👩‍🏫What is RWA?

RWA, Real World Assets, refers to the blockchain version of asset tokenization. It transforms various real-world assets such as money, precious metals, real estate, bonds, etc., into digital currencies through a special evaluation system. These assets are given a new form - Tokens, through which we can trade on the network, just like buying and selling goods in the real world, greatly facilitating asset liquidity. The US Dollar digital token USDT is an example of RWA.

In the cryptocurrency realm, RWA represents "physical assets." In DeFi, RWAs are being used as collateral for loans. This is an innovative approach as it combines traditional financial elements (such as real estate or stocks as collateral) with cryptocurrency loans. For instance, someone might own a significant amount of real estate but does not wish to sell it to obtain cash. Using DeFi, they can tokenize these physical assets and use them as collateral for loans, thereby obtaining cryptocurrency loans to use when liquidity is needed.