Real-world assets (RWA)

Real-world assets, often shortened to RWA, are tokenized versions of assets that exist off-chain. A token on a blockchain represents a claim on the underlying asset, so it can be held, transferred, and settled on-chain. The most common form is short-term US Treasuries, and the category also includes private credit and real estate.

Tokenization works by placing the asset with a custodian or legal structure and issuing tokens that track it. When the underlying asset earns interest or income, that yield can flow to token holders, which has made RWA a growing source of on-chain yield.

Because RWA depends on both on-chain and off-chain parts, it carries risk from each. This includes smart-contract risk, custody and issuer risk for the entity holding the asset, and the market risk of the asset itself. A token's value also relies on the redemption terms that link it back to what it represents.