RWA Lending

Definition ∞ RWA Lending, or Real-World Asset Lending, refers to the practice of using tangible, off-chain assets as collateral for loans within decentralized finance protocols. This process involves tokenizing physical assets, such as real estate, invoices, or commodities, and then leveraging these digital representations on a blockchain to secure borrowing. It aims to bridge traditional finance with decentralized finance, expanding the utility and collateral base of DeFi. This innovation connects illiquid assets to global liquidity pools.
Context ∞ RWA lending is a rapidly growing sector in crypto news, often highlighted as a pathway for DeFi to achieve broader mainstream adoption and provide new yield opportunities. Discussions focus on the legal frameworks for tokenizing and enforcing collateral rights for real-world assets. A critical future development involves standardizing the tokenization process and establishing clear legal enforceability for these digital representations across jurisdictions.