Introduction

According to data from the RWA (Real-World Asset Tokenization) research platform rwa.xyz, the total market size of RWA currently stands at $15 billion. Meanwhile, BlackRock holds an extremely optimistic outlook on the RWA market, projecting that by the 2030s, its market value will reach $10 trillion. However, the RWA ecosystem faces multiple structural challenges: First, asset compliance remains in question, with over 60% of projects failing to pass the SEC or the EU MiCA’s securities classification review, hindering institutional capital from entering the market. Second, liquidity depth is insufficient, as non-government bond RWA assets generally have a daily trading volume of less than $1 million, making it difficult to support large-scale redemption demands. Third, yield isolation remains an issue, as most protocols have only completed asset on-chain processes without establishing reinvestment scenarios for returns. RWAfi has emerged to address these obstacles. The following content will provide an in-depth analysis of the overall operational logic and current state of the RWAfi sector.

Source: https://app.rwa.xyz/

What is RWAfi?

RWAfi (Real World Asset Finance) is a financial innovation paradigm that tokenizes traditional financial assets (such as government bonds, real estate, and commodities) using blockchain technology and integrates them into DeFi protocols to enable yield distribution, trading, and collateralized lending. Its core architecture consists of three key elements: Regulated asset mapping (such as BlackRock’s BUIDL fund tokenized as OUSG), on-chain liquidity engines (such as Flux Finance’s staking and lending), and cross-jurisdictional settlement networks (such as Mastercard’s MTN integrating with OUSG). Through smart contracts and oracle technology, RWAfi transforms real-world asset cash flows (such as U.S. Treasury interest and rental income) into programmable on-chain yield certificates, breaking the barriers of high thresholds and low liquidity in traditional financial markets.

Core Components and Operational Logic of RWAfi

After understanding the innovative value of RWAfi, it is essential to further break down how it enables the on-chain rebirth of traditional assets through a modular architecture and full-chain processes. RWAfi is not merely about tagging real estate or bonds with a token label; rather, it constructs a closed-loop system that integrates legal validation, yield enhancement, and cross-chain circulation.

This system relies on three core components—the compliance anchoring mechanism at the asset layer, the liquidity engine at the protocol layer, and the seamless interaction interface at the application layer. These components are interconnected through automated smart contracts, linking the entire process of “asset tokenization → yield compounding → cross-border settlement.”

Asset Layer (Compliance Anchoring)

The asset layer (compliance anchoring) serves as the foundation of trust for RWAfi, addressing the legal validation challenges of bringing traditional assets on-chain. By introducing licensed financial institutions and off-chain legal entity custody, it ensures the compliance and transparency of tokenized assets.

1.Licensed Asset Managers: Regulated financial institutions (such as asset management giants and banks) provide the underlying assets, ensuring compliance of the tokenized securities.
Example: BlackRock tokenized its SEC-registered BUIDL fund (backed by short-term U.S. Treasuries) into OUSG. Each OUSG corresponds to $1 worth of U.S. Treasuries, with legal risk mitigated through endorsement by licensed entities.

2.Legal Entity Custody: Establishing independent legal entities off-chain (such as trusts or SPVs) to isolate bankruptcy risks and safeguard token holders’ senior claims.
Example: Swiss Sygnum Bank issued the tokenized gold DIGau, with physical gold stored in Swiss vaults. On-chain token holders can redeem physical gold based on LBMA prices, achieving a 1:1 peg between on-chain certificates and real-world assets.

3.On-Chain Compliance Verification: Utilizing oracles and smart contracts to dynamically verify user identities (KYC) and asset status (e.g., reserve adequacy).
Example: Centrifuge’s corporate loan pools integrate with Chainlink nodes to fetch real-time loan repayment records and validate on-chain token repayment status. If a borrower exceeds 30 days of delinquency, smart contracts automatically freeze token transactions.

Protocol Layer (Liquidity Engine)

The protocol layer acts as the core hub for value transformation, turning static assets into programmable on-chain instruments through technical protocols.

1.Tokenization Protocols: Converting physical assets into regulatory-compliant on-chain tokens that support fractional trading and permission controls.
Example: Polymath utilizes the ERC-1400 standard to issue tokenized private equity, allowing only KYC-approved whitelist addresses to trade. Token transfers require issuer approval, ensuring compliance with securities regulations.

2.Yield Enhancement Modules: Automatically channeling base asset returns (such as interest or rental income) into DeFi protocols to maximize yields.
Example: Flux Finance enables users to stake Ondo’s OUSG (a U.S. Treasury-backed token). The system converts U.S. Treasury interest into USDC daily and deposits it into the Compound lending pool, increasing APY from 5.2% to 9.7%.

3.Cross-Chain Settlement Layer: Bridging multiple blockchain networks and traditional payment systems to enable seamless RWA asset transfers.
Example: Circle’s CCTP (Cross-Chain Transfer Protocol) allows OUSG to move seamlessly between Ethereum, Solana, and Avalanche. Enterprises can purchase OUSG directly with fiat via Mastercard’s MTN network without holding cryptocurrencies.

Application Layer (User Interface)

The application layer bridges the real world and blockchain, lowering the entry barriers for traditional institutions.

1.Institutional Access: Providing banks, hedge funds, and other traditional institutions with compliant fiat on/off-ramps and custody services.
Example: Morgan Stanley connects to Ondo Finance via Coinbase Prime, allowing high-net-worth clients to purchase OUSG directly with USD. The fund flow is fully monitored by Fireblocks’ custody wallets, ensuring compliance with SEC regulations.

2.DeFi Integration: Embedding RWA assets into mainstream DeFi protocols to expand their use cases and liquidity.
Example: MakerDAO includes tokenized real estate (such as RealT’s Detroit apartment tokens) in its collateral pool. Users can borrow DAI at a 0.5% fee by pledging real estate tokens, with a collateralization ratio set at 65%, lower than ETH’s 150% due to real estate’s lower price volatility.

Source: Gate.io

RWAfi Ecosystem Overview

As DeFi infrastructure projects mature, RWA tokenization has continued to evolve and innovate, leading to an explosive growth phase for the RWAfi ecosystem. Pioneering projects like MakerDAO, Aave, and Chainlink are at the forefront of exploring RWA’s potential within DeFi.

Although regulatory uncertainty around RWA remains, the long-term potential of this narrative is significant, with the ability to reshape the DeFi landscape and bridge value between the crypto and traditional markets. As a result, RWAfi could become a key catalyst for the next DeFi bull market.

Source: https://app.rwa.xyz/

Monitoring data from research institution rwa.xyz shows that the current RWA sector has formed a distinct asset-class stratification. As of February 2025, private credit dominates with an overwhelming 67.7% market share, followed closely by tokenized U.S. Treasuries at 22.5%. Both categories collectively account for nearly 90% of the total value locked (TVL), which has reached $16 billion.

Private credit is experiencing “regulation-driven growth”—its market size saw significant expansion following the SEC’s approval of tokenized note securities and the implementation of the EU’s MiCA framework. If regulatory sandboxes in Hong Kong, Singapore, and other regions continue to open up, this sector could experience explosive expansion by 2025.

Below, we introduce three key projects in the RWAfi sector:

Plume Network

Plume is a fully integrated modular blockchain specializing in RWAfi. It has built the first modular, composable, RWA-focused EVM-compatible chain, designed to streamline the registration of all asset types and facilitate capital tokenization through native infrastructure and chain-wide RWAfi-specific functionalities. Plume is developing a composable DeFi ecosystem around RWAfi, featuring an integrated end-to-end tokenization engine and a network of financial infrastructure partners for developers to deploy seamlessly.Plume Network Blog

Key Advantages of Plume Network’s Architecture:

• Scalability: Designed to handle the trillions of dollars in value expected to be unlocked by real-world assets.
• Security: Optimized economic models to ensure large-scale protection of real-world assets.
• Composability: Seamlessly integrates with DeFi protocols, unlocking real yield and liquidity without trade-offs.
• Full-Stack Ecosystem: Provides integrated tools for tokenization, compliance, liquidity management, and distribution, fostering a thriving community of developers, asset issuers, and users in a secure, scalable, and composable environment.

Source: Plume Network Blog

Solera

Solera, powered by Plume’s RWAfi ecosystem, is an efficient lending platform for yield-generating assets, including tokenized real-world assets (RWA). Through Solera’s risk-adjusted vaults and isolated lending pairs, users can optimize capital by leveraging crypto and RWA assets, benefiting from some of the sector’s highest loan-to-value (LTV) ratios.

Source: Solera Documentation

MultichainZ

MultichainZ leverages cross-chain functionality to provide lending solutions tailored to both retail and institutional users. By establishing strategic partnerships and integrating tokenization protocols, the platform offers secure and flexible financial opportunities. MultichainZ is committed to building a compliant yet inclusive environment, delivering a reliable RWA lending framework.

MultichainZ tackles regulatory challenges through a multi-layered approach that balances compliance without compromising decentralization. Operating under a Decentralized Autonomous Organization (DAO), the platform ensures community governance, allowing participants to shape its future development.

Cross-chain interoperability plays a crucial role in this model, enabling seamless interaction across networks and jurisdictions while maintaining versatility. This adaptability enhances transparency and accessibility, aligning with decentralization’s core mission of making financial services globally inclusive.

Source: MultichainZ Documentation

Future Outlook

Development Path: From Infrastructure Maturity to Ecosystem Expansion

As core technologies advance and regulatory frameworks become clearer, the RWAfi sector is set to transform infrastructure development to real-world adoption. Its growth trajectory follows these key directions:

The compliant tokenization and liquidity solutions in the RWAfi ecosystem have already been validated through standardized assets like U.S. Treasuries and corporate credit. The next phase will focus on universality and deep composability to enhance accessibility and integration.

1. Technology Layer: Cross-Chain Interoperability as a Necessity

• In RWAfi, multi-chain deployment is becoming an essential demand for asset issuers, driving continuous upgrades in cross-chain protocols. As real-world assets (RWA) are increasingly distributed across different blockchains, ensuring compliance during cross-chain operations has become a critical challenge. For instance, the EU’s MiCA certification mandates that assets must maintain compliance when transferred across chains. This requires cross-chain protocols to automatically identify and map regulatory requirements across different networks, ensuring legally valid transfers.

At the same time, frictionless settlement is crucial for multi-chain deployment. This means that asset transfers and legal entity changes must be executed in an atomic manner—either fully completed or entirely reverted—to prevent asset inconsistencies or legal disputes. Such atomic execution is typically enforced by smart contract logic, ensuring each operation is tightly linked and indivisible within the blockchain.

• Privacy-preserving computation technologies, particularly zero-knowledge proofs (ZKPs), are emerging as powerful tools in RWAfi. In asset classes like accounts receivable and supply chain finance, sensitive business data—such as counterparties and transaction amounts—must be protected while maintaining transparency.

For example, if a company wishes to tokenize its accounts receivable for on-chain financing, ZKPs can verify the asset’s existence and validity without revealing confidential details. This preserves business confidentiality, enhances the credibility of tokenized assets, and promotes the healthy growth of the RWAfi ecosystem.

1. Regulatory Layer: Standardization of Embedded Compliance Frameworks

• Major jurisdictions will introduce RWAfi-specific regulatory sandboxes, allowing tokenized assets to experiment with dynamic KYC, automated dividend taxation, and other compliance mechanisms within predefined rules.
• Compliance-oriented smart contract standards (e.g., ERC-3643) may become a mandatory regulatory requirement, establishing a “code-as-compliance” operational paradigm.

1. Market Layer: Expansion into Long-Tail Assets and Derivatives Innovation

• Beyond the dominant credit and bond assets, long-tail RWAs such as IP licensing fees, carbon credits, and renewable energy revenue rights will accelerate their on-chain migration.
• The RWAfi-based derivatives market (e.g., interest rate swap options, real estate lease securitization) is expected to generate trading volumes several times larger than the underlying assets themselves.

Risk Evolution: Systemic Challenges Accompanying Ecosystem Expansion

As the RWAfi sector becomes increasingly intertwined with traditional finance, its systemic risks will evolve, introducing new risk paradigms:

1.Regulatory Arbitrage and Jurisdictional Conflicts

• Regulatory Arbitrage Case Study: Some asset issuers may exploit regulatory loopholes in offshore jurisdictions to issue tokenized products that do not meet investor protection standards.
• For example, certain companies establish subsidiaries or Special Purpose Vehicles (SPVs) in lenient regulatory regions to issue RWAs, avoiding strict financial regulations in their home countries.This not only increases cross-border regulatory burdens but also exposes investors to greater risks, as these assets may lack legal protection.

2.Jurisdictional Conflict Case Study

• Cross-chain asset flows may trigger overlapping legal obligations across multiple jurisdictions. For instance, a tokenized real estate asset may be legally issued in Country A, traded on-chain in Country B, and then fall under securities law scrutiny in Country C.
• Such discrepancies in legal definitions and regulatory requirements can lead to complex legal disputes and enforcement conflicts.

3.Liquidity Fragmentation and Market Distortions

• Case Study on Liquidity Stratification: High-quality RWA assets issued by leading institutions (such as tokenized government bonds) absorb the vast majority of liquidity, while long-tail assets issued by small and medium-sized enterprises face a “liquidity desert.”

For example, in the RWAfi market, tokenized government bonds issued by large financial institutions attract a significant number of investors due to their high credit rating and strong market recognition. As a result, a substantial amount of market capital flows into these premium assets. Meanwhile, long-tail assets such as accounts receivable issued by small and medium-sized enterprises struggle to gain sufficient market trust and liquidity, making it difficult to secure adequate funding. This further exacerbates the polarization of financing costs.

• Case Study on Market Distortions: Automated Market Maker (AMM) models in the DeFi market may fail to effectively price non-standard RWA assets, leading to a breakdown in the price discovery mechanism.

For example, certain non-standard RWA assets with unique attributes and risk characteristics—such as supply chain finance assets from specific industries—may not be accurately assessed by AMM models. As a result, the market price may fail to reflect the true value of these assets, thereby impairing the efficient functioning of the market.

4.Smart Contracts vs. Traditional Legal System Conflicts

• On-Chain Liquidation vs. Traditional Legal Enforcement Case Study: Conflicts between on-chain liquidation mechanisms (e.g., collateral auctions) and traditional bankruptcy procedures (e.g., court-ordered asset distribution) can lead to double claims and ownership disputes.

For example, an on-chain collateral auction may conflict with traditional legal procedures, causing the same asset to be liquidated multiple times under different systems, creating legal uncertainty.

• Unclear Legal Standing of Tokenized Asset Holders Case Study: The legal status of tokenized asset holders remains ambiguous, leading to panic-driven sell-offs during market crises.

For instance, during extreme market conditions, if investors are uncertain about their legal rights over tokenized assets, they may rush to sell, triggering liquidity crises and widespread market panic.

Conclusion

Ultimately, RWAfi is not just a technological experiment in asset tokenization—it represents a paradigm shift in global capital allocation.

If RWAfi protocols can overcome the three key bottlenecks—compliance, liquidity, and pricing power—the projected $10 trillion market by 2030 could become a reality.

However, only protocols that deeply integrate the rigor of traditional finance with the efficiency of DeFi will successfully navigate systemic risks, anchor sustainable value, and truly reshape the financial industry’s foundational logic.