Real World Asset Tokenization

6 min readMay 22, 2023

Greetings Learn2Earn community!

Today’s topic will be covering Real World Asset Tokenization (A.k.a RWA Tokenization) - where we will go over the main components of this segment in the Blockchain ecosystem, as well as some of the most notable projects in the space.

Real-world asset tokenization is the process of representing tangible or physical assets, such as real estate properties, artwork, or commodities, as digital tokens on a blockchain or distributed ledger system. It involves converting the ownership rights and value of these assets into digital tokens that can be traded and transferred more efficiently and securely than traditional methods.

To tokenize a real-world asset, a unique digital representation, often referred to as a token, is created on a blockchain network. This token is backed by the underlying asset and represents a specific portion of its value or ownership rights. The tokenization process typically involves conducting due diligence on the asset, verifying its ownership and value, and issuing tokens in a transparent and regulated manner.

Benefits of Tokenization:

There are several benefits of real-world asset tokenization for people around the world. Here are some of the extraordinary advantages of real-world asset tokenization!

It provides increased accessibility to traditionally illiquid assets. For instance, real estate properties, which are often expensive and require substantial investment, can be divided into fractional ownership tokens, allowing smaller investors to participate and diversify their portfolios. This opens up investment opportunities to a broader range of individuals who may not have had access to such assets previously.
Fractional Magic: Imagine stepping into a grand art gallery adorned with priceless masterpieces, each whispering captivating tales of artistic brilliance. With real-world asset tokenization, the doors to these artistic wonders swing open for everyone. Unlocking this opportunity means that even those with modest means can invest in and cherish a fraction of an illustrious artwork, a piece of institutional-grade real estate, or even previously inaccessible corporate-type investments.
Another advantage is increased transparency and security. Blockchain technology provides a decentralized and immutable ledger, ensuring that ownership records and transaction histories are transparent, tamper-proof, and verifiable. This can reduce fraud, enhance trust among participants, and simplify the transfer of assets, eliminating intermediaries and associated fees.
Democratized Elevation: It elevates opportunities, erases financial barriers, and empowers individuals of all backgrounds to become part of the wealth-building narrative. From grand commercial ventures to sprawling farmlands, the Democratized Elevation ensures that everyone can participate in wealth creation, fueling a sense of inclusivity and fostering economic empowerment on a scale never seen before.

Top RWA projects (By Market Cap):

1. Maker (MKR)

Maker (MKR) is a cryptocurrency and governance token associated with the MakerDAO project, which operates on the Ethereum blockchain. MakerDAO is a decentralized autonomous organization that aims to create a stablecoin called DAI.

One of the unique features of MakerDAO is its ability to generate DAI through a process known as "collateralized debt positions" (CDPs). Users can lock their cryptocurrency assets, primarily Ether (ETH), as collateral in a CDP and generate DAI as a loan against that collateral.

Last year, the DAO passed a proposal to invest $500 million worth of stablecoin DAI into US Treasurys and corporate bonds. Voters agreed 80% of the funds would be allocated to US short-term Treasurys and 20% to investment-grade corporate bonds.

This proposal was an attempt for the DAO to generate yield from its DAI holdings with professional bond managers and to diversify counterparty risks, ultimately strengthening the DAO’s balance sheets.

2. Polymesh (POLYX)

Polymesh (POLYX) is a blockchain platform specifically designed for security token offerings (STOs) and regulated asset tokenization. It aims to provide a secure and compliant infrastructure for issuing, managing, and trading security tokens on the blockchain.

The platform utilizes a permissioned blockchain architecture, enabling only authorized participants to access and transact with security tokens. This approach helps meet regulatory requirements and ensures that participants adhere to relevant securities laws and regulations.

3. Centrifuge (CFG)

A blockchain-based platform that aims to bring real-world assets onto the decentralized finance (DeFi) ecosystem. It enables the tokenization of real-world assets, such as invoices, loans, and other forms of receivables, allowing these assets to be fractionally owned, traded, and financed on the blockchain.

Centrifuge utilizes a multi-chain approach, with its primary integration on the Ethereum blockchain. It leverages decentralized finance protocols, such as MakerDAO and Compound, to provide liquidity and lending services against the tokenized assets.

Through Centrifuge, asset originators can tokenize their assets by creating non-fungible tokens (NFTs) backed by the underlying real-world assets. These NFTs represent fractional ownership in the assets and can be traded on decentralized marketplaces, allowing investors to diversify their portfolios and gain exposure to previously inaccessible asset classes.

4. TrueFi (TRU)

TrueFi (TRU) is a decentralized lending platform built on the Ethereum blockchain. It aims to provide uncollateralized lending to trusted borrowers within the decentralized finance (DeFi) ecosystem.

TrueFi focuses on enabling borrowers to access loans without the need for collateral, utilizing a reputation-based lending model. Borrowers with a strong track record and reputation can apply for loans, and the TrueFi community of token holders collectively evaluates and approves these loans.

The TrueFi protocol emphasizes transparency and risk mitigation. Loans are executed through smart contracts, and lenders have the assurance that they will receive their principal and interest payments as per the agreed terms.

5. Maple (MPL)

Maple (MPL) is a decentralized finance (DeFi) protocol that aims to bridge the gap between traditional finance and the world of cryptocurrency lending. It provides a platform for institutional and individual lenders to participate in decentralized lending markets.

Maple allows lenders to directly fund pools of liquidity, which are then utilized to provide loans to borrowers seeking capital. These borrowers can be businesses or individuals in need of financing for various purposes.

Borrowers are required to provide collateral to secure their loans, and lenders can earn interest on their deposited funds.

Maple offers several benefits to participants, including efficient loan origination, transparent terms, and automatic repayment schedules. The protocol handles the administrative tasks associated with loan management, including the distribution of interest and principal payments to lenders.

* AllSet (By Xillion):

As many of you are aware of the current cohort of Xillion, AllSet is our proprietary AI-empowered real-estate platform, where you can sell any percentage of your property and get a return without any obligations.

It's a better, faster, and cheaper option than taking out a traditional loan or even selling your property entirely. You keep control over your property, you still could enjoy a % of the income it generates and you get real cash to use the way you want.

For example, we have currently partnered with Multi-Billion dollar Real Estate developer Niecon, and have tokenized $5MM + in luxury villas on the Gold Coast of Australia, as well as expanded to Dubai in UAE with an upcoming expansion into North America and other major hubs!

What Does this Mean for YOU? (A Truly Liquid Symphony)

Simply put, tokenization is transactional poetry in motion. In the past, investments in real-world assets (such as real estate) resembled a slow, ponderous symphony, with each note taking its time to resonate. But now, with real-world asset tokenization, the pace quickens.

Previously static and illiquid assets, like grand estates and commercial properties, transform into dynamic entities ready to dance in the market. Tokens representing these assets sway to the rhythm of demand, enabling owners to sell fractions effortlessly and investors to engage in a lively marketplace. The Liquid Symphony orchestrates harmony between buyers and sellers, unleashing a vibrant cadence of efficient transactions.

Summary:

Real-world asset tokenization has brought forth a wave of unique benefits that are revolutionizing how we perceive and interact with tangible assets. It has the potential to democratize investment opportunities, increase liquidity, enhance transparency, and enable global participation in asset markets. It represents a significant innovation in the financial industry, offering benefits to investors and asset owners worldwide.

Tokenization can foster global investment and cross-border transactions. By digitizing assets and using blockchain technology, individuals from different countries can invest in and trade tokens representing assets in other jurisdictions. This facilitates international capital flows, removes barriers to entry, and promotes economic growth and diversification.

About us

Xillion.one - a Web3 Tokenized Incubator that provides every XIL token holder with free tokens of every project it incubates.

We build projects from scratch and create synergy between them. We combine the VC and PE approach to building companies by growing their value and managing investor capital. We simultaneously operate as investors and founders to amplify the results.