🪙RWA Tokenization Technology
RWA (Real World Asset) represents the tokenization of real-world assets off the chain. To bring real-world assets into DeFi, it's essential to clarify the conversion of ownership and value of assets between the physical and digital worlds – namely, how to interpret RWA as a legitimate representation of real-world assets. TBC's RWA tokenization process can be divided into three stages:
Off-chain packaging;
Information bridging;
Demand and supply of RWA protocols.
Off-Chain Formalization
To make assets compliant and clarify aspects such as the value, ownership, and legal protection of asset equity, it is necessary to formalize assets off-chain.
Representation of Economic Value: The economic value of assets can be represented by the fair market value in traditional financial markets, recent performance data, physical condition, or any other economic indicators.
Ownership & Legitimacy of Title: Ownership of assets can be determined through deeds, mortgages, bills, or any other form.
Legal Backing: In cases involving changes in ownership or equity that affect asset ownership, there should be a clear resolution process. This typically includes specific legal procedures for asset liquidation, dispute resolution, and enforcement.
Information Bridging
Subsequently, information regarding the economic value, ownership, and equity of assets is brought onto the blockchain after being digitized and stored in the distributed ledger of the blockchain.
Tokenization: After digitization in the off-chain phase, the information is tokenized, represented by metadata in digital tokens. This metadata is accessible through the blockchain, providing full transparency on the economic value and ownership of assets. 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 in a legal and compliant manner. Regulatory measures include but are not limited to licensing for issuing security-type tokens, KYC/AML/CTF processes, compliance with exchange listing requirements, etc.
Oracle: In the case of Real World Assets (RWA), accurately depicting the value of assets requires referencing external real-world data, such as performance data for stock RWAs. Since blockchain cannot directly incorporate external data into the blockchain from centralized sources, technologies like Chainlink are needed to bridge blockchain and real-world information. These solutions provide off-chain asset value data to DeFi protocols.
RWA Protocol Demand and Supply: DeFi protocols focusing on RWAs drive the entire process of tokenizing real-world assets. On the supply side, DeFi protocols oversee the formation of RWAs, while on the demand side, they facilitate investor demand for RWAs. In this way, DeFi protocols specializing in RWAs serve as both the starting point for RWA formation and a marketplace for the final RWA products.
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