Beyond Hype: The Actual Use Cases of RWAs in On-Chain Finance
- Harsim Ranjit Singh
- Mar 6
- 10 min read
Mar 6th, 2025 | RWA | Crypto | By Harsim Ranjit Singh
Moving Past the Buzzwords: “Real World Assets” became a crypto buzzword, but behind the hype there are genuine, tangible use cases of RWA integration in on-chain finance that are live today. These use cases demonstrate that blockchain isn’t just for trading meme coins or NFTs – it’s facilitating real economic activity: funding businesses, issuing debt, and enabling new forms of transacting value. Let’s cut through the noise and examine some of the actual, concrete use cases where RWAs are adding value on-chain:
1. Decentralized Lending Backed by Real Assets: One of the earliest and most robust use cases is using real-world collateral in decentralized lending protocols. MakerDAO led the way by onboarding real-world assets as collateral for its DAI stablecoin. Starting around 2020, MakerDAO began working with partners like Centrifuge to bring asset-backed loans onto its balance sheet. For example, a Tinlake pool (Centrifuge’s platform) might consist of invoices financing for small businesses; these invoices are tokenized, and MakerDAO extended a DAI loan against those tokens. By 2023-24, Maker’s vaults held hundreds of millions in RWAs – financing everything from trade receivables to mortgages – and this contributed to DAI stability and Maker’s revenues1. So, a very real use case: small businesses getting cheaper financing because a DeFi protocol is effectively buying their invoices or loan paper. This bridges DeFi liquidity to the real economy. Another example: Goldfinch enabled DeFi lenders to fund microfinance and fintech lenders in emerging markets. Real businesses (like a motorcycle taxi financing company in Kenya) got USDC loans through a local fintech, and that fintech’s loan book was partially funded by Goldfinch’s on-chain pool. The end borrowers likely never knew crypto was involved, but they benefited from access to capital. Meanwhile, crypto lenders earned yield sourced from these borrowers’ repayments2. This model proved itself in 2021-2022 and continued through 2024 with relatively low default rates, showing that DeFi can be a channel for productive lending.
2. On-Chain Trade Finance and Factoring: Closely related is the use of RWAs for trade finance. Projects like Centrifuge, Harbor, and Tradewind have tokenized receivables (like unpaid invoices, purchase orders, or warehouse receipts) and used them in DeFi. A concrete case: ConsenSys’s project in 2021 with Coca-Cola’s bottlers tokenized supply chain invoices on Ethereum, which were then financed via a DeFi pool (providing working capital to suppliers). This meant a supplier could get paid faster by effectively selling their invoice to DeFi investors who would collect from Coca-Cola later – a process known as factoring, now done on-chain. These kinds of pilot programs have grown. By 2024, multiple factoring companies and fintech lenders regularly tapped DeFi liquidity by tokenizing receivables and taking loans on platforms like Clearpool or TrueFi. For the DeFi user, they simply see a pool offering, say, 10% APY backed by “Trade Receivables – Pool A” with details of the portfolio health. For the borrower, they see a faster, often cheaper financing source than traditional banks. This use case is less visible to the average crypto enthusiast but incredibly powerful in demonstrating real economic integration.
To illustrate, a medium enterprise in Brazil might have $1 million in net-30 receivables from a multinational. Instead of borrowing at 15% from a local bank (if they even can), they tokenize those receivables via a fintech and borrow USDC at 9-10% from a DeFi pool. They swap USDC to BRL via a fiat gateway to use in their business, then a month later they repay in USDC (after collecting from the multinational). This is DeFi providing supply chain finance – not just a concept, but executed by fintechs like Credix and others in Latin America.
3. Stablecoins and Asset-Backed Tokens as RWA Use Cases: It might not be obvious, but fiat-backed stablecoins are essentially RWA use cases – they are tokens backed by off-chain assets (cash and bonds). USDC and USDT combined hold tens of billions in U.S. Treasuries and other instruments as reserves. These reserves are RWAs that have been brought into the crypto ecosystem to provide stability for the tokens. In a sense, every time someone uses a stablecoin on-chain, they are indirectly interfacing with an RWA (the reserve asset). In 2023, Circle (issuer of USDC) reported that a large portion of USDC’s reserve was in 3-month U.S. Treasuries3, meaning the yield from those RWAs was significant. This actually led to another use case: some protocols created yield-bearing stablecoins that pass through the interest from reserve assets to holders. For instance, Overnight’s USD+ and Angle Protocol’s agEUR started deploying stablecoin collateral into TradFi yields and updating their token value or paying yield to holders. So DeFi users could hold a token that represents, say, a money market fund share – effectively getting real-world money market returns on-chain. Maker’s DAI, through its DAI Savings Rate (DSR), began paying out interest that ultimately came from RWA investments (Maker invested in bonds and used the earnings to pay DSR). By mid-2023, Maker raised the DSR to as high as 8% for a period, showcasing an actual use case of RWA yields benefiting on-chain savers. Stablecoins and related yield tokens are thus a huge RWA use case, arguably the backbone of on-chain finance at this point.
4. Tokenized Securities and On-Chain Funds: We are also seeing traditional securities and funds being ported to blockchains to improve accessibility and efficiency. A notable example is Franklin Templeton’s OnChain U.S. Government Money Fund (FOBXX) – a U.S.-registered mutual fund whose official share ledger is on the Stellar blockchain (and now also supported on Polygon)4. This is an actual 1940 Act fund that anyone with a brokerage account (meeting certain eligibility) can buy, and the shares are essentially tokens. The fund handles shareholder transactions via blockchain, which streamlines transfer agency operations. The actual use here is a smoother fund management process and potentially interoperability with other digital platforms. Another example: tokenized ETFs – in late 2023, firms like Hashnote and Backed Finance in Europe issued tokens mirroring the performance of U.S. Treasury ETFs or other index funds, fully collateralized by holdings of those ETFs or securities. This allowed on-chain participants to get exposure to TradFi indexes within DeFi. For instance, Backed’s bIB01 token represents an ETF of investment-grade bonds5. While regulators in the U.S. haven’t approved open tokenization of stocks/bonds, Europe has a more permissive regime for professional investors, and we’ve seen these tokenized security products trade on-chain (mostly among institutional or qualified parties). What value does this bring? It means a DeFi user can diversify into traditional assets without leaving the crypto environment – for example, putting idle stablecoins into a tokenized BlackRock money market fund (the BlackRock’s BUIDL token is precisely that, holding ~$1.7B in a tokenized money market fund by 20255. Such tokens often trade on decentralized exchanges or can be used as collateral in DeFi lending protocols, extending the functionality of TradFi assets.
5. Payments and Remittances with Stablecoins (indirect RWA use): Another real-world use case is using stablecoins (which as mentioned are backed by RWAs) for cross-border payments and remittances. This is more of an application of stablecoins themselves, but it’s worth noting because it ties the off-chain and on-chain value. For example, a business in Argentina might accept USDC from a U.S. client as payment for services, rather than dealing with correspondent banking – they then convert to local currency as needed. The real-world impact: faster settlement, avoidance of currency controls, and leveraging blockchain rails to move actual economic value. This is facilitated by the fact that one USDC is backed by one U.S. dollar in reserves6, making businesses comfortable that it’s a reliable stand-in for fiat. We’ve seen rapid growth in stablecoin transaction volumes for commerce, salaries (some freelancers get paid in stablecoins), and remittances (people sending money to family abroad using stablecoins through mobile apps). In markets with volatile currencies, stablecoins have become a lifeline – that’s a very tangible use of RWA (fiat) on-chain, improving lives by providing access to stable value and faster transfers. While not a flashy “DeFi protocol” use case, it’s arguably one of the biggest real-world impacts crypto has had to date.
6. Marketplaces for Asset Trading and Settlement: On the institutional side, we have projects like JPMorgan’s Onyx Digital Assets network enabling tokenized collateral swaps between banks (like tokenized T-bills against cash for repo). By mid-2023, Onyx had facilitated over $700 billion in intraday repo transactions using tokenized U.S. Treasury bonds7 – a massive real-world usage, albeit on a permissioned ledger. This shows how capital markets can gain efficiency; it’s not open DeFi, but it uses the same principle of tokenizing assets to streamline settlement. Similarly, the HQLAx platform in Europe is used by major banks to swap ownership of high-quality liquid assets (bonds) without moving the bonds themselves – instead, tokens called Digital Collateral Records are exchanged8. This is a real use case in improving collateral mobility in finance. It might be happening in the background, but it’s a sign that RWA tokenization is solving actual pain points (slow settlement, capital costs for banks) under the hood of the financial system.
7. Real Asset Tokenization for Retail Access: On a more retail level, there have been successful use cases of tokenizing tangible assets for broader investor access. For example, the tokenization of a luxury resort (Aspen St. Regis) allowed accredited investors to buy tokens representing equity in the hotel’s ownership trust, receiving quarterly dividends from hotel income. This was done on the Ethereum blockchain and later traded on secondary markets, demonstrating real estate crowdfunding 2.0. By 2025, platforms in the Middle East like SmartCrowd and in Asia like Fraxtor have tokenized dozens of properties and successfully distributed rental yields to token holders. These are real investors putting real money into fractional property tokens to earn real rental income – the tech is secondary, the investment is primary. Surveys show that 45% of HNW individuals would be willing to pay a premium in fees for access to direct real estate equity investments via tokenization if it meant lower minimums9, highlighting that the demand is grounded in tangible benefits (access and diversification).
The Results So Far: What have these use cases achieved in practice?
For DeFi protocols like Maker, RWA integration stabilized their business models. After incorporating RWAs, MakerDAO’s surplus grew, and DAI’s stability improved thanks to more diverse collateral5. Similarly, other DeFi lenders have found a product-market fit lending against RWAs when crypto demand was soft.
For borrowers and asset originators, cheaper or more flexible financing has been obtained. Multiple fintech lenders in emerging markets attribute growth to being able to tap DeFi liquidity when local banks or funds were limited. One Goldfinch borrower said they grew their lending in Africa by 4x thanks to the continuous funding channel1.
For investors, new yield opportunities opened. During periods where on-chain yields from pure crypto were near zero (e.g. mid-2022 after DeFi yields collapsed), those who supplied to RWA pools still earned attractive yields. It showed that DeFi can offer returns not tied to speculative trading but to real economy activity, which is a more sustainable value proposition.
Challenges and Learnings: The actual implementations of RWA use cases have also surfaced challenges, which teams have been actively managing:
Legal complexity: Each RWA integration required creating legal structures off-chain (LLCs, trusts, etc.) to hold the real assets and interface with the blockchain. MakerDAO, for instance, worked with a firm (Society General Forge or others) to set up structures that funnel collateral into an on-chain representation1. These arrangements are complex and costly to establish. Over time, standard templates are emerging (e.g. Delaware statutory trusts for U.S. real estate tokens, Cayman SPVs for global portfolios) to streamline this.
Oracles and Transparency: Bringing off-chain data on-chain reliably has been key. Most RWA protocols use oracles (sometimes operated by the issuer or a third party) to feed in NAV or confirm collateral existence. In a few cases, lack of transparency caused concern – e.g., questions arose about valuation of certain real estate tokens when market conditions shifted. This has reinforced the need for regular audits and disclosures to token holders, just like a traditional investment. Projects like RWA.xyz now aggregate data on RWA protocol performance, improving transparency for investors by showing outstanding loan values, interest paid, defaults, etc., in real time.
Regulatory compliance: Some early attempts like DAI’s exposure to a U.S. bank loan had to be structured carefully to not violate banking regulations or securities laws. While MakerDAO could engage via an SPV, fully decentralized protocols faced limits – completely permissionless platforms cannot hold securities easily without falling under regulations. Thus, many RWA platforms ended up whitelisting investors or being semi-permissioned. This is a learning: pure on-chain decentralization sometimes had to give way to a hybrid CeDeFi model to accommodate real assets. The industry has adapted by creating niches (e.g., separate pools for KYC’d investors vs. general pools).
Despite these challenges, the trajectory is clearly positive. Each successful use case builds confidence and a track record. The experiences of 2022-2024 – including weathering a crypto bear market – showed that RWA-based protocols were often the best performing in terms of steady yields and low drama, compared to flashy DeFi experiments that collapsed. For instance, while algorithmic stablecoins failed, DAI (backed partially by USDC and bonds) held its peg and paid interest; while degenerate yield farms vanished, Goldfinch lenders kept getting ~10% yields from real borrowers who kept paying even through crypto winter.
Conclusion – Real Value in a Digital Ecosystem: The take-away “beyond the hype” is that RWAs have moved from concept to reality in multiple domains of on-chain finance. They have made DeFi more connected to real economic flows, providing services that either complement or, in small ways, compete with traditional finance. We have on-chain loans funding businesses, on-chain tokens representing shares in physical assets, and stablecoins enabling commerce across borders. Each of these is an example of blockchain delivering value beyond just speculative trading. The trend is likely to accelerate as success stories spread.
Importantly, these use cases also subtly drive mainstream adoption of crypto tech, often without the end-user even realizing. A small business taking a DeFi-funded loan or an investor receiving yield from Maker’s vault might not care that it’s “DeFi” – they just see the benefit (a loan or yield) that’s competitive with or better than traditional options. This is how blockchain gains real traction: by solving problems or improving outcomes in the background.
So, beyond the buzzwords, RWAs are at work improving liquidity for investors, lowering cost of capital for borrowers, and generally making finance a bit more efficient and inclusive. As the ecosystem matures, we expect these existing use cases to scale up (from millions to billions and eventually trillions in volume) and new use cases to emerge (perhaps tokenized intellectual property markets, or on-chain consumption loans, etc.). But even if we froze progress today, the case studies we have are already enough to say: yes, real-world assets on-chain are working in practice – and they’re bringing DeFi closer to everyday finance.
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