Why RWA?

Advantages of RWA and the Potential of Gold-Based RWA

With growing interest in Security Tokens and Digital Assets in the global financial market, the field of RWA (Real World Assets), which bridges physical assets with digital forms, has also garnered significant attention. RWA refers to the concept of issuing tokens on the blockchain that represent tangible and real-world valuable assets such as real estate, stocks, bonds, and commodities like gold and silver. This allows investors to benefit from the value fluctuations of such assets by holding tokens without directly owning the physical assets, maximizing the transparency and efficiency of transactions.

The application of RWA brings various advantages.

• First, the barriers to entry are significantly lowered compared to traditional financial markets. Investors can access global assets through blockchain without requiring accounts with traditional financial institutions, and intermediary procedures are greatly reduced, thereby lowering transaction fees. Furthermore, investments can be made in small units, allowing individual investors to participate without much burden.

• Second, as all transaction records are stored on the blockchain in a decentralized manner, data tampering becomes practically impossible, enabling transparent verification of who owns how much of which asset at any given time.

• Third, by utilizing smart contracts to automate transaction processes, payment and settlement times can be shortened, and errors can be minimized.

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Why Gold?

Gold is the most attractive asset in the RWA field. As previously mentioned, gold has been globally recognized for its value over thousands of years and is a representative safe-haven asset that combines scarcity and stability.

If the ownership of gold is tokenized and recorded on the blockchain, it would allow easy trading of gold's value without the need for physical possession. Furthermore, if the project operator securely stores the gold and verifies that the gold is matched 1:1 with specific accounts or tokens, a digital asset ecosystem based on physical gold could be established. This represents an advanced form of traditional gold trading, providing investors with the advantage of simplifying and increasing the transparency of all processes related to gold trading.

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Beyond Gold

RWA can also be applied to other tangible assets besides gold. For example, commodities such as silver, copper, and crude oil, as well as high-value assets like real estate, are also being tokenized through blockchain. However, as a globally trusted safe-haven asset, gold is the most effective choice for the early stages of an RWA project. Gold-based RWA offers investors a relatively intuitive and stable investment opportunity and provides project operators with the advantage of leveraging strong market awareness and clear infrastructure.

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Ultimately, the answer to the question "Why RWA?" is straightforward. By digitally connecting real-world assets, RWA simultaneously secures liquidity, transparency, accessibility, and efficiency, which were difficult to achieve in traditional financial systems.

When the real-world asset in question is gold, its historical trust and future scarcity contribute to its long-term value, serving as a critical foundation for maximizing the growth potential of a protocol. This is why the Arowana Protocol is pursuing gold-based RWA, while also keeping the door open for expansion into various other assets beyond gold.