Real World Assets (RWAs) are finding themselves at a crossroads as the blockchain industry grapples with the need for more seamless integration. Despite the promise of decentralized finance (DeFi) to revolutionize the way we interact with assets, many RWAs remain fragmented, lacking the composability that could transform them into the building blocks of a new financial ecosystem. It’s a call to action for developers and investors alike to rethink how these assets are structured and utilized.
The Composability Conundrum
RWAs, ranging from real estate to art and beyond, have long been touted as the bridge between traditional finance and the digital frontier. However, the reality is more complex. “What we’re seeing is a disconnect,” says Emily Thompson, a blockchain analyst with a focus on asset tokenization. “These assets aren’t being leveraged to their full potential within DeFi protocols, which limits their usability and appeal.”
Thompson highlights that the issue isn’t just technical—it’s also about perception. “Many investors still view RWAs as static entities, rather than dynamic components that can interact with smart contracts and other digital assets,” she explains. This perception keeps RWAs siloed and prevents them from participating in the vibrant ecosystem that DeFi promises.
Bridging the Gap
The need for integration is pressing. Platforms like Lido and EigenLayer have begun exploring ways to incorporate RWAs more effectively, but progress is slow. The key lies in creating networks where these assets can be as easily traded, borrowed against, and used in yield farming as any native crypto token. This is echoed in recent developments where Mercado Bitcoin announced the tokenization of $200M in RWAs on XRPL, showcasing a significant step towards integrating RWAs into existing blockchain frameworks.
“Adopting a more modular approach is essential,” suggests Raj Patel, a DeFi strategist who has consulted for several high-profile blockchain projects. “If RWAs can be treated like Legos, where each piece can connect with another, we’ll see a dramatic shift in their utility and value.”
Patel points to recent innovations in cross-chain technology as a potential game-changer. “With the development of cross-chain bridges, there’s an opportunity to link RWAs to various DeFi protocols in a way that wasn’t possible a year ago,” he adds. It’s a step toward making these assets not just accessible but also functional within the broader DeFi landscape.
A Historical Perspective and Future Outlook
Historically, RWAs have been challenging to digitize due to regulatory hurdles and market fragmentation. Yet, as the digital asset space matures, these challenges are slowly being addressed. The introduction of more robust legal frameworks in jurisdictions like Singapore and Switzerland is paving the way for broader acceptance and integration. As explored in our recent coverage of Mercado Bitcoin’s initiative to tokenize $200M in real-world assets on the XRP Ledger, such efforts are crucial in overcoming existing barriers.
Still, it’s not just about regulation. It’s about overcoming the technological and cultural barriers that prevent these assets from becoming true DeFi citizens. The industry stands at an inflection point, with the potential for RWAs to evolve from isolated digital replicas of physical assets into the foundational elements of decentralized finance.
Looking ahead, the question remains: Will the blockchain community rise to the occasion and unlock the full potential of RWAs? Or will these assets continue to be mere shadows of their real-world counterparts, underused and undervalued?
The answer may depend on the willingness of innovators to embrace change and the openness of regulators to support new models. It’s a dynamic time for RWAs, and what happens next could redefine the financial landscape as we know it.
Source
This article is based on: RWAs build mirrors where they need building blocks
Further Reading
Deepen your understanding with these related articles:
- Dubai Sets RWA Milestone With First Approval of Tokenized Money Market Fund
- Ethereum DeFi Project Ondo Aims to Take on Robinhood With Jump Into Tokenized Stocks
- Australia’s Central Bank to Explore Developing Wholesale Tokenized Asset Markets
Steve Gregory is a lawyer in the United States who specializes in licensing for cryptocurrency companies and products. Steve began his career as an attorney in 2015 but made the switch to working in cryptocurrency full time shortly after joining the original team at Gemini Trust Company, an early cryptocurrency exchange based in New York City. Steve then joined CEX.io and was able to launch their regulated US-based cryptocurrency. Steve then went on to become the CEO at currency.com when he ran for four years and was able to lead currency.com to being fully acquired in 2025.
