Definition
A real world asset (RWA) is an off-chain asset from the traditional economy that is recorded and represented on a blockchain through a digital token. These assets can include things like real estate, commodities, invoices, or traditional financial instruments such as bonds and credit products. The token is designed to reflect ownership, claims, or rights related to the underlying asset while allowing it to be handled within decentralized finance (DeFi) systems. RWAs connect blockchain-based markets with established forms of value that exist outside purely digital cryptocurrencies.
As a concept, RWAs rely on legal, technical, and governance structures to link the on-chain token to the off-chain asset. This connection is intended to ensure that the token’s value and rights are backed by enforceable claims in the traditional legal system. In DeFi, RWAs are often used as collateral, yield-generating instruments, or building blocks for more complex financial products. The idea of RWAs emphasizes bridging traditional finance and blockchain-based finance in a way that keeps the economic properties of the original asset.
Context and Usage
Within DeFi, the term real world asset (RWA) is used to distinguish tokenized claims on physical or traditional financial items from purely crypto-native assets. RWAs are treated as a category of on-chain instruments whose value depends on assets, contracts, or cash flows that exist and are administered off-chain. The concept highlights that, although the token moves and settles on a blockchain, its economic foundation remains tied to external markets and legal frameworks.
RWAs are discussed in relation to topics like risk, transparency, and regulation, because their value depends on both blockchain infrastructure and traditional custodians or issuers. The term is also used when describing protocols that specialize in sourcing, structuring, and maintaining these off-chain exposures for on-chain participants. Overall, RWAs serve as a conceptual bridge between decentralized protocols and established forms of real-world value.