The Great Thaw: What RWAs Can Do

The Vision

If you’ve been anywhere near web3 in the last few financial quarters, you’ve probably been hearing a lot of the space’s buzziest acronym: the RWA, or real world asset.

Conceptually, it’s easy enough to grasp: physical or financial assets – real estate, commodities, bonds, equities, you name it – of the offchain world are tokenized and moved onchain. There, RWAs circulate in every conceivable format in the DeFi ecosystem, being traded, owned, and sold in previously unseen volumes, speeds, and permutations, by anyone with an internet connection. 

It sounds utopian, doesn’t it? Suddenly, inaccessible markets and traditionally static, long-term investments liquify into accessibility. The barriers to entry and mobility open like floodgates – a burst dam refilling a river to bring thriving and growth back to a village once facing drought. 

There is a tendency to speak about tokenization in almost literary terms like those above – as a sensational novelty, a game of “what will they tokenize next?” fit for alternative reality novels (and/or sassy quips on Crypto Twitter). The futurist narrative can be fun, even inspiring. But this framework also tells the story of digital assets as speculative at best, unreal and unregulated at worst. We have to start closer to home, with what’s happening today, to show what RWAs can already do. Turns out they not only bust the Sci Fi myth of crypto – they’re also excellent, high yield investments that anyone can use to accrue wealth. (Which, to be fair, is pretty magical.)

The Now

Science fiction writer William Gibson is often cited for his observation that the radical innovations we have long associated with some near or distant future are in fact already a part of our technological reality – they just aren’t widely accessible. 

We have the tech to make flying cars, one imagines. What we don’t have is the market interest, infrastructure, or lobbying power that it would take to make that old symbol of futurism a viable “thing,” commercially or policy-wise. (What would be the point of them in today’s metropolis, honestly?) We also have the technology to make the transfer of vehicular assets – flying or not – instant, easy, safe, and low-cost. Tokenize them, then move their value onchain. Ta-da.

Yet the future that is here isn’t some Sci Fi fantasy. We’ve been hearing the “tokenize the world” narrative for years already, and all real world assets can, effectively, be digitized. (Plus, we actually have the infrastructure to put real-world cars and airplanes onchain. And we’re using it, too.)

But RWAs aren’t just about tokenizing luxury commodities or bringing other novelties onchain. They’re also treasury bills, government bonds, debt – traditional instruments that, if you’re not an institutional investor or high net-worth individual, can be hard to get. The barrier to entry tends to be high in terms of minimum thresholds, and even if you have the cash, an entire industry of intermediaries is there to guard the gate: brokers and advisors whose whole business is keeping wealth where it has always been. 

And if you don’t live in a global financial capital earning tons of USD, you may have a tough time purchasing treasury bills and government bonds. 

Unless the assets are tokenized.

As RWAs, government bonds and debt instruments can be purchased in fractional amounts, dramatically lowering the point of entry. Transacting them onchain eliminates the middle man – and the associated costs. Tokenized assets can be bought and sold instantly, and in full transparency, leaving an indelible and tamper-proof transaction history onchain. 

RWAs dissolve the regulatory and currency exchange issues that arise when attempting to invest outside of one’s country of residence by traditional means – using assets that are seen as stable, such as the United States dollar.  

“Stable,” traditionally, often also means “stagnant.” If you buy a three-year  treasury bill, you get a fixed APY for those three years. But you can’t cash it out before that time is up. It’s yours, but you can’t have it. You get thirsty, you’ve got a water glass and the tap’s right there, but you’re not allowed to turn it on. In your own home.

With RWAs, you can earn close to the same yield on that asset, but you can sell it whenever you want. Drink up.     

Increased capital flow means general economic growth. Increased stability stimulates innovation: buffered from risk, participants feel freer to invest in new ventures, technologies, and industries. 

The TLDR of it all is that RWAs democratize access to investment opportunities. Tokeniziation both preserves value onchain and unlocks new ways to use and to move it. Liquidity floods the market. Fractional ownership models are exponentially available. Global commodities markets are accessible via smartphone – without brokers or high entry costs to interfere. Fundraising for start-ups, even nonprofits, radically evolves. Individuals of all net worths invest in the projects they believe in, receiving tokenized shares in return. Democratized funding gives rise to a new wave of innovation, powered by a diverse, international community of stakeholders. Individuals are empowered. The global collective is strengthened. 

This is not a “trend.” Nor is it “the future.” This is happening now. 

We, at Coinshift, are not only calling for widespread distribution. We’re building to make it possible to open the proverbial dam – and make it rain on every constraint. 

Surfing the Continuum

Both tangible real world assets such as real estate and valuable commodities, and intangible, traditional financial ones such as debt or company shares, are – be it by their physical nature or their institutional status – perceived by the general public as “safe.” 

Crypto, as we know all too well, is not. Digital assets, despite the highly secure decentralized infrastructure that supports them, are for a variety of reasons still seen as untrustworthy – “fake,” scammy non-realities that have nothing to do with concrete, reliable financial investment. 

RWAs are backed by capital literally created by the government: stable, highly regulated assets tied to financial instruments that are as “real” as they get. Fiat-pegged stablecoins make up a vast majority of the RWA market, for one thing. RWAs tied to government bonds or treasury bills operate within established legal frameworks, ensuring compliance with financial laws and offering greater protection to investors. 

This security and oversight means that RWAs don’t just open up global financial markets to new kinds of investors – they open up the blockchain to traditional ones. 

Solid and secure means of transacting make it easier to participate in the DeFi space without the stress of price swings associated with cryptocurrencies, whether you’re a high net worth tycoon or a reasonable, future-minded professional just looking for accessible ways to reliably level up. 

Borrowers unlock the value of their physical assets; lenders can depend on the stability of their fiat-pegged currency. 

RWAs are the perfect vector for onchain value movement for this reason: because they don’t just bridge the divide between traditional finance and DeFi. They dissolve it. 

Responsible Irrigation

“Digital” (or as some would falsely contend, “fake”) assets and “real,” government backed ones are one and the same. The fusion is complete. 

Money has been digital for a while now, when you think about it. For many, bank account balances are simply numbers on a phone, and have been for some time. No one is worried about the technology under the hood. Holding ourselves to a perceived binary of “us and them” – of “real” versus “digital”; crypto versus tradfi; static versus dynamic; good versus risky – is out of date, and increasingly limiting. Diversity and connectivity, in our co-created and globalized economy just as in any ecosystem, is essential for growth. Fractionary ways of thinking impede flourishing. Ecologists have known this forever. Honestly, so have economists. Our financial system has ignored the science for too long.

That’s why we like to say that RWAs melt the ice – in the good, passing-from-winter-to-spring way, not the global warming one – that is the financial institution. 

Stablecoins enable that thaw. But not all stablecoins are created equal.

Everything we do reflects the pillars of onchain value movement – including our choice of stablecoin. We have studied the climate and the needs of our co-inhabitants. And we choose USDL. 

USDL is issued by Paxos International, whose stablecoins are trusted by giants like PayPal and Binance because it is uniquely safe, and uniquely hard-working. Paxos International is notable for its next-level regulatory compliance, something essential for our collective forward movement. (Just check out their transparency reports.) 

Every investor, of every size, is looking for – and in our view, deserves – passive income and yield. USDL is the first stablecoin to offer holders daily yield in-wallet, under regulatory oversight. In fact, users enjoy a 5% yield, just for holding. 

True, you can also get 5% from a AAA grade treasury bond. So, if you had the access and the means, why would you buy yours onchain? 

Because your bond is liquid and you can sell it for cash at any time. Because you can choose to supply liquidity to an automated market maker (AMM) pool, you can make swap revenue, too. Because, if you want to, you can use DeFi protocols that offer additional rewards, points, and airdrops.

Now the same AAA bond is giving you more than 10% APY– all because you bought it on the blockchain. 

What you choose to do may well come down to your appetite for risk and your financial know-how. But it’s your choice. Removing barriers and giving new investors access to high yields is how we emerge from the status quo. That’s what we mean by the “great thaw”: an era of unity, flexibility, and motion that (unlike the flying cars) is not only possible in theory, but actually here. 

We have the state of the art infrastructure necessary to support RWAs and an entire global community of investors ready to get moving downstream. So let’s go.