costs in the traditional financial markets, such as long transaction settlement times, high intermediary costs, and limited liquidity.

Take the bond market as an example. Traditional bond trading often involves multiple financial institutions and regulatory bodies, with cumbersome intermediary steps, leading to high transaction costs. Meanwhile, RWA tokenization can achieve real-time on-chain settlement, greatly improving transaction efficiency and reducing transaction costs. Additionally, due to the transparency and traceability of the blockchain, the management of RWA assets is more transparent, effectively reducing fraud and malpractice in the market.

With the maturity of blockchain technology and the growing market demand, the RWA track is attracting more and more institutional participation. For example, BlackRock, one of the world's largest asset management companies, recently launched a blockchain-based tokenized fund called BUIDL, which mainly holds stable assets such as U.S. Treasuries and provides a more efficient trading method through blockchain.

In addition, traditional financial giants like Franklin Templeton are also actively attempting to tokenize some of their fund products, allowing investors to more easily participate in the market. These examples indicate that the RWA track is no longer just a part of the "crypto narrative" but is becoming a core trend in the global financial market's digitization.

From a technical perspective, the development of RWAs relies on the support of multiple key infrastructures, including the blockchain underlying network, smart contracts, oracle, decentralized identity (DID), and compliance management, among others. Firstly, the public chain, as the carrier of RWA assets, determines the security and operability of the assets. Currently, Ethereum remains the preferred network for RWA tokenization, with many institutions deploying smart contracts on Ethereum to manage RWA assets. Additionally, L2 solutions (such as Arbitrum, Optimism) are also becoming popular choices for RWA asset transactions to reduce transaction costs and increase throughput. Furthermore, public chains like Solana, Avalanche, Polkadot, among others, are also exploring applications of RWA assets, striving to capture market share in this field.

From the market perspective, the RWA track has tremendous potential. According to Boston Consulting Group (BCG) research, it is expected that by 2030, the market size of the RWA track will reach $160 trillion, far exceeding the total market capitalization of the current entire crypto market. Currently, the global real estate market is valued at approximately $300 trillion, but most real estate investments require high capital and have low liquidity. If 1% of these assets are tokenized, it could create a $3 trillion RWA market. Similarly, the global bond market exceeds $120 trillion, and if 1% enters the blockchain, it will form a $1.2 trillion emerging market.

Institutional funds are rapidly flowing into the RWA track, indicating that this track is no longer just a pure "crypto experiment" but is becoming an integral part of the global financial system. By 2025, with the unprecedented support of the Trump administration for the crypto industry, this trend will continue and develop.

For investors, the RWA track not only provides a new market opportunity but may also become a crucial bridge between the crypto market and the traditional financial market. In the coming years, with more infrastructure improvements, the implementation of regulatory frameworks, and further deployment by mainstream financial institutions, the RWA track is poised to become a new growth engine for the blockchain industry, potentially driving the digital transformation of the entire financial market.

Overall, the rise of the RWA track represents not only the maturity of blockchain technology and the expansion of application scenarios but also signifies that the global financial market is entering a new stage of decentralization and efficiency. For market participants, seizing the opportunity of RWA asset tokenization, laying out infrastructure, and key protocols will be the core proposition for the development of the crypto industry in the coming years.

2. Current Market Environment: Macroeconomics and RWA Development Catalysts

In the current global economic environment marked by heightened uncertainty, liquidity cycle changes, and the vibrant growth of the digital asset market, the Real-World Assets (RWA) track is becoming one of the key growth areas in the crypto industry. With the Federal Reserve's monetary policy adjustments, persistent inflationary pressures, debt market volatility, and increased institutional participation in the crypto market, RWA development is experiencing an unprecedented opportunity.

Simultaneously, the shortcomings of the traditional financial system and the maturation of DeFi (Decentralized Finance) have been driving the migration of real-world assets to the blockchain. This article will deeply explore the development catalysts of the RWA track from five aspects: global macroeconomic conditions, liquidity environment, policy regulatory trends, institutional entry situation, and DeFi ecosystem maturity.

2.1 Global Macroeconomic Conditions: Inflation, Interest Rates, and Market Risk Sentiment Changes

The global macroeconomic environment is one of the most core variables influencing RWA development. In recent years, factors such as weak economic recovery post-COVID, escalating geopolitical conflicts, supply chain issues, and central bank policy adjustments have contributed to significant uncertainty in global economic growth. Among these, changes in inflation and interest rate policies directly affect liquidity and investor asset allocation strategies, indirectly propelling the RWA track's development.

Firstly, from an inflation perspective, the Federal Reserve's aggressive interest rate hikes in the past two years have had profound impacts on global markets. Since 2022, the Fed has hiked rates multiple times to curb high inflation rates, leading to global liquidity tightening. In a high-interest-rate environment, investors' risk appetite decreases, traditional financial markets are impacted, and capital flows tend to move towards low-risk, high-yield asset classes. This has prompted investors to focus on assets like government bonds, gold, real estate, among others, whose tokenization has become a significant growth area for the RWA track. For example, the tokenization of US Treasuries (such as the OUSG token provided by Ondo Finance) has become an important investment tool in the crypto market due to its high annualized yield (over 5%), attracting a significant inflow of DeFi funds.

Secondly, as the global debt crisis intensifies, the RWA track has become a critical option for capital hedging. By 2024, global debt has exceeded $300 trillion, with US national debt surpassing $34 trillion, reaching historic deficits. In this scenario, investor confidence in traditional financial markets has been shaken, leading them to seek more transparent and efficient financial infrastructure. The blockchain technology's characteristics of trustlessness, borderlessness, and low cost make on-chain RWA assetization the optimal solution.

In addition, in a high inflation environment, the demand for gold and commodities surged, and gold-backed tokens (such as PAXG, XAUT) also became popular assets in the crypto market. Overall, the increased global economic uncertainty has heightened investors' demand for safe-haven assets, and the innovation in the RWA track has made it easier for these assets to enter the crypto market, thus driving the explosive growth of this track.

2.2 Liquidity Environment: Fed Policy Shift and Market Risk Appetite Change

The rapid development of the RWA track is inseparable from changes in the global liquidity environment. In 2022-2023, the Fed implemented a significant rate hike, leading to severe global market liquidity tightening. However, since 2024, with the easing of inflation pressures, the Fed has reached the end of its rate hike cycle and may even begin a rate cut cycle. Market liquidity expectations have changed, which has had a significant driving force on the RWA track.

Firstly, the adjustment of the Fed's monetary policy has led to an increase in demand for stable income assets in the market. The DeFi ecosystem went through a high volatility and high-risk phase in 2021-2022, but current investors are more inclined towards low-risk, predictable income products, and the RWA track conveniently offers this solution. For example, bond tokenization and private market tokenization allow investors to enjoy a more stable and compliant income model within the DeFi ecosystem, which is also one of the key reasons for the explosion of RWA in 2024.

Secondly, from the perspective of the crypto market, BTC saw the approval of a spot ETF in 2024, with institutional capital continuing to flow in, expanding the overall crypto market liquidity pool. These funds, beyond BTC, also need to find more stable investment targets. RWA assets, due to their deep connection with the traditional financial market, have become an important allocation direction for institutional funds. For example, asset management giants such as BlackRock and Fidelity have begun to focus on the RWA field and have launched related investment products, which will further drive the growth of the RWA track.

Furthermore, as DeFi interest rates decline, the yield advantage of the RWA track becomes more apparent. In 2021-2022, the yield in the DeFi ecosystem was generally above 10%, but by 2024, the stablecoin yield in most DeFi protocols had dropped to between 2% and 4%, while the US Treasury bond yield in the RWA track still remains above 5%. This has made RWA assets the new cornerstone of DeFi yield, attracting a large influx of funds.

2.3 Policy Regulatory Trends: The Compliance Process of the RWA Track

Throughout the development of the cryptocurrency industry, regulatory issues have always been a focus of the market. The rise of the RWA track is due to its greater compliance compared to other DeFi tracks, making it able to meet the needs of institutional investors. Regulatory bodies around the world are gradually accepting the innovation of asset tokenization and exploring how to support the development of the RWA ecosystem through legal frameworks.

Firstly, the U.S. SEC (Securities and Exchange Commission) and CFTC (Commodity Futures Trading Commission) have conducted research on security tokenization, bond tokenization, and other areas, and have allowed some institutions to issue tokenized assets within a compliance framework. For example, Securitize has obtained SEC approval to issue blockchain-based security tokens, providing a good example for the compliance of the RWA track.

Secondly, Europe, Japan, Singapore, and other regions have a relatively open attitude towards the RWA track. For instance, Switzerland's SIX Digital Exchange (SDX) and Germany's Boerse Stuttgart Digital Exchange (BSDEX) have both supported tokenized stock trading, and the Singapore government is actively promoting the on-chain development of RWA assets. These favorable policies have made institutional investors more willing to enter the RWA track, providing a solid foundation for its development.

2.4 Institutional Entry and DeFi Ecosystem Maturity

In addition to macroeconomics and policy regulation, institutional entry and the maturity of the DeFi ecosystem are also important driving factors for the growth of the RWA track. Traditional institutions are starting to pay attention to the integration of DeFi and TradFi (Traditional Finance), with many top asset management companies, banks, and hedge funds already researching how to issue and trade RWA assets on the blockchain.

At the same time, the DeFi ecosystem is gradually transitioning from "high volatility, high risk" to "stable income, compliant development," with the RWA track being a core beneficiary of this trend. More and more DeFi protocols (such as MakerDAO, Aave, Maple Finance) are deeply integrating with RWA assets, giving the growth of the RWA track a stronger sustainability.

In conclusion, the surge of the RWA track is not only the result of market demand but also a product of the combined effects of global macroeconomics, policy regulation, liquidity environment, and the evolution of the DeFi ecosystem. Driven by these catalytic factors, the RWA track is expected to become one of the most important engines of growth in the cryptocurrency market between 2024 and 2025.

Three, Main Classifications of the RWA Track and Analysis of Core Projects

Against the backdrop of a maturing crypto market and accelerating institutional inflows, the rise of the Real World Assets (RWA) track has become a major trend. The core goal of the RWA track is to tokenize traditional financial market assets such as bonds, real estate, commodities, private equity, etc., in a blockchain-native form for issuance, trading, and management, making them more liquid, more accessible, and able to integrate with the DeFi ecosystem. This not only brings the convenience of decentralized finance to traditional assets but also provides a more stable source of income for the DeFi ecosystem.

The RWA track has diverse use cases, with different types of real-world assets having various representations on-chain, usually falling into the following major categories: Bond-based RWA, Commodity and Bulk Asset RWA, Real Estate RWA, Equity and Private Markets RWA, Infrastructure and Supply Chain RWA. In this section, we will delve into the core logic of these categories and analyze representative projects in the current market to gain a deeper understanding of the RWA track's landscape.

3.1 Bond-based RWA: Tokenization of US Treasuries, Sovereign Bonds, Corporate Bonds

The bond market is one of the most important asset classes in the global financial market, with U.S. Treasury Bonds (UST) in particular being considered one of the safest assets globally, widely used for hedging and reserve purposes. With the maturation of the DeFi ecosystem, more and more institutions are attempting to bring bond assets onto the blockchain to achieve transparent yield, increased liquidity, and the possibility of globalized trading.

Currently, the global debt market exceeds $300 trillion, with U.S. debt holding a significant share, while the total market capitalization of the crypto market is only $2-3 trillion. If bond-based RWA assets can be smoothly introduced into the DeFi ecosystem, it will greatly alter the market landscape. The liquidity of the traditional bond market is limited by factors such as trading hours, market access barriers, settlement cycles, etc., while on-chain bonds can provide 24/7 trading, borderless access, instant settlement, and other advantages, making them an important addition to the DeFi ecosystem.

Representative Project Analysis: Currently, in the RWA track, the key participants in the bond tokenization field include Ondo Finance, Maple Finance, Backed Finance, etc.

Ondo Finance: It is currently one of the most active bond tokenization projects, focusing on U.S. Treasury bond tokenization, offering the OUSG (Ondo Short-Term US Government Bond Fund), allowing DeFi users to earn returns similar to a short-term U.S. Treasury ETF on-chain, with an annualized return rate exceeding 5%. Ondo's tokenized bonds are custody by compliant institutions, comply with U.S. securities laws, and can freely circulate on-chain.

Maple Finance: Initially focused on the DeFi lending market, later expanded to the RWA track, providing on-chain debt financing services. Maple allows institutional investors to issue bonds in the DeFi ecosystem, providing a stable source of income for the crypto market.

Backed Finance: Introduced various bond ETF tokenization products, such as $bIB01 (corresponding to iShares Short-Term Treasury Bond ETF), providing investors with on-chain versions of mainstream bond ETFs in the traditional financial market, reducing the trading threshold and increasing accessibility.

The rise of bond-related RWA has not only met the needs of traditional institutions but also brought new revenue streams to the DeFi ecosystem, further driving the growth of RWA assets.

3.2 Commodity and Bulk Asset RWA: Tokenization of Gold, Oil, and Other Commodities

The commodity market is another important RWA track, especially for gold, which, due to its long-standing role as a store of value, became one of the earliest assets to be tokenized on the blockchain. The tokenization of commodities allows investors to trade more conveniently and integrate directly with the DeFi ecosystem, enhancing asset liquidity.

Gold has long been used as an inflation hedge, and as global economic uncertainty increases, the market's demand for gold continues to rise. However, the traditional gold market has high trading costs and complex settlement processes. Tokenized gold assets (such as PAXG, XAUT) provide seamless cross-border transactions, smart contract management, and DeFi staking functionalities, making it a significant asset class in the crypto market.

Representative Project Analysis:

PAXG (Paxos Gold): A gold token issued by Paxos, where each PAXG represents one ounce of physical gold in the London vault, exchangeable for physical gold at any time. PAXG is currently the highest-trading-volume gold token on-chain and is widely used for DeFi staking and trading.

XAUT (Tether Gold): A gold token issued by Tether, also pegged to physical gold, allowing users to engage in seamless global trading and participate in the DeFi ecosystem.

Commodities DAO: Explores the possibility of more commodities (such as oil, copper, soybeans, etc.) being tokenized on-chain, enabling the bulk commodity market to operate more transparently and efficiently.

The tokenization of gold and other commodities is changing the way the commodity market operates, making it more open and bringing a stronger inflation-resistant asset class to the crypto market.

3.3 Real Estate RWA: A Breakthrough in Asset Liquidity

The real estate market is one of the world's largest real estate markets. However, due to high transaction costs, low liquidity, and other issues, the traditional real estate market has struggled to integrate with the DeFi ecosystem. Real Estate tokenization in the RWA track allows global investors to participate in the real estate market through blockchain, breaking down geographical and financial barriers.

Representative Project Analysis:

RealT: Tokenizes U.S. real estate assets, with each token representing partial ownership of the real estate asset. Investors can receive rental income by holding the tokens.

LABS Group: Focuses on the Asian real estate tokenization market, allowing individual investors to participate in high-end real estate investments at a very low threshold.

The development of real estate in the RWA track has significantly increased the liquidity of the real estate market, while also providing DeFi with new collateral assets, promoting the overall growth of the ecosystem.

3.4 Private Equity and Fund RWA: Bringing Transparency to VC Investment

Traditional VC investment and private equity markets have long suffered from high barriers to entry and low transparency. Tokenization in the RWA track has made these assets more liquid. For example, well-known asset management company Hamilton Lane issued tokenized funds through blockchain, allowing investors to participate in the private equity market with a lower threshold.

Furthermore, compliance-focused tokenization platforms like Securitize are helping more traditional institutions put equity assets on-chain, enabling them to trade on secondary markets and improve liquidity.

IV. Challenges and Potential Breakthroughs in the RWA Track

Over the past few years, the RWA track has gradually attracted the attention of many in the blockchain industry. RWA aims to digitize real-world assets such as real estate, bonds, stocks, commodities, etc., and incorporate them into the blockchain ecosystem, allowing them to be traded, staked, borrowed, etc., on decentralized finance (DeFi) platforms. This track holds enormous potential but also faces numerous challenges. Overcoming these challenges will be key to determining its ongoing development.

First and foremost, one of the most significant challenges is the issue of legal compliance. Traditional assets are typically subject to national laws and regulatory frameworks, and digitizing these assets and introducing them into a blockchain environment may face scrutiny from regulatory bodies and issues of policy adaptability. Many countries' current financial regulatory policies do not explicitly address crypto assets and blockchain technology, especially when it comes to cross-border asset transfers, legal uncertainty further increases enterprise risk.

For example, how to legally transfer traditional assets such as real estate or bonds to the blockchain on a global scale and ensure compliance in different jurisdictions requires not only deep involvement of legal experts but may also necessitate revisions to relevant countries' legal frameworks. In addition, the issue of managing digital assets and transferring ownership may pose complex regulatory challenges, involving how to verify the actual existence of assets and the legitimacy of their owners.

Furthermore, the technological challenges are also significant. Although blockchain technology has clear advantages in data immutability, decentralization, and others, transforming real-world assets into digital form effectively remains a complex problem. This involves not only how to tokenize physical assets (i.e., convert them into digital tokens) but also ensuring that these tokens accurately reflect the value and liquidity of the assets.

Currently, the digitalization of assets often relies on traditional third-party intermediaries for assessment and endorsement, such as banks or legal institutions, which creates a contradiction between the decentralized concept and traditional centralized institutions. Additionally, the custodianship and management of assets are also major technological challenges. While blockchain can provide transparency and automation, ensuring the security and compliance of assets, especially without centralized intermediaries, is a crucial issue to address. Smart contracts on the blockchain can significantly streamline asset transactions, but in case of bugs or errors, substantial asset losses may occur, making the security and auditing of smart contracts extremely important.

For innovators in the RWA track, effectively combining the advantages of blockchain with real-world requirements is key. Particularly regarding asset liquidity issues, the decentralization features of blockchain can make assets more liquid, but real-world assets often face liquidity problems. For example, real estate, a high-value asset, has a long transaction cycle and limited market participants.

How to leverage blockchain to overcome the liquidity bottlenecks of traditional assets, allowing these assets to flow globally, becoming the liquidity assets of DeFi platforms, is one of the potential breakthroughs in the RWA track. By introducing asset tokenization, a real estate project, a bond, and other assets can be divided into multiple smaller shares, reducing the transaction threshold, attracting more investors, and making assets more liquid. Furthermore, asset tokenization can enhance market transparency, as investors can track asset movements through the blockchain's public ledger, reducing issues of market information asymmetry.

In addition to the legal and technical challenges, market acceptance is also a key obstacle faced by the RWA track. While blockchain has made significant achievements in the cryptocurrency and DeFi fields, for traditional investors, blockchain and digital assets are still a relatively unfamiliar concept. Especially for those accustomed to the traditional financial system and asset classes, digital assets may not immediately gain their trust.

To overcome this barrier, the RWA track needs to establish closer partnerships with traditional financial institutions. A potential breakthrough is that as more and more traditional financial institutions begin to accept blockchain technology and explore collaboration with crypto assets, the RWA track also has the opportunity to receive support from the resources and reputation of these institutions. For example, banks and asset management companies can help drive market acceptance of RWA by endorsing digital assets or collaborating with blockchain platforms.

Furthermore, potential breakthroughs for the RWA track also include multi-chain interoperability and liquidity innovation. Currently, many RWA projects rely on Ethereum or other mainstream blockchains, but interoperability between different blockchains still faces significant challenges. If RWA can achieve multi-chain interoperability, cross-chain asset transfers will become smoother, and the flow of asset value will be greatly enhanced. To achieve this, cross-chain protocols and bridging technologies will be crucial breakthroughs in the RWA track. This will not only enhance asset liquidity but also expand RWA's market share, attracting more investors and users.

Five, RWA Future Outlook and Investment Strategy

As blockchain technology continues to mature and develop, the RWA track is undergoing a subtle transformation. The integration of traditional assets with the crypto world will not only complement digital assets but may also reshape the global financial system. The future of RWA holds enormous market opportunities, but it also comes with complex challenges. To succeed in this field, investors need a deep understanding of industry trends and develop sound investment strategies.

The future outlook for RWA is full of potential, especially as the bridging role between blockchain technology and the traditional financial system becomes increasingly apparent. As blockchain technology is gradually adopted by financial institutions, the tokenization of traditional assets will become more common. It is expected that asset tokenization will become mainstream in the coming years, especially in real estate, bonds, equities, and commodities.

The increasing openness of the traditional financial market to digital assets will also accelerate the growth of RWA. Institutions such as banks, insurance companies, and asset management firms are exploring how to leverage blockchain technology to achieve automation and transparency in asset management while reducing operating costs and increasing efficiency. Particularly in capital-intensive industries, the market potential of RWA will be more significant, as digitized assets can transcend geographical restrictions, providing unprecedented investment opportunities for global investors.

The future outlook of RWA is closely related to the overall digitalization process of the financial system. As the financial market increasingly shifts towards digitalization and automation, RWA will gradually become a key part of the global capital market. With technological advancement and market maturity, the future RWA landscape may see more industry consolidation and merger opportunities, with some leading RWA platforms and projects potentially becoming unicorns in the blockchain industry.

Throughout this process, investors may not only receive direct asset returns but also participate in the "dividend" of blockchain financial innovation. Therefore, investment opportunities in the RWA space will continue to grow, requiring investors to timely grasp market trends, flexibly adjust investment strategies, in order to maximize returns in this innovative market.

This article is a contributed piece and does not represent the views of BlockBeats.

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