Tokenizing Real-World Assets
Lin William Cong, Simon Mayer, Daniel Rabetti
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.
Key Findings
- 1Tokenization reduces intermediary reconciliation costs, leading to faster settlement cycles.
- 2The oracle problem presents a significant technical bottleneck for real-time valuation of off-chain assets.
- 3Legal framework integration is a greater constraint than blockchain technological limitations.
- 4RWA tokenization fundamentally alters market transparency but introduces new dependencies on custodians.
Topics
Citation
BibTeX
@misc{tokenizingreal2025,
title = {Tokenizing Real-World Assets},
author = {Lin William Cong and Simon Mayer and Daniel Rabetti},
year = {2025},
howpublished = {\url{https://papers.ssrn.com/sol3/papers.cfm?abstract_id=7094059}},
}Knowledge Explorer
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