Being aware of what narratives are unfolding in crypto can help boost your returns. One such narrative that is gaining popularity and deserves your attention is RWA.
The RWA narrative is what most people are talking about today. Crypto influencers have mentioned it multiple times and we have also witnessed several RWA coins receive a hype-based pump. But what exactly is this narrative, and how does it work? I am sure you have all these questions and I will answer them for you.
In this article, I will take you through the basics of the RWA narrative and what projects are doing well under RWA.
Overview of The RWA Narrative
Before we look at the thriving projects in this sector, you need to understand the entire narrative well. Let’s look at the basics that you need to be well-versed in before diving deep into the space of RWA,
Securities Tokens Offerings
Before we come to what RWA is, it is important to understand the concept of STOs. Have you ever heard of Securities Tokens Offerings, also known as STOs? A security coin is essentially a one-of-a-kind token given out on a blockchain system that can be either permissioned or permissionless. These Securities Tokens Offerings are a narrative that started to take shape in 2018. However, it could not reach its full potential and didn’t become very big.
In basic terms, Securities Tokens represent a little slice of something bigger – like a stake in a business or a chunk of an investment. Even big shots like the government and big businesses can create their security tokens. These can be utilized in much the same way as stocks, bonds, and other assets. It’s kind of like owning a piece of the pie without having to buy the whole thing
Suppose a corporation wants to disperse shares to investors. In that case, they can leverage a security token to provide the same perks as regular securities – think shares, voting rights, and dividends. The reason we covered this is that RWA are essentially also Securities Tokens
What is RWA?
Now let’s come to what is RWA. RWA pertains to physical assets that can be transformed into tokens and represented using blockchain technology. However, RWA isn’t just restricted to physical assets. It encompasses any verifiable revenue streams or cash flows, or even in reflection on a company’s balance sheet, where the entire asset side can be viewed as RWA.
There are effectively four categories of physical assets that can be tokenized for RWA:
- Yield-bearing instruments (Dividend-paying assets, Royalty streams, and P&L monetization)
- Real Estate (Hard Assets, Funds, and Non-Traded REITs)
- Alternative Assets (Private Assets like equity, and debt; Collectables like art, cars, spirits; and Sports)
- Financial Products (ETFs, Indices and Stablecoins)
Furthermore, RWA also encompasses the emerging trend of issuing capital market products using blockchain technology. This involves tokenizing digital securities, which can then be offered to retail investors. RWA protocols enable the use of these assets as collateral for securing loans in cryptocurrencies, predominantly stablecoins. The debt is generally transformed into a non-fungible token (NFT) split into several tokens that represent the lenders’ shares. These tokens can be exchanged for stablecoins, which ultimately transfer to the borrower’s account.
Top RWA Coins to Invest in 2024: The next crypto trend
Now that you know the basics of what the RWA is, you are ready to learn about the best RWA projects in the market right now. As you know, the market is flooded with these projects right now and it is understandable that as a user you may be confused about which is the best option. Well, you don’t have to worry. I have carefully assessed these projects and found the 5 best options for you to choose from. These projects each have a list of pros and cons, and come with a lot of advantages that you must consider. You can sort through all these options based on your own investment needs and goals and choose what suits you the best.
The 5 best RWA projects are:
- Maple Finance
Goldfinch is a credit protocol that operates in a decentralized manner and is available worldwide. The primary goal of Goldfinch is to migrate all credit-related activities onto the blockchain, thus making capital more accessible to everyone and promoting financial inclusivity. This protocol enables crypto lending without the need for borrowers to provide crypto assets as collateral – a crucial aspect that has been lacking in the crypto industry for a long time, and one that provides entry to cryptocurrency capital for most people globally.
You may have recognized that the one major issue with existing decentralized crypto lending platforms is that they need borrowers to put up more crypto assets than they’re borrowing, making it impossible for most people around the world to take part. However, the Goldfinch protocol uses the idea of “consensus-based trust” to give borrowers a chance to prove their “creditworthiness” through the evaluation of other participants, rather than relying solely on their crypto assets. This approach opens up lending opportunities for more people, regardless of their access to crypto assets. Presently, all loans granted through the protocol are secured by off-chain assets and income, removing the need for borrowers to overcollateralize with crypto assets.
Goldfinch assures you of on-demand liquidity that fits your specific needs, with personalized options that are unique to you. Moreover, they provide various alternatives that help to optimize yield or streamline processes, giving you the freedom to choose the option that suits you best. What’s more, the yields are sustainable and unaffected by the fluctuations of the crypto markets. This could be a significant advantage for you in the long run.
The project has managed to achieve great milestones including a 7.8% Senior Pool USDC APY, 99,470,695 dollars as Active Loan Value, and a 30-day Protocol Revenue of 100,138 dollars. Goldfinch has also received the support of many renowned names in the industry through financial backing.
Some of these investors include
- Andreessen Horowitz
- Coinbase Ventures
- Kindred Ventures
- IDEO CoLab
- Mercy Corps Ventures
- A.Capital Ventures
- Access Ventures
- Stratos Technologies
As of December 9, 2023, GFI is trading at 1.49 with a market cap of $94,394,233.
Centrifuge is an ingenious infrastructure that fosters decentralized financing of tangible assets directly on the blockchain via a transparent marketplace for borrowers and lenders. What’s even more impressive is that Centrifuge has made history as the first-ever protocol to integrate Real-World Assets into the realm of DeFi. By enabling this innovative technology, Centrifuge is helping to create a more open and accessible financial system that benefits everyone.
Centrifuge is a game-changer for issuers, offering them the opportunity to borrow and finance their real-world assets without having to deal with traditional banks or intermediaries. However, that’s not all – the platform also provides a unique opportunity for institutions and DeFi protocols to access lending features. The team behind Centrifuge is constantly collaborating with industry experts like BlockTower Capital, Maker DAO, Aave, Polkadot, Moonbeam, Flowcarbon, and Ethereum to ensure that the product they deliver is of the highest quality.
One of the most remarkable things about Centrifuge is that they offer complete transparency to their users by bringing the entire capital structure, securitization, and debt servicing process on-chain. Additionally, it operates on a decentralized infrastructure that significantly reduces traditional expenditures. This can provide you with considerable cost savings and ensure that you get the most out of your investments.
At the core of the Centrifuge Protocol is the Centrifuge Chain, which operates as a layer-1 blockchain designed specifically for tangible assets. Moreover, the Centrifuge Chain has its native token called CFG, which serves as an on-chain governance mechanism that enables CFG holders to have a direct say in the development of the Centrifuge Protocol. This ensures that the Centrifuge community is actively involved in the growth and success of the protocol, making it more democratic and user-driven.
The feature of the platform that you are bound to value the most is its security features. As a protocol with strict legal and regulatory standards, Centrifuge ensures that all users go through extensive KYC screenings, sanctions screenings, and accredited investor checks. In addition to this, the platform undergoes frequent technical audits to further enhance its security features and ensure that it remains one of the most reliable and secure options out there.
CFG is trading at 0.66 USD with a market cap of $238,507,309.
TrueFi is the top DeFi credit platform that lets people borrow both real-world and crypto assets without putting up any collateral. By doing this on the blockchain, TrueFi is super efficient for borrowers and lenders alike. The thing is, TrueFi has come a long way since it started and has established itself as “ DeFi’s first and leading uncollateralized lending protocol”
TrueFi offers some seriously competitive returns making it an attractive option for DeFi investors looking to earn some serious cash. But that’s not all. One of the great things about TrueFi is the flexibility it offers. You can exit your investments anytime, with no lockup period and deep liquidity. And here’s the cherry on top: TrueFi’s SAFU fund and TRU stakes provide millions of dollars in aggregate coverage to protect your loaned assets. Plus, their underwriting process is top-notch, so you can trust that your investments are in good hands.
TrueFi is all about being transparent with its users. They make it super easy to track every dollar that’s loaned out to their vetted borrowers on the blockchain. Plus, they provide regular updates on the TRU token treasury, so you can stay up-to-date on everything that’s happening. And when it comes to their success so far, the numbers speak for themselves. TrueFi has managed to lock in a total value of $25.35M and earn a total interest of $37,999,068.
One of the key benefits of TrueFi is that it brings asset management onto the blockchain, cutting out the need for middlemen and making the whole process more efficient. This, in turn, allows for better yields for lenders, which is always a plus. In addition, TrueFi makes financial opportunities more accessible to everyone, regardless of their background or experience. With multiple layers of loss protection in place, users can rest assured that their investments are secure, even in the event of a default. Finally, by tapping into global liquidity, TrueFi helps portfolio managers expand their reach and take advantage of a wider range of investment opportunities. It’s all part of the platform’s mission to democratize finance and make it more accessible for everyone.
Truefi (TRU) as of December 9, 2023, is trading at $0.06 with a market cap of $65,261,939. TRU is available on Binance.
Maple Finance is an Institutional On-Chain Capital Market, which enables credit professionals to manage their lending businesses more efficiently. The way it works is that pooled capital is lent out to a bunch of institutional borrowers who need funding for their businesses. It’s a smart way to help these companies grow and expand their operations. It’s a promising project that started back in 2019. The team behind it consists of some former bankers and credit investment professionals who are determined to shake things up in the world of capital markets.
Do you know what’s amazing? Maple is doing something revolutionary in the world of finance. They’re taking compliance and due diligence – which are super important in any industry – and combining them with cutting-edge blockchain mechanics. This means that lending money is now totally transparent and frictionless, thanks to smart contracts. And it’s not just good for lenders – Maple is also opening up new opportunities for financial institutions, pool delegates, and companies who need funding.
They’re available 24/7, so you can access them whenever you need to. The best part? They offer uncollateralized lending, which means that businesses can finally break free from the constraints of traditional lending practices. With Maple, you can get flexible terms on-chain quickly – it’s way more efficient than anything we’ve seen before.
The Maple platform is a pretty versatile multichain platform- there’s a lot you can do on there. For starters, you can lend out your capital or borrow funds if you need them. You can even stake the MPL token, which is pretty cool. But that’s not all. Maple has partnered up with some other companies to create a credit market that’s way bigger than anything they could achieve on their own. It’s a true collaboration, with some big names on board – like TRM Labs, Trail of Bits, Meta Mask, Anchorage Digital, ImmuneFi, Fireblocks, meow, Coinbase, Circle, Gnosis Safe, Gemini, and Code4arena. As of now, they boast impressive analytics with 3,032,315,068 dollars worth of TOTAL LOANS ISSUED and around 87,953,891 dollars deposited in total.
MPL is trading at 17.6 USD with a market cap of $77,709,076.
Polymesh is catering to real-world assets (RWAs) in decentralized finance (DeFi). It’s a unique blockchain protocol designed for regulated assets, blending the reliability of traditional finance with the efficiency and security of blockchain technology. By converting traditional assets like real estate and bonds into security tokens, Polymesh addresses critical issues such as identity verification, legal compliance, and transaction confidentiality.
This platform is not just about digitizing assets; it’s a bridge between traditional finance and the innovative DeFi space. Polymesh opens up new financing avenues and market access, facilitating a seamless integration of traditional assets into the DeFi ecosystem. It’s a significant step towards a more interconnected and efficient digital financial world, where traditional and digital finance coexist and thrive together
Polymesh token is available on Binance and at the time of updating the article, it is trading at 0.21 USD with a market cap of $195,443,943.
Summary: Understanding RWA in Short (TLDR)
- Real World Assets (RWAs) are off-chain assets like gold, real estate, and bonds, tokenized for use in Decentralized Finance (DeFi), enhancing liquidity and investment opportunities.
- RWAs offer sustainable, reliable yields in DeFi, backed by traditional asset classes, transforming the DeFi landscape.
- They serve as a bridge between decentralized and traditional financial systems, making DeFi more compatible with external markets.
- Tokenization of RWAs allows for fractionalization, making assets like private credit accessible to a wider range of investors.
- The RWA ecosystem is evolving due to factors like layer 1 RWA protocols, regulatory changes, and the global economic environment.
My favorite RWA Protocols with a Potential 5 to 10X Opportunity
|RWA Project Name
|7 to 10x
Last updated: 9th December, 2023