No this isn't a article saying that RWA are breaking down and doomed to fail instead it's a article about what RWA are, how they work and the direction we are moving in rolling forward. A deeper more in depth breakdown of RWAs so you can understand the full scope of it all.
The Start
A quick recap to explain how Real World Assets started. The first was what is known as a stablecoin and the first was released in 2014 called bitUSD but depegged ine 2018 and never recovered. So the longest standing one would be of course Tether which has been around for just about as long.
Fiat Stablecoins
Stablecoins have become a popular tool and some of the best are now Tether, Cricle, Paxos, DAI and a few others. These are often backed with not only bank deposit but also other real-world securities. Things such as...
- Cash
- Treasury Securities
- Cash Equivalents
- Other Crypto assets
- or just backed by other stablecoins (A dangerous road to go down IMO)
This has provided a lot of great options and helped counter high issues with defi platforms where Impermanent Loss was becoming far too common for many people.
These treasuries are backed mainly by government issued bonds or money funds. These often become an area of focus when the bear markets set in and when interest rates are so low you're not making anything. Bonds open up a way to start to earn at least some form of yield on your money so it's only natural that this was a direction some companies went.
However these often have major KYC and limited options in terms of people investing into them. To be fair you'd most likely be better off just buying the bond yourself with Fiat.
#P2P Lending
P2P lending was something I stumbled on about 7 years ago and it was a real eye opener. While banks where paying me roughly 1-2% on my savings I could instead open up a p2p account (which let me add I had to move to another state to be able to get involved with it) allowed me to loan out my money to others and earn roughly 5%-7% which is triple that of what I made putting my money in the bank.
However many of these platforms then became shut down as more states stopped allowing it. Which is a damn shame and kind of shows you how messed up the system is and what a horrible system the banking system is.
Now with crypto and bitcoin we saw that power restored back into the hands of people. more and more platforms are offering up lending services.
Real Estate
This would be one I am most excited about. How do people in the USA become rich and stay far ahead of inflation? You guessed it Real Estate!
The issue is it's out of the hands of many as buying a second house is impossible for a vast majority of people. Now there are some options to invest in these and they do fairly well such as Ark7 and Fundrise which offer up options to invest in real-estate for little money.
The crypto space is also moving in on this and expanding outside of real estate as well such as art, collectables and even debts and credits. The biggest issue with this is you really have to trust the blockchain behind it. These are high risk of course and if they go belly up your most likely not getting a penny back.