The Rise of RWA: Transforming the Digital Landscape with Blockchain
The enrichment of blockchain-based products is happening through the hands of crypto developers. The RWA field is also extremely important. When we talk about Web3, the next phase of the Internet, we also talk about the transformation of the existing digital infrastructure as a whole. Finance is also included in this. So, what is RWA and what does it do?
What is RWA and What Does It Do?
While most crypto investors focus on price speculation rather than technology, many sectors are opening up to the transformation brought about by the trillion-dollar blockchain ecosystem. From Metaverse to SocialFi, DeFi, the hype in recent quarters has been RWA. As mentioned before, RWA is used in the tokenization of real-world assets.
Websites, banking applications, stock markets use databases. SQL and many other alternatives, along with their combined use, represent Web2. And then there are blockchain-based applications. SQL data can be altered and manipulated on existing data servers. However, in structures that use blockchain and data feeds, this risk can be eliminated.
Transparency, on-chain traceability, low cost, and many other advantages make it necessary to transform traditional, even outdated data pools into blockchain. So are those who think this way just a few eccentric blockchain enthusiasts? Of course not, trillion-dollar companies also think the same and form partnerships.
RWA and Its Use in the Real World
One of the main advantages of digital assets is that they can be enriched with all the information and logic that banks, protocols, and customers need to interact with assets, including reserve proof, automated company transactions, identity data, active risk management, reconciliation requirements, and daily net asset value (NAV).
In 1970, we witnessed the transition from paper-based assets to digital. Our grandparents remember the days when stocks were bought and sold as physical paper. What seems absurd to us today was normal back then. And now the transition to blockchain is beginning.
Chainlink (LINK) is the most popular and almost monopolized venture in this field. Although it has competitors like TRB, the luxury of having partnerships with CCIP and Swift belongs only to Chainlink. So, what services do they offer?
- Reserve Proof: Enables the tracking of cross-chain or off-chain reserves that support tokenized RWA for consumers, monetary authorities, asset issuers, and on-chain applications. This provides them with advanced transparency and allows for the implementation of circuit breakers that protect users if the value of off-chain assets differs from the value of tokenized assets on the chain.
- Identity: Identity verification is necessary for compliance with regulations for all financial transactions. DECO is an oracle protocol that uses zero-knowledge technology to tokenize RWA and allows institutions and individuals to prove the source and ownership of tokenized RWA without disclosing personal information to third parties.
- Data Feeds: Ensures the secure delivery of commodity, stock, and all other data you can think of. Today, we know that the most popular DeFi applications benefit from Chainlink price feeds.
Investors need to realize that there are many imposters in the world of cryptocurrencies. For example, when the metaverse hype emerged, we saw the rapid launch of fake metaverse projects whose sole purpose was to deceive investors. We have experienced similar things in every field.
There are many altcoins listed in the RWA field by CoinMarketCap. It is important for investors to carefully examine and consider them based on the criteria we shared in our research guides. The ranking of RWA Coins by market value is as follows. It should also be noted that there are token-less initiatives and efforts by major financial institutions, such as Binance Oracle.
Disclaimer: The information provided in this article does not constitute investment advice. Investors should be aware of the high volatility and associated risks of cryptocurrencies and should conduct their own research before making any transactions.