Tokenizing Real-World Assets: What It Means for Valuation

Tokenization of real-world assets (RWAs) is no longer a futuristic concept. As blockchain infrastructure matures, efforts to digitize traditional asset classes are rapidly gaining momentum. From real estate and commodities to bonds and treasuries, both physical and financial assets are increasingly being represented on-chain through tokenization.

This shift is more than technical. Tokenization improves transparency, enhances security, and increases liquidity. These changes have significant implications for valuation professionals, who must now consider not only traditional metrics but also how these assets are governed and accessed in a digital environment. As a Redwood expert notes, this convergence of tangible and digital finance requires a new approach to measuring and reporting value.

“Tokenization allows for fractional ownership, real-time pricing, and transparent custody—all in a space where those things were traditionally opaque.”

Tokenized RWAs dominated conversations across the ecosystem at Consensus 2025 back in May. From tokenized gold to on-chain treasuries, these developments are moving quickly from theory to adoption, and the valuation world must keep pace with this evolution.

What Are Real-World Assets (RWAs)?

Real-world assets refer to traditional financial instruments and physical assets, such as stocks, bonds, real estate, and commodities, that are brought on-chain through tokenization. Tokenization involves issuing a blockchain-based token that represents ownership, exposure, or rights tied to an off-chain asset. These tokens may represent actual legal ownership or offer synthetic exposure, depending on the structure and jurisdiction.

Recent implementations include tokenized money market funds, such as Franklin Templeton’s OnChain U.S. Government Money Fund (FOBXX), which uses their proprietary Benji platform to represent fund shares digitally and support peer-to-peer transfers on public blockchains. Real estate NFTs are also emerging, enabling fractional ownership of property, along with tokenized gold and commodities that allow on-chain trading. In trade finance, firms are beginning to experiment with blockchain-native solutions such as tokenized invoices and receivables. Among the most mature examples, U.S. Treasuries are being made accessible on-chain through platforms like Ondo Finance and Matrixdock, enabling investors to access yield-bearing assets anytime via interoperable tokens.

Tokenization offers several key benefits. Transactions recorded on-chain are immutable and transparent, creating an auditable trail that supports trust and accountability. Smart contracts automate transaction logic and reduce reliance on intermediaries. Tokenized assets also introduce new levels of liquidity, particularly for traditionally illiquid markets such as real estate, by allowing fractional ownership and easier transferability. These assets can also be integrated into decentralized finance protocols, where they may serve as collateral, be traded on decentralized exchanges, or support yield-generating strategies.

Why RWAs Are Top of Mind Now

One notable example is Ondo Finance, which offers tokenized access to U.S. Treasuries. This case illustrates the growing maturity of the space: the underlying assets, Treasury bills, are well understood and institutionally familiar, yet the on-chain structure introduces new considerations for valuation and risk. By combining traditional financial instruments with blockchain-native mechanics, Ondo demonstrates how tokenization can expand access while preserving the rigor of existing valuation methodologies.

Institutions, on the other hand, see tokenized RWAs as a practical entry point into digital assets. Tokenized versions of familiar instruments such as the S&P 500 and U.S. Treasuries reduce barriers to adoption. Major firms have already entered the space. BlackRock has partnered with Securitize to launch tokenized money market funds. Franklin Templeton now offers tokenized government securities, and Ondo Finance is enabling access to U.S. Treasuries via blockchain infrastructure.

Beyond the successful case studies, the technology itself has matured significantly. Just a few years ago, the infrastructure to support tokenization at scale did not exist. Today, both centralized and decentralized platforms are capable of supporting complex token mechanics. As Redwood’s expert explained, the DeFi and exchange ecosystems are evolving quickly to accommodate tokenized products, creating real demand and new market opportunities. These examples of high-profile launches further validate the space.

Valuation Challenges with Tokenized RWAs

While tokenized RWAs are a transformative financial instrument, they introduce new complexities that differ from traditional asset classes. One of the primary challenges is understanding what the token actually represents. In some cases, tokenized RWAs represent a direct legal claim to the underlying asset, such as a share of a building or a U.S. Treasury bill. In others, the token merely offers price exposure or is structured as a synthetic instrument, similar to a derivative. This distinction is critical, as it determines whether the valuation should be based on the asset’s intrinsic value or the structure and risk profile of the token itself.

Another critical issue is liquidity. A token may be technically tradable but have little to no market activity. Without a deep or reliable secondary market, valuation professionals must fall back on fundamental techniques such as discounted cash flow analysis or public comparables. These methods must be adjusted to account for reduced marketability and increased uncertainty.

Jurisdictional and tax uncertainty remains a significant concern as well. Valuation professionals must assess which legal framework applies to the token and what regulatory or tax obligations may arise. Determining which jurisdiction governs a token backed by a physical asset like real estate is not always straightforward.

Custody and smart contract risk also play a role. Questions around who controls the asset, whether tokens can be revoked or modified, and whether the smart contract has been audited introduce additional layers of complexity. These risks must be considered when estimating fair value.

Valuation often depends on accurate, timely data. Oracles such as Chainlink feed off-chain pricing information to the blockchain, but they raise questions about data integrity, latency, and susceptibility to manipulation. In a market still lacking standardization, reliance on oracles introduces another variable.

Furthermore, most tokenized RWAs are early-stage and lack robust trading histories. It’s so new that Redwood has not yet seen enough mature transactions to define a clear valuation framework. In the meantime, traditional models remain applicable but must be adapted to reflect the unique risks of tokenized assets. These include infrastructure risk, legal enforceability, smart contract exposure, and the absence of consistent liquidity.

Ultimately, this space requires a rethinking of how valuation professionals define and measure risk. It is no longer sufficient to assess the economic fundamentals of an asset alone. The token’s architecture, governance model, and transaction infrastructure must also be evaluated to arrive at a defensible conclusion of value.

Where the Market Is Headed

As tokenized RWAs gain traction, new standards and practices are beginning to emerge. Protocols such as ERC-3643 are positioning themselves as leading frameworks for compliant, institution-ready tokens. While no clear dominant standard has taken hold, the push toward interoperability and legal clarity is moving the industry forward.

A deeper convergence between DeFi and traditional finance is already underway. Tokenized RWAs are being used as collateral in decentralized lending protocols and integrated into broader portfolio strategies. 

Platforms that resemble traditional brokerages, but operate entirely on-chain, are likely to become more common. The market is moving toward blockchain-native versions of platforms like Fidelity, where users can access tokenized equities, bonds, and other financial products with the same ease they now trade crypto.

These developments carry significant implications for valuation. As infrastructure matures, valuation practices must evolve to account for how assets are held, transferred, and governed on-chain. That includes considerations like smart contract risk, oracle data reliability, token rights, and market structure.

Conclusion: A New Paradigm for Valuation

Tokenized RWAs are changing the way assets are owned and valued. Rather than replacing traditional finance, they extend it into a digital environment built for transparency and broader access. For valuation professionals, this shift calls for updated tools, closer collaboration across disciplines, and a more adaptable approach to modeling value.

Stablecoins provided the first wave of real-world integration into crypto markets. The tokenization of broader asset classes is the next step. Redwood remains committed to evolving with the landscape and helping clients navigate it with clarity, rigor, and technical depth.