Real World Assets are not what you think they are

?“Real World Assets" refer to physical or tangible assets represented and recorded on a blockchain or in digital form. For example, back in 2019, many startups were working on introducing "tokenized real estate," which essentially amounted to little more than crowdfunding websites. Later, real world assets also found applications in supply chain management, where every step of a merchant's delivery history can be recorded on the blockchain. Why a company would need a decentralized system for this is a question that puzzled me as well.

After the DeFi summer, ambitious entrepreneurs shifted their focus towards integrating real world assets into the financial market. Overnight, an army of startups emerged, aiming to bring the finally on-chain DeFi capital for investment in SME loans, structured products, and bonds, or to tokenize traditional financial products on-chain. This again raises the question of why we are reinventing the wheel when the existing system, albeit not flawless, is already well-established. The Chinese idiom "画蛇添足" (huàshétiānzú) literally translates to "draw a snake and add feet." This idiom conveys the idea of "gilding the lily" or "overdoing something unnecessarily." It means adding superfluous or unnecessary details to something that is already complete or perfect, which can detract from its original simplicity or effectiveness.

For starters, the term “real world asset” is problematic. The issue lies in our approach, which focuses on how blockchain can add value to "existing assets" rather than considering blockchain as the "originator of assets." Blockchain should be the originator of real world assets to be fundamentally useful. There shouldn't be a need to distinguish between metaverse assets (or whatever term we use) and real assets. By making this distinction, we deny that digitally originated assets are real assets. When an asset is generated on the blockchain, it automatically becomes immutable and honors its digital right owner. This is the "birthright" of a blockchain-based asset, setting it apart from any other asset class in the world. In this sense, a parallel can be drawn between the blockchain world and the real world. Just as recognizing private property rights is fundamental to individual liberty and economic prosperity in the real world, on the blockchain, these rights are secured by the "rule of immutable consensus."

Here is where the real advantage of blockchain assets comes into play. Consider this scenario: Your 3-year-old daughter created a finger painting of you using an iPad Finger Painting app. You thought it was good but didn't pay much attention. Twenty years later, your daughter has become one of the most promising young artists in the UK and has been awarded The BP Portrait Award, attributing her success to you. The once-ignored finger painting is now worth millions. Counterfeits flood the market, making it difficult to distinguish the real from the fake. Little did you know that the Finger Painting app was built on Ethereum. The painting itself is stored on Filecoin, and a non-fungible token was generated for the painting as proof of its creation. This token provides indisputable evidence that the millions belong to your family, and no one can argue otherwise due to the "rule of immutable consensus." No court proceedings or lawsuits are necessary because the truth is evident for all to see. And that’s the 'birthright' of blockchain assets. You decide not to sell the painting; instead, you take out a loan to renovate the house for your family. You collateralize it on Synonym Finance, a cross-chain lending market on Arbitrum, and pay the contractors on Coinbase's Base chain. You still have some money left, so you buy 32 ETH and become a home staker, in gratitude for how its technology has positively impacted your life. By becoming a validator, you hope that your participation in the security of the blockchain will benefit others as well.?

I do think that the “real world asset” can be the next breakthrough for blockchain. But not as its current definition stands, but all assets born on blockchain that contribute to the real world economy.?

Metaverse as an interface for blockchain born assets?

In the last example, the app serves as the interface between the blockchain and users. However, we can let our imagination take us even further. Currently, the concepts of the Metaverse and Real World Assets exist in separate realms. The Metaverse is a digital space that utilizes advanced IoT and VR technologies to offer users lifelike experiences online. In practical terms, the Metaverse, in its current state, falls somewhere between an in-condo tennis game with an awkward headset and two handheld controllers, and a collection of intelligently worded phrases strung together, such as "immersive semi-lifelike virtual creative economy." The essence of the Metaverse lies in being the interface between people and the economy.

No matter where we live, we often find reasons to complain. We grumble when the subway is down, traffic is bad, signals are weak, or credit cards get stolen. What we are truly complaining about is the interface we have with the world. The Metaverse holds the promise of providing a better interface, where we can work, play, socialize, and interact with one another without the constraints of non-digital economies. Now, imagine this world as the gateway to blockchain, where ownership is respected, our assets are secure, data belongs to us, holding company equities grant governance rights, artists can express them freely, financial markets are permissionless, and our privacy is protected. I would envision that such an economy would thrive. In other words, Metaverse has the potential to become the breeding ground for blockchain born assets. Those assets have to promise to have instant utility in an existing economy through the Metaverse interface.?