RWA Lending

This explains how ZeroLend implements RWA (Real World Asset) lending.

What are RWAs?

RWA platforms allow users to represent real-world assets, such as stocks, government bonds, real estate, and commodities, as crypto tokens and trade them on the blockchain. $USDT and $USDC can be considered RWAs, representing the tokenized and on-chain versions of US dollars.

According to the Boston Consulting Group, the RWA market will grow from $1.5 trillion in 2024 to $16 trillion by 2030. Zerolend helps you leverage this growing RWA narrative through our lending/borrowing services.

RWA Lending on ZeroLend

RWAs can be used to lend and borrow on money markets like ZeroLend. To help users leverage the growing RWA narrative, ZeroLend offers RWA lending/borrowing. We support RWA assets like $wUSDM on our Manta Market.

RWA lending has three major advantages:

  • Growth catalyst for developing countries: RWA-based loans are crucial in empowering businesses in developing economies like Kenya, Nigeria, and Uganda to underscore the potential for financial inclusion.

  • On-chain process and better repayment terms: RWA lending also eliminates the bureaucratic processes of traditional banks, offering the company a favorable repayment schedule.

  • Less collateral required for loans: In RWA lending, you can offer collateral that may be objectively valued at less than the borrowed amount. For example, a company seeking a $7 million loan might lack sufficient collateral for such a sizable loan. Through RWA lending, they can secure the necessary funds with collateral valued at $4 million.

How is RWA solving the over-collateralization problem in DeFi?

DeFi lending heavily relies on over-collateralization. Borrowers must provide more crypto collateral than the loan's value. Overcollaterization limits mass adoption, as individuals or entities seeking loans might not have significant crypto reserves to provide collateral.

RWA lending solves this challenge. Borrowers seeking loans might not have massive crypto reserves. For example, an institution seeking a $1 million loan might not have over $1 million in crypto reserves. However, they might provide other assets, such as real estate, bonds, or gold, as collateral to secure the loan. RWA lending helps such borrowers tokenize their assets and secure loans.

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