🪗Tokenization Technology for RWA
Last updated
Last updated
RWA tokenization is the manifestation of off-chain real-world asset tokenization. To bring real-world assets into DeFi, it is necessary to clarify the conversion of asset ownership and asset value between the physical world and the digital world, that is, how to interpret RWA as a legitimate representation of real-world assets. The RWA tokenization process of IEX can be divided into three stages: (1) Off-Chain Formalization; (2) Information Bridging; (3) Demand and Supply of RWA Protocols.
To make assets compliant and to clarify the value, ownership, and legal protection of assets, assets must be packaged off-chain.
Representation of Economic Value: The economic value of assets can be represented by the fair market value of assets in traditional financial markets, recent performance data, physical condition, or any other economic indicators.
Ownership and Legitimacy of Title: Ownership of assets can be determined through deeds, mortgages, bills, or any other form.
Legal Backing: There should be a clear process for asset ownership or rights changes involving specific legal procedures for asset liquidation, dispute resolution, and enforcement.
Next, information about the economic value, ownership, and rights of assets is bridged to the blockchain after being digitized and stored in the distributed ledger of the blockchain.
Tokenization: After the information packaged off-chain is digitized, it is brought on-chain and represented by metadata in digital tokens. These metadata can be accessed through the blockchain, and the economic value, ownership, and rights of assets are fully transparent. Different asset categories can correspond to different DeFi protocol standards.
Regulatory Technology/Securitization: For assets that require regulation or are considered securities, they can be incorporated into DeFi through legal and compliant means. These regulations include but are not limited to licenses for issuing security tokens, KYC/AML/CTF compliance, and compliance requirements for listing on exchanges.
Oracle: For RWAs, accurately depicting the value of assets requires reference to external real-world data, such as performance data for stocks RWA. However, since blockchain cannot directly bring external data onto the blockchain, solutions like Chainlink serve as data bridges between on-chain and off-chain information, providing DeFi protocols with off-chain asset value data.
RWA Protocol Demand and Supply: DeFi protocols dedicated to RWA drive the entire process of tokenizing real-world assets. On the supply side, DeFi protocols oversee the formation of RWAs. On the demand side, DeFi protocols facilitate investors' demand for RWAs. In this way, most DeFi protocols specializing in RWA can serve as both the starting point for RWA formation and the market provider for final RWA products.
