Weekly Edition: We need to talk about RWAs There's a right way and a wrong way to tokenize them. As we step into another bull market, the narratives that will carry us to the promised land are starting to emerge. The strongest one is arguably tokenization. Every other week, headlines come out about the biggest private equity firms, real estate investment trusts and even countries wanting to tokenize everything. We are being told trillions of dollars of assets are about to sit on blockchain rails. Not all tokenization efforts are created equal. One unlocks entirely new financial markets. While the other is mostly putting existing ownership structures onchain. First, why would you want to tokenize a real-world asset? The main reason major institutions are pushing so hard for this is because it creates liquidity for illiquid assets. Imagine a real estate trust wants to tokenize an apartment building. They could divide ownership into thousands of tokens and let people around the world buy a small piece. That certainly improves accessibility and liquidity, but there is something misleading about calling it decentralized ownership. Thousands of people might own tokens representing the apartment, but one guy still has the master keys. Someone still has to manage the building, collect rent, fix the toilets and decide what happens to the property. Putting the ownership records onchain doesn’t suddenly make the underlying asset decentralized. This is where I think tokenization gets much more interesting. ↓ Instead of focusing on putting the asset itself onchain, tokenize the economic rights attached to it. Take the rent from the apartment building. You could fractionalize those cash flows and distribute them among token holders. Investors could trade their exposure, borrow against it or potentially use it throughout DeFi. One token could represent rental income, another could represent appreciation in the property and another could represent its debt. Instead of simply fractionalizing an apartment building, you are unbundling its economic characteristics and creating entirely new markets around them. Two approaches to real-world asset tokenization The apartment building doesn’t need to be decentralized. It probably never can be. The financial rights attached to it are what benefit from being put onchain. Blockchains are really good at moving, dividing and trading financial assets globally. They are considerably less useful at deciding who gets the master keys. ↓ TLDR: The future of tokenization isn’t putting everything onchain. It’s putting the economic rights that actually benefit from being onchain. Words: @alphadawgcrypto