Why are DeFi projects increasingly viewing RWA as a new growth opportunity?
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Why are DeFi projects increasingly viewing RWA as a new growth opportunity?
RWA is already one of the fastest-growing sectors, with a vast untapped DeFi market, and we are ready to embrace it.
Navigating Web3 tides with focused insightsAuthor: Jeremy Nation
Compiled by: TechFlow
In a rising interest rate environment, demand for real-world assets (RWAs) in DeFi is growing as platforms race to access the attractive yields currently available in traditional markets. RWAs include conventional financial products such as bonds, stocks, and real estate, offering DeFi growth opportunities tied to tangible assets.
Lending protocol Umee plans to launch a bond-focused RWA product. Institutional capital markets platform Maple Finance aims to expand its current RWA offerings within the next six to nine months. Meanwhile, yield protocol Pendle has announced plans to introduce permissionless interest rate swaps targeting RWAs. Additionally, stablecoin issuer Frax has approved a governance measure to adopt RWAs through a holding company structure.
Umee Targets Bonds
Brent Xu, founder and CEO of Umee, said that rather than broadly covering RWA products, crypto lenders should focus specifically on bonds. Xu spent much of his career trading bonds before moving from Wall Street to the crypto space in 2015.
"I immediately looked toward the bond market," Xu said. "By focusing all our efforts on optimizing bonds, I believe this gives us a competitive advantage compared to others who might be considering custodianship of these assets."
Xu noted that platforms seeking to adopt RWAs must consider usability, compliance, and building a robust network resilient against hacks, exploits, and errors.
"If you could just press a button to trade stocks instead of going through the entire Fidelity account process, that would be incredibly powerful," Xu added, noting the same applies to over-the-counter assets like "real estate or bonds."
Maple's Expansion into Trade Finance
Although Maple already operates RWA-based lending pools, CEO Sidney Powell said the company is looking to further expand its exposure.
"We're having further discussions with several trade finance service providers regarding potential pilot programs," Powell said, adding that blockchain offers faster cross-border payments for export transactions compared to traditional banking channels.
"These two products offer higher yields, making them more attractive to funds engaged in fixed income and high-net-worth lending," Powell said.
Powell previously stated he hopes to launch a trade finance product within the next six to nine months to capitalize on undersupply in the sector.
Maple already supports physical assets via its AQRU pool, which aims to facilitate financing for small businesses in the U.S., such as leasing deposits or funding workforce expansion.
Maple manages counterparty risk through custody and collateral agents, handles collateral in default scenarios, and enforces legally binding agreements. It further reduces risk by receiving accounts receivable to ensure repayments are paid directly to lenders without passing through borrowers.
Stablecoin Interest Rate Swaps
Pendle has extended its interest rate swaps to sDAI from Spark Lend and fUSDC from Flux Finance—two stablecoins linked to RWA holdings and treasury yields.
As an interest rate derivatives protocol, Pendle allows users to trade these yields or earn fixed returns on these assets.
"RWAs are already one of the fastest-growing sectors, representing a massive addressable DeFi market—we're ready to capture it," Pendle said.
Pendle has also opened voting on sDAI and fUSDC within its governance system, allowing holders of the native PENDLE token to lock tokens for vePENDLE and direct incentives to various pools on the platform.
Frax to Integrate RWAs
A proposal by Frax founder Sam Kazemian to partner with FinresPBC, a Delaware-based nonprofit C corporation, passed on August 14 with overwhelming support. Nearly 100% of the 35 million FXS tokens committed in the vote supported the partnership with FinresPBC. This move will enable Frax to hold a range of traditional financial assets, including cash deposits and government securities.
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