Real-World Assets On-Chain: A Birds Eye View
One of the crazy parts about crypto is that trends sometimes outperform utility, but what if there’s a category that benefits from both? Introducing real-world assets (RWAs) on the blockchain.
In recent months, talks have been brewing about RWAs. Today, we’ll walk you through what exactly they are and show you some shiny new protocols making it easy to buy, sell, and trade RWAs on-chain.
First, a quick explanation of RWAs: simply put, they are an on-chain representation of an off-chain asset. They can either be backed as a 1:1 representation of the underlying asset or a synthetic version which follows the asset’s price movements.
Stablecoins
Stablecoins — probably the most well-known form of RWAs. There are four types, but for simplicity, they can be grouped into two: backed and algorithmic.
Backed stablecoins are a cryptocurrency that’s price is pegged to an underlying commodity or currency. For each coin on-chain, the issuer has an equivalent amount of the real asset in their custody.
On the other hand, algorithmic stablecoins are synthetic versions of a commodity or currency regulated by an algorithm rather than backed by the physical asset.
US Dollar stablecoins are the most popular form for swapping in and out of other cryptos and you’ll find them in every corner of crypto. But, stablecoins can also represent commodities such as gold.
Fun fact: you can find amazing prices on gold-pegged stablecoins from the Magpie dashboard. Just visit our app and search for “Pax Gold” on the Ethereum chain.
Loans
Loans are the second most well-known RWA class, but retail investors sometimes underestimate their significance. DeFi loans have facilitated billions in volume, with some of the industry leaders like Goldfinch, AAVE, and Maple each using creative strategies to leverage off-chain assets on-chain.
With Goldfinch, borrowers can collateralise on-chain loans with off-chain assets, while Maple offers under-collateralised crypto loans to institutional borrowers (although this does come with Tradfi-style background checks).
Within DeFi, we’re hopeful that one day retail customers can take under-collateralised loans by proving their creditworthiness on-chain rather than with traditional background checks.
Currently, most DeFi loan protocols remain on the Ethereum chain, so if your funds are on Arbitrum, BNB, or anywhere else, you can move them to Ethereum with Magpie in a couple of clicks.
Real Estate
Have you heard of Propy? They’re the blockchain-based real estate marketplace selling properties as NFTs globally, and they’ve already facilitated thousands of deed transfers on the Ethereum blockchain. Crazy right?
With Propy and other on-chain real estate marketplaces, blockchain’s benefits shine. From borderless transacting to immutable and indestructible property deeds, blockchain provides brilliant solutions to the slow and inefficient real estate transaction process.
Although you cannot transfer NFTs cross-chain, with Magpie, you can ensure you are getting the best prices on crypto swaps in preparation for the new nest you’re looking to build!
Carbon Credits
It’s important to protect our environment, saving the trees so us birds have somewhere to hang out at night.
Therefore, carbon credits RWA protocols have us flapping excited! In a nutshell, carbon credit cryptocurrencies like KlimaDAO are backed by real-world carbon assets, so token holders can offset carbon emissions.
There are several projects attempting similar feats, such as Nori and Moss, and the transparent nature of blockchain could play a significant role in attracting businesses to carbon credit RWA protocols in the future.
However, since Ethereum has a bad rep’ regarding sustainability, many carbon credit protocols choose to set up on alternative blockchains; for example, KlimaDAO is on Polygon.
If you want to make a difference, there’s no better way than with Magpie’s order routing algorithm to get your funds to the desired chain as efficiently as possible.
A lot of action surrounding RWAs is happening on Ethereum. However, as Magpies, we are nomads; we’ll cross any chain or terrain for our next DeFi meal. Sometimes we are hungry for RWAs on Ethereum, or sometimes we’re degen trading on Arbitrum.
Whatever our destination, the Magpie app will take us there.
