Why Confidential Computing is Inevitable for RWA
What is RWA
RWA, or Real-World-Assets narrative is gaining popularity in the Web3 world. Looking for “Real-World Assets” on CoinMarketCap or Coingecko brings up 140 projects and counting.
RWA involves tokenizing and putting on-chain assets that exist in the real world. This includes financial assets like stocks, bonds, company debt, treasuries, and physical assets such as real estate, art, and collectibles (like expensive whisky and wine bottles).
Real-world assets represent a massive market. For instance, the real estate market alone is valued at around $387 trillion, dwarfing the S&P 500’s total market cap of $42 trillion.
Advantages of tokenizing real-world assets:
- Global 24/7 availability: Blockchains are available everywhere and they never sleep
- Reduction of costs: Less need for lawyers and paperwork
- Composability: Tokens can be used in a variety of other DeFi applications
- Lower entry barriers: Minimum investment amounts may be as low as 1 wei
Despite these benefits, challenges like securing custody of real-world assets, ensuring accurate on-chain representation, and navigating regulatory landscapes remain. Nonetheless, the industry is progressing, gaining traction and popularity.
Leading RWA Projects
Let’s have a look at some of the leading players in the space.
Securitize is an asset tokenization platform that recently announced a $47 strategic investment round led by BlackRock. They offer on-chain investment in top-tier private equity funds, VC funds, and more. They are working with issuers like Hamilton Lane, KKR, Blockchain Capital and more. Securitize reports over $800M total investments on the platform, and over 500K active accounts.
Centrifuge is the platform for tokenized real-world assets on-chain, allowing borrowing and lending. One of Centrifuge’s most prominent users is MakerDAO which provided $150M of capital on the platform, investing in an RWA fund created by BlockTower. The total TVL of Centrifuge is over $275M.
Goldfinch is a protocol that allows lending of crypto assets to real-world businesses, with real world assets serving as collateral for the loans. Investors can loan and generate yields from vetted businesses or other credit aggregators. At the moment of writing, Goldfinch states almost $100M of total active loan value.
RealT offers fractional investment in real estate on-chain. Real estate is tokenized, and investors can buy a share in a property for as low as $50. Owning a token entitles the holder to rental income and profits from price appreciation when the property is sold.
Maecenas, Artory, and Masterworks are art investment platforms that allow users to buy fractional shares of high-value artworks, making fine art accessible to everyday investors.
There are more exotic offerings — Blockbar tokenizes expensive alcohol, and Icecap Diamonds offers tokenized diamonds on-chain.
While the initial tokenization hype waned at the end of the previous bull run, there is renewed interest in RWA across the ecosystem. We believe RWAs are now past the Trough of Disillusionment and climbing up the Slope of Enlightenment.
The Transparency Challenge
RWA solves a real problem, disintermediating and democratizing investment in the Web3 way. But can it reach hundreds of millions of investors and overtake the traditional solutions in the near future?
Not with the current state of affairs. Most if not all the RWA tokenization solutions are implemented on fully transparent blockchains like Ethereum,
As in any other sphere of life people in general and investors in particular seem to be cautious about exposing their holdings to the world.
Do I want everyone to know that I own a piece of this Mark Rothko painting? Well, maybe when I hang the painting on the wall I do want my friends to see the item. But definitely not every stranger in the street.
Do I want everyone to know that my home is tokenized and half of the equity is acquired by some foreign investors? And how much rent I am charging my tenants? Again, probably not.
In case of tokenized equities, the list of shareholders of each company becomes fully public, and so does the investment portfolio of any individual investor or fund.
This state of affairs is not sustainable. While full transparency may be OK for initial “dipping your toes” investments, it clearly deters any large-scale adoption.
DeCC has the Solution
DeCC solutions, and specifically Secret’s Confidential Computing Layer, have an answer. By controlling data visibility, Secret CCL allows building decentralized, trustless, and compliant solutions without exposing users’ confidential information. Secret CCL is currently available for multiple EVM networks, as well as Cosmos chains, and will soon be expanding to Solana and more.
To enable efficient cross-chain communication, Secret Network uses flexible bridging solutions, namely our in-house developed lightweight SecretPathbridge and Axelar GMP.
Together with Secret Network’s EVM Developer Toolkit, we provide an extensive framework for anyone who wants to combine RWAs and Confidential computing into Confidential RWAs = CRWAs.
The integration of Confidential Computing into blockchain solutions for RWAs is not a question of “if” but “when.” As blockchain permeates every aspect of economic activity, ensuring privacy and security for RWA transactions becomes a necessity. The community must adopt these advanced technological solutions to secure a future where blockchain reaches its full transformative potential.
DeCC is inevitable.
About Secret Network
Secret Network is a layer 1 DeCC chain. Mainnet since 2020, Secret is one of the OG Confidential Computing chains. We offer a rich on-chain development ecosystem, as well as cross-chain infrastructure that allows builders on any chain to get confidential computing features easily and securely.
Secret Confidential Computing Layer offers easy-to-integrate cross-chain development primitives and allows EVM developers to add data protection and privacy to their solutions.
Learn more and join the privacy conversation by connecting with our official accounts.
