Real-world assets (RWAs) are rapidly reshaping DeFi by bringing tokenized gold, real estate, invoices, and more on-chain. As of April 2025, over $12 billion in RWAs are locked in DeFi protocols. This article explains on-chain finance, the tokenization process, key use cases, challenges, and, crucially, the latest RWA TVL rankings, revealing which platforms lead in bridging traditional finance with programmable DeFi.

Understanding On-Chain Finance

The complete understanding of RWAs begins by explaining the nature of on-chain finance. Any financial operation executed through a blockchain network constitutes on-chain finance. Instead of relying on banks, brokers, or paper-based systems, on-chain finance operates through code-based smart contracts that enforce transactions transparently and automatically.

Decentralized protocols enable operations of lending and borrowing besides trading and investment. These platforms offer 24/7 access, reduced counterparty risk, and global participation without the need for intermediaries.

During the initial stage of DeFi, there existed a strong reliance on cryptocurrency-based assets whose prices tend to be highly unstable as well as speculative in nature. Mainstream users, along with institutions, found DeFi unattractive because of this restriction. The adoption of RWAs establishes a new system that connects blockchain financial operations to the real economy.

Tokenized assets like real estate, gold, or music royalties bring familiar value structures into the blockchain world, making DeFi more stable, relatable, and trustworthy.

What Are Real World Assets (RWAs)?

Real World Assets are physical or financial assets that exist outside the blockchain but are tokenized and represented on-chain. The tokenization system enables representation of many different kinds of assets including real estate, gold, oil, intellectual property (IP), supply chain invoices and future financial inflows.

The definition of RWAs has expanded over time. Originally, it referred mainly to tokenized physical goods. Now, it includes intangible and digital assets that have real-world value and are verifiable, such as music streaming royalties, patents, accounts receivable, or marketable securities. Every fixed asset and current asset item found on a corporate balance sheet has a valid representation as an RWA.

When security rights within an RWA get transformed into blockchain-based tokens, it becomes tokenized. Tokens derived from RWA acquisition enable multiple functions, including trade possibilities and collateral usage, but also serve as an asset for smart contracts to obtain yield. This process unlocks liquidity, improves accessibility, and brings transparency to assets that were traditionally illiquid or difficult to transfer.

The Process of Tokenizing Real World Assets

A single real-world asset requires these main procedures to become part of blockchain technology

1. Asset Selection

The process starts with identifying a suitable real-world asset, such as a building, gold reserves, an IP license, or an invoice.

2. Valuation and Legal Review

Tokenization requires experts to evaluate the market worth of assets, together with legal checks to verify lawful tokenization possibilities.

3. Token Design

The asset is modeled into a token format, typically using ERC-20 or ERC-721 standards, specifying rules around ownership, transferability, and revenue sharing.

4. Blockchain Deployment

Smart contracts are deployed on a blockchain network. Off-chain data is brought in through oracles to ensure up-to-date asset information.

5. Issuance and Distribution

The new tokens get released and distributed to investors from the minting process. Therefore the distributed tokens enable users to participate with both lending platforms and liquidity pools in addition to governance systems.

6. Ongoing Management

The asset must be monitored, audited, and maintained in accordance with regulations and investor protections.

There are many leading infrastructure providers in this space. The infrastructure providers help users verify asset representation through Proof of Reserve as well as enable asset movement between diverse blockchain networks with Cross-Chain Interoperability Protocol (CCIP).

RWA TVL Rankings (April 2025)

The first one is MakerDAO. It utilizes RWAs as collateral to back its stablecoin, DAI. MakerDAO elevates the stability and diversification of its collateral pool through asset inclusion such as real estate and trade receivables.

Secondly, Centrifuge focuses on bringing real-world assets into DeFi by enabling businesses to tokenize assets like invoices and use them as collateral for financing. The method enables financial access to operations of businesses that fall into the small and medium-sized enterprise category.

Third is Ondo Finance, which offers tokenized exposure to traditional financial instruments, such as U.S. Treasuries, allowing DeFi users to access stable yields through blockchain-based investments.

The table below shows the leading RWA protocols by Total Value Locked (TVL), highlighting how much real-world value each has tokenized on-chain.

Source: on-chain protocol dashboards and DeFi data aggregators, April 2025.

Multi-Chain Developments in RWA Finance

Ethereum & Layer-2s

Ethereum Mainnet continues to anchor the largest RWA pools, thanks to robust security and deep liquidity. MakerDAO’s real-estate and receivables vaults hold over $2 billion on Ethereum.
Arbitrum has seen a 50% TVL increase in RWA projects this quarter, as cross-chain bridges (e.g., Connext, Hop) simplify asset transfers.

Polkadot & Cosmos

Polkadot parachains like Centrifuge’s “Tinlake” enable bespoke RWA pools, attracting $350 million in TVL for invoice financing.
Cosmos IBC-enabled RWA protocols (e.g., Gravity Bridge) are emerging, with $150 million TVL in tokenized real estate and carbon credits.

Solana & Others

Solana hosts institutional credit markets via Maple Finance, now surpassing $400 million TVL in RWA loans.
Binance Smart Chain and Avalanche are incubating gold-backed and commodity RWA tokens, though each remains below $200 million TVL combined.

Key Use Cases in RWA Tokenization

Real Estate

Real estate has long been an illiquid investment with high entry barriers. With tokenization, properties can be divided into smaller ownership units. Through platforms like Propy and Centrifuge, users can purchase fractional ownership of residential or commercial real estat,e which provides tradeability as well as lending platform collateralization opportunities.

Commodities

Gold-backed tokens are one of the most successful RWA use cases. Each token is backed by physical gold, combining the safety of a tangible asset with the flexibility of blockchain.

Supply Chain Finance

Supply chain finance has embraced tokenization to solve liquidity issues. In traditional systems, SMEs often wait months for invoice payments. Tokenizing invoices allows suppliers to sell them on-chain and get immediate liquidity.

Intellectual Property

Tokenized IP is another emerging sector. These platforms are digitizing patents and licensing rights, enabling artists, authors, and inventors to monetize their work directly on-chain. For instance, streaming royalties from music or films can be tokenized and sold to investors, providing the creator with upfront capital.

Why RWAs Matter for the Future of Finance

On-chain finance obtained strategic value through the integration of RWAs as a technological achievement. Traditional financial systems maintain outdated operational frameworks that involve high fees together with slow transaction speeds and low transparency in operations. On the other hand, DeFi delivers automated functionality along with high accessibility, yet lacks solid connections to physical assets.

Real World Assets establish a necessary connection that enables decentralized systems to receive real-world monetary value. RWAs continue to transform finance by following these key developments:

Enhancing Liquidity

RWAs turn traditionally illiquid assets into liquid tokens. Real estate, for example, can be fractionalized into digital tokens that are tradable 24/7. Real estate investors and property owners can both extract and utilize their property equity while diversifying their assets at reasonable investment levels.

Diversifying Yield

DeFi protocols that integrate RWAs can offer yield streams tied to real-world performance. For instance, tokenized shipping invoices alongside music royalties function as revenue generators through actual business transactions. This contrasts with yield from crypto lending, which is often dependent on market speculation.

Expanding Participation

Fractional ownership lowers the barriers to entry for retail investors. A user in Asia can invest in U.S. commercial property or European art through a few clicks. Similarly, small businesses that lack access to bank loans can finance receivables through tokenized debt markets.

Reducing Volatility

The notable characteristic of assets operating within the crypto ecosystem includes wild price fluctuations. Real World Assets based on real economic foundations work to stabilize total portfolio risk levels. Assets like tokenized gold, government bonds, or receivables introduce more stable risk-return profiles into DeFi systems.

Attracting Institutional Capital

Institutions feel more at ease working with assets they have clear understanding of. Institutional investors can participate in DeFi without retrograde cryptocurrency risks by using tokenized U.S. Treasuries and commercial real estate as RWAs. This leads to greater capital inflows and faster ecosystem growth.

Leading RWA Protocols and Platforms

MakerDAO utilizes RWAs as collateral to back its stablecoin, DAI. MakerDAO elevates the stability and diversification of its collateral pool through asset inclusion such as real estate and trade receivables.

Centrifuge focuses on bringing real-world assets into DeFi by enabling businesses to tokenize assets like invoices and use them as collateral for financing. The method enables financial access to operations of businesses that fall into the small and medium-sized enterprise category.

Ondo Finance offers tokenized exposure to traditional financial instruments, such as U.S. Treasuries, allowing DeFi users to access stable yields through blockchain-based investments.

Real-World Examples

MakerDAO and New Silver

In one of the earliest large-scale RWA integrations, MakerDAO partnered with Centrifuge and New Silver to tokenize real estate loans. These loans were then used as collateral to mint the DAI stablecoin, resulting in a $30 million securitization. This demonstrated how DeFi can support real estate financing while maintaining liquidity and risk controls.

Societe Generale’s €100M Digital Bond

The digital asset division of French bank Societe Generale performed its first Ethereum-based digital bond issuance worth €100 million in 2023. Digital tokens improved both transparency and settlement efficiency by cutting off intermediaries, and this created new opportunities for the onboarding of traditional financial products.

Paxos Gold (PAXG)

Paxos Gold represents a digital token backed by physical gold stored in vaults. Each token equals one troy ounce of gold. The market capitalization of gold-backed tokens like PAXG and Tether Gold (XAUT) has surged.

Challenges Facing RWAs

While the growth is impressive, several roadblocks remain.

Regulatory Uncertainty

Different jurisdictions have different rules on tokenization. Some classify tokenized assets as securities, others as digital goods. The lack of global standards creates friction for cross-border investment and compliance.

Off-Chain Enforcement

Unlike crypto-native assets that can be liquidated instantly on-chain, RWAs sometimes require off-chain processes, like court orders for foreclosure or debt recovery. This reintroduces legal complexity and slows down execution.

Data Integrity and Valuation

The trust depends on precise asset valuation calculations. The process of valuations remains vulnerable to manipulation particularly when based on private financial records. Only independent audits and third-party verification maintain the trustworthiness of the system.

KYC and Privacy

Most RWA protocols require Know Your Customer (KYC) verification. While this is necessary for compliance, it can deter users who prefer the pseudonymity of DeFi. Balancing privacy with regulation remains an ongoing debate.

The Road Ahead: RWA Potential and Projections

The momentum behind RWAs is undeniable. From 2020 to 2024, the TVL in RWA protocols grew at over 200% annually. It grew from under $4 billion in May 2024 to more than $11 billion by March 2025.

Emerging trends include:

CBDCs acting as settlement layers for RWA transactions.
Tokenization of green bonds and carbon credits.
AI-powered asset valuation and risk modeling.
Cross-chain interoperability for global asset mobility.

A foundation based on smart contracts, real-world value, and scalable infrastructure emerges to transform global finance into a system that delivers speed alongside fairness and transparency.

Conclusion

RWA protocols have rapidly evolved from niche experiments to major DeFi pillars, with over $11 billion TVL diversified across Ethereum, L2s, and emerging chains. By tokenizing everything from real estate to carbon credits, RWAs are stabilizing yields, attracting institutions, and democratizing global asset access. As regulatory frameworks solidify and interoperability improves, RWA TVL is poised for continued exponential growth, cementing the fusion of traditional finance and blockchain into a cohesive, programmable financial system.

Top RWA TVL Rankings: Leading Protocols & Trends in On-Chain Assets