Finance Magnates has recently highlighted the growing interest in incorporating real-world assets (RWAs) into blockchain over the past year. The aim is to unite the stability of traditional finance (TradFi) with the adaptability of decentralized finance (DeFi). However, current RWA implementations often fail to meet this aspiration. They frequently exist within legal uncertainties, are confined to custodial systems, and bear a closer resemblance to traditional securities rather than crypto-native assets.
Despite these setbacks, the market is ripe for expansion. The Boston Consulting Group has forecasted that tokenized RWAs might reach a staggering $16 trillion by 2030. At present, a mere $23 billion of RWAs are tokenized on-chain, which is only a fraction of the potential. Giants like BlackRock and HSBC are placing their bets on tokenization, with the latter expanding its tokenized product offerings. The Bank for International Settlements is also conducting pilot programs with central banks in the U.S., Japan, and France.
However, the majority of the existing RWA infrastructure is being constructed with a TradFi perspective, making it permissioned, centralized, and challenging to incorporate into DeFi protocols. DeFi’s present focus is on volatile and speculative crypto-native assets. Without access to stable assets from the real economy such as bonds or real estate, DeFi struggles to attract long-term capital.
Enter Asset-Referenced Tokens (AR tokens), a practical solution to these challenges. These tokens are fully backed by real-world assets and are designed to operate within the crypto ecosystem. Unlike traditional tokenized securities, AR tokens are not hindered by restrictive custody models or security classifications. They are compliant with evolving regulatory frameworks like the EU’s Markets in Crypto-Assets (MiCA), allowing them to function across DeFi protocols while remaining compliant and secure.
AR tokens offer a viable route to success for DeFi, not by emulating TradFi, but by enhancing it. They are paving the way for a financial system that is more accessible, resilient, and interoperable.
