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Tokenizing Real-World Assets

Cong et al. offer a rigorous analytical framework for understanding the economic incentives and systemic implications of real-world asset (RWA) tokenization. Th

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Abstract

Cong et al. offer a rigorous analytical framework for understanding the economic incentives and systemic implications of real-world asset (RWA) tokenization. The authors dissect the mechanics of on-chain asset mapping, focusing on how tokenization alters the trade-off between transaction costs, transparency, and counterparty risk. Utilizing a combination of game theory and financial economics, the paper evaluates the ‘trust-minimized’ promises of blockchain systems against the reality of legal enforcement dependencies. The work highlights the ‘Oracle Problem’ in the context of off-chain assets, arguing that the true value proposition of tokenization lies in the reduction of reconciliation costs and the acceleration of settlement cycles rather than mere digitisation. By evaluating the impact on market depth and access, the authors provide a foundational guide for policymakers and market participants alike regarding the systemic risks and structural benefits that emerge when traditional finance meets blockchain architecture. Authors: Lin William Cong, Simon Mayer, Daniel Rabetti Publication: Academic Paper Publication date: 2025-01-01

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Key findings

  • Tokenization reduces intermediary reconciliation costs, leading to faster settlement cycles.
  • The oracle problem presents a significant technical bottleneck for real-time valuation of off-chain assets.
  • Legal framework integration is a greater constraint than blockchain technological limitations.
  • RWA tokenization fundamentally alters market transparency but introduces new dependencies on custodians.

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Citation

Lin William Cong, Simon Mayer, Daniel Rabetti (2025). Tokenizing Real-World Assets. Academic Paper. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=7094059
Canonical knowledge ID: research:tokenizing-real-world-assets