👨‍🏫Problem

Thesis/Problem Statement:

RWA products in DeFi are financial instruments that represent ownership or claims on real-world assets. These assets can include real estate properties, commodities, revenue streams, or other tangible or intangible assets.

RWA products in DeFi open up investment opportunities to a wider audience. Through tokenization, fractional ownership, and lower entry barriers, individuals can participate in assets that were previously reserved for institutional investors. This democratization of access can promote financial inclusion and empowerment.

General direction on Solution: Blockchain technology provides transparency and immutability to RWA products. Ownership, transaction history, and other relevant information can be recorded on the blockchain, enhancing transparency and reducing counterparty risks. Smart contracts automate various processes, streamlining operations and reducing intermediaries, thereby improving efficiency.

RWA products provide investors with the ability to diversify their portfolios beyond traditional financial instruments. DeFi allows for the creation of diverse RWA products, enabling exposure to different sectors and geographies. This diversification can mitigate risk and improve overall portfolio performance.

By tokenizing real-world assets, builders can unlock liquidity in traditionally illiquid markets. RWA products enable fractional ownership, allowing individuals to invest in assets they otherwise might not have access to. This increased liquidity can create new investment opportunities and enhance market efficiency. (edited) [2:24 PM] Challenges you may have to overcome: Verifying the authenticity and evaluating the value of real-world assets can be complex and time-consuming.

Incorporating real-world assets into a DeFi protocol often involves compliance with various legal and regulatory frameworks.

Reliable and transparent data is crucial for assessing the performance and risk associated with RWAs. Obtaining accurate and up-to-date data can be challenging.

Business Model: Asset Origination: The RWA protocol can act as a platform for asset originators to tokenize and offer their real-world assets to investors. The protocol can charge a fee or commission for facilitating the tokenization process and connecting asset originators with potential investors.

Asset Management: The RWA protocol can provide asset management services, offering investors the opportunity to diversify their portfolio by investing in a range of real-world assets. The protocol can earn revenue through management fees based on the value of assets under management.

Secondary Market Trading: Building a secondary market for tokenized RWAs can enable liquidity and trading opportunities. The protocol can earn fees from transactional activities, such as trading fees, listing fees, or market-making fees.

Yield Generation: The RWA protocol can generate yield for investors by utilizing the underlying real-world assets. For example, rental income from real estate properties or interest payments from loan portfolios can be distributed to token holders. The protocol can earn a fee or take a percentage of the generated yield as revenue.

Insurance and Risk Mitigation: The RWA protocol can offer insurance or risk mitigation services to protect investors against potential losses. It can charge premiums or fees for providing insurance coverage or risk management solutions. [2:24 PM] Total Addressable Market (TAM): The Total Addressable Market (TAM) for a Real World Asset (RWA) protocol can be significant, as it encompasses the value of all real-world assets that can potentially be tokenized and brought onto the blockchain. Estimating the exact TAM is challenging, as it depends on various factors such as the types of assets targeted, the geographical scope, and market adoption. Here are some examples of RWA projects:

Treasury Bill Unlock —> Ondo Finance has a minimum of 100k to access their treasury bill product. One can tokenize the treasury bill 100k and create LST. Liquid staking treasuries to unlock treasury yield for any size depositor.

Commodities: RWA products can be created to represent ownership or exposure to commodities such as gold, silver, or oil. These tokens can be traded on DeFi platforms, providing investors with a convenient way to gain exposure to commodity markets.

Revenue-Generating Assets: Builders can tokenize revenue-generating assets such as music royalties, licensing agreements, or revenue streams from businesses. Investors can participate in these assets' cash flows, receiving proportional returns based on their ownership of the tokens.

Intellectual Property: RWA products can also represent ownership or licensing rights to intellectual property, such as patents, trademarks, or copyrights. Tokenizing intellectual property assets allows creators and inventors to monetize their work and investors to participate in potential future earnings. October 4, 2023