In traditional financial markets, many real-world assets (such as real estate, artwork, bonds, precious metals, etc.) often face the problem of low liquidity. Although these assets hold significant value, long transaction cycles, limited counterparties, and geographical restrictions make it difficult for investors to liquidate them quickly.
RWA (Real World Assets) improves liquidity through tokenization, which digitizes traditional assets and issues them on the blockchain, allowing them to be traded efficiently and with low barriers, just like cryptocurrencies. This significantly enhances asset liquidity in the following ways:
Fractional Ownership, Lower Entry Barriers
For example, a real estate property worth $10 million traditionally requires a single investor or institution to purchase, which severely limits liquidity.
Through tokenization, this property can be divided into millions of tokens, each representing a small portion of ownership. This allows even ordinary investors to participate with as little as a few hundred or thousand dollars.
Fractional ownership lowers the investment threshold and brings more buyers and sellers into the market, boosting overall activity.
Instant Trading, Higher Turnover Efficiency
RWA tokens on the blockchain can be traded on secondary markets in real time, unlike traditional markets that require lengthy procedures and settlement periods.
Investors no longer need to wait months or even years to sell their assets—they can buy or sell almost anytime, similar to Bitcoin or Ethereum.
Global Market Participation, Expanded Buyer-Seller Pool
Due to the borderless nature of blockchain, RWA tokens can attract investors worldwide, no longer limited to local markets.
A global pool of buyers and sellers further enhances liquidity and improves price discovery.
Collateral and Derivatives Support
Tokenized RWAs can be freely traded on spot markets and also be used as collateral in lending, derivatives trading, yield farming, and other DeFi scenarios.
This adds more financial utilities to traditionally illiquid assets, further improving liquidity.
Improved Price Transparency and Market Efficiency
RWA tokens trade openly on-chain, with transparent price data and traceable transactions, helping markets quickly discover the true value range of assets.
Greater transparency and market depth, in turn, drive liquidity growth.
Conclusion:
The core of RWA’s liquidity improvement lies in fractional ownership, on-chain instant trading, global participation, collateral applications, and enhanced price transparency. This revitalizes traditionally illiquid assets in finance and enables ordinary investors to participate more easily.