Real-world assets have become more important in conversations about Web3. It is now possible to represent these assets as tokens thanks to blockchain technology. This means that things like stocks, currencies, and commodities can be traded on a blockchain. The market for tokenized real-world assets, including Polymesh real world assets, could be very large — potentially trillions of dollars’ worth of trading each year. There are many ways to think about this idea, but one key point is that lots of different kinds of value might be represented by tokens and moved around easily on blockchains- not just money or digital currencies. For example, you could also use blockchains to trade company stocks in a way that’s transparent & publicly verifiable (to make sure everyone knows what deals are being made).
Introduction to Real-World Asset Tokenization
Real-world assets (RWAs) exemplify the transformative potential of blockchain technology, enabling the digital representation of diverse physical, digital, and data-based assets. As per the research on market prediction, the asset tokenization market could reach $16 trillion by 2030, driven by anticipated annual savings of approximately $20 billion from blockchain efficiencies.
Tokenization allows assets like art, real estate, stocks, commodities, and personal data to be securely represented on-chain, enhancing ownership transfer, revenue sharing, and liquidity. This innovation unlocks new commercial possibilities for previously illiquid assets. This trend is exemplified by the increasing tokenization of the U.S. dollar, with projections suggesting the U.S. stablecoin market could grow to $3 trillion by 2028.
Importance of Real-World Assets in the Crypto Space
Including Polymesh real world assets in crypto portfolios allows investors to diversify beyond purely crypto-related assets. This diversification can mitigate risk and stabilize investment returns, offering a balanced approach to wealth management in volatile markets.
Real-world assets bridge traditional finance with decentralized finance (DeFi) by enabling lending, borrowing, and trading on DeFi platforms. This integration expands financial opportunities and functionalities within the decentralized ecosystem. Use Cases of Real-World Assets in Crypto include:
● Lending and Borrowing: Tokenized real-world assets serve as collateral on lending platforms, facilitating stablecoin loans and interest earnings for lenders. This decentralized model offers flexible financing alternatives compared to traditional banking.
● Index Fund Creation: DeFi platforms enable the creation of index funds composed of diversified real-world asset tokens. These funds spread risk across asset classes, providing passive exposure and investment diversification.
● Asset Management: Autonomous fund protocols trade real-world asset tokens to generate returns. This active management approach offers the potential for higher yields and capital deployment efficiency in the crypto space.
● Less Volatile Investments: Tokenization allows investors to access less volatile assets like real estate and commodities on blockchain platforms, diversifying risk and expanding investment horizons.
Tokenization Process for Real-World Assets
With these three simple steps, you can tokenize your real-world assets:
● Asset Identification: Identify valuable assets suitable for blockchain exposure and tokenization, whether physical (e.g., real estate) or digital (e.g., stocks).
● Regulatory Approval: Obtain regulatory clearance to ensure legal compliance and enforceability of asset-backed tokens, adhering to jurisdictional regulations.
● Blockchain Selection: Choose a blockchain network like Polymesh for its robust smart contract capabilities and asset management features tailored for real-world asset tokenization.
Harnessing the Power of Polymesh for Real-World Assets (RWAs)
Polymesh real world assets offer transformative advantages across efficiency, cost reduction, transparency, compliance assurance, liquidity expansion, and innovative financial solutions. Polymesh Real World Assets bring:
Centralized Transaction Data Entry
Centralized Transaction Data Entry ensures trust and reliable ownership verification. The immutable ledger acts as the definitive source of truth, enabling-
● Seamless post-trade reconciliation
● Atomic settlement
● Simultaneous delivery with payment
Autonomous Protocols
Autonomous protocols automate trade processes, reducing reliance on intermediaries and minimizing human error. This automation accelerates-
● Transaction speeds
● Lowers risk
● Significantly cuts costs associated with manual labor
Real-time Auditability
Public blockchains like Polymesh provide real-time audibility with accessible on-chain activity and data. Enhanced transparency empowers participants to
● Verify asset quality
● Assess systemic risk exposure
● Expedite dispute resolution
Compliance Assurance
Polymesh integrates complex compliance rules directly into real-world asset tokens at the protocol layer. This setup includes a unique identity system and privacy-preserving KYC features, ensuring regulatory adherence while safeguarding user privacy.
Fractional Ownership for Liquidity Expansion
Blockchain enables fractional ownership of traditionally illiquid assets, such as
● Real estate
● Private credit investments
● Pre-IPO shares and carbon credits
This innovation expands access to trillions in asset value, creating new ownership models and financial products.
Supporting Both Fungible and non-Fungible Tokens
Polymesh natively hosts digital assets and settlement logic, eliminating the need for smart contracts or multiple environments. Polymesh facilitates the creation of innovative financial products like fractionalized real estate funds and liquid revenue-sharing agreements by supporting fungible and non-fungible tokens.
Conclusion
Polymesh real world assets ensure robust governance through a multi-layered model involving token holders, stakeholders, and committees, bolstered by Substrate’s adaptable upgrade mechanism. Its decentralized identifier framework guarantees verified identities for all participants, promoting trust and security. Polymesh enables customizable compliance rules for global regulations like KYC/AML and investor accreditation. It ensures privacy with zero-knowledge proofs, secure asset management, and selective data disclosure. Polymesh’s on-chain settlement engine provides fast, secure settlements for on- and off-chain assets, ensuring near-instant finality without pre-funding or smart contracts.
