A couple of weeks ago we posted an article about how Real-World Assets (RWA) represented the next frontier for the token economy and -maybe- the ultimate implementation push that Blockchain needs to be legally and broadly accepted, therefore allowing new financial inclusiveness possibilities around the world.

On paper, it looks outstanding but what’s the actual experience around this subject? Has it been good? We promised we would be revising some success stories in order to see if this token economy could be applied for, say, a Social Mining community, for instance, in order to increase group earnings.

To go from bottom to top, let’s start with a sound case in the news: The Petro.

‍

The Token that tried to buy Time

Petro was a cryptocurrency launched and backed by the Venezuelan government in 2018. At the time, Nicolás Maduro’s staff campaigned for this as a revolutionary action to tackle the sanctions imposed on many Venezuelan officials and Institutions due to this totalitarian state. 

Venezuela allegedly has the biggest crude oil reserves of the world, alongside many valuable minerals like gold, aluminium and iron, which are RWAs. Without really knowing how the token economy works in reality, Maduro proclaimed that the Petro would represent the potential value of all those unearthed riches and -centrally speaking- assigned and arbitrary value to the Petro with aims to making of it a digital alternative for the Venezuelan Bolívar, the country’s fiat currency, without the standard representative procedures made for issuing a CBDC.

It was supposed that nationals and foreigners would use the Petro to pay taxes or buy and sell assets to the Venezuelan Government but after 5 years of trying to make it work Maduro finally cancelled the Petro, buying the tyrant only 5 years of news and international whining and self victimization.

Although the Petro was backed by Venezuela's mineral reserves, nationals and foreigners were  sceptical of its legitimacy. Many doubted the government's ability to manage a digital currency effectively added to the economic and political Instability in the country.

Furthermore, the token faced technical challenges, including poor infrastructure, lack of wallet support, and security vulnerabilities. Users were hesitant to invest in a system with such flaws.

Maduro’s stunt to get more money for his regime failed due to a combination of economic, political, technical, and trust-related factors. The Petro’s fate serves as a cautionary tale for other countries considering state-backed cryptocurrencies, and other projects that seek to support their activities focusing on the product and not the market nor their token’s tokenomics.

‍

Will RWA projects take on DeFi for the good of people?

There’s a long and proven financial tradition, with local and international laws, that allow the investment, commerce and exchange of RWAs, and it’s also true that this template is designed by and for big players, like countries and corporations. This is not transparent or democratic in any way, but it works for its purposes in a highly technified way.

A digital and crypto-secured ledger, core technology of any blockchain, can support the inscription of any asset, as we discussed in the last article. Art, collectibles, landholdings and more can be projected to have a future or actual value, and a set of tokens can be issued based on that, and there are cases in which this technology is working well.

Big money follows Big Players, not the regular people. Small communities can take on a project, work together to add value to it, spread the word on their social media and contribute to it, so why not open the possibility for it, even on a smaller basis?

Decentralization and transparency are crucial for it. The first, for communities to self regulate democratically towards what asset or project, and how, would be tokenized and the second for every member to have enough and clear information on all the process steps to make the right decisions. And for the security, developing becomes the 

So, Social Miners could benefit from it? Yes. Now, when is it happening? That’s still early to answer with precision but it’s definitely coming. But above all, the Social Mining Community must research deeply into this.

‍

The three key components of a RWA tokenization

According to Chainlink, maybe the biggest blockchain player working with RWA solutions, the DeFi segment devoted $5B to these kinds of tokens and it keeps growing by the day.

All the industries and projects that are turning into blockchain to get money on their projects or products play a pivotal role in enhancing Real-World Assets (RWAs) by connecting them to on-chain ecosystems while they can provide:

Proof of Reserve: Users, asset issuers, and on-chain applications can monitor cross-chain or off-chain reserves that back tokenized RWAs. This transparency empowers users and allows circuit breakers to safeguard against discrepancies between offchain and on-chain asset values.

Identity Solutions: Essential for seamless transactions. It allows institutions and individuals to prove ownership and verify the provenance of tokenized RWAs without compromising personal information.

Data Streams and Feeds: Who issues the token must provide secure, decentralized financial market data. From commodities and equities to forex and cryptocurrencies, users benefit from reliable information.

Once RWAs are enriched with real-world data, they must move across blockchains -both public and private- while staying updated. This would maintain the high security standards demanded by a growing number of communities, projects and governments who will benefit from more assets in the DeFi market.

‍

Breadcrumbs for a task (or many tasks) about Social Mining and RWA:

A simple Google search or AI prompt will throw a list of examples of what kind of RWA Tokens are currently being trendy, so it would not be a real contribution of this article to dwell on that. It would be good that the keen reader would make this search on his or her own terms just to realize that maybe there’s a potential use case for RWA Tokenization.

How about making a list of the things you must consider to find it?

1. Understand what RWA Tokenization is: Learn about the basic concept. It involves representing physical assets (such as real estate, precious metals, or art) as digital tokens on a blockchain.
2. Evaluate Asset Eligibility: Identify which real-world assets are suitable for tokenization. Consider factors like liquidity, divisibility, and legal compliance, but it must be in your area, in your country or maybe the factory you used to work in before joining Social Mining :)
3. Choose a Blockchain Platform: Choose the one you prefer BUT consider selecting a Layer-2 solution that supports RWA tokenization. Polygon and Avalanche do, and other platforms offer relevant infrastructure like Kava are to follow in a bit.
4. Legal and Regulatory Compliance: Make your Google query or consult local legal experts to ensure compliance with your country’s regulations. Understand securities laws, ownership rights, and tax implications.
5. Asset Valuation and Fractionalization: If your research can’t enable you to determine the value of the asset you pick and decide how it will be divided into tokens, it’s okay if you would throw a number but you must clarify that THAT is your criteria on it. Fractionalization allows smaller investors to participate, and Social Miners are a huge number in the world but just a fraction in your country. 
6. Smart Contracts and Token Creation: Maybe for a later stage of the experiment you will make a chart to represent the smart contracts to display ownership and transfer rights. Creating asset-backed tokens (NFTs or fungible tokens) is also allowed. 
7. Lay out collaborations with Experts: It’s ideal that the product or project you find would count with the help or partner with knowledge in blockchain developing, legal advisors, and financial institutions experienced in RWA tokenization. All that’s hypothetical but will help you to understand the planning part of it.

Only two more steps are required in the Real World to implement a RWA Token, and those two would be out of your work for a Social Mining task. 

8. Security and Custody Solutions: Think of implementing robust security measures to protect tokenized assets you are thinking about. Explore custody solutions for safe storage.
9. Marketplace Integration: As you should list the token on a decentralized marketplace or exchanges, you can recommend one. This will provide liquidity and facilitate trading.
10. Educate your Stakeholders: Think of a strategy (pitch) to educate investors, potential buyers, and partners about RWA tokenization and the project you are preparing, of course. Transparency builds trust.

‍

Remember, RWA tokenization democratizes access to assets and opens new investment opportunities. Start small, learn, and adapt as you explore this transformative space. It's an exciting journey with significant potential for smaller companies. 

Educating citizens about cryptocurrency benefits, risks, and usage is essential. Successful RWA cryptocurrencies require transparency, stability, technical excellence, global cooperation, and community education. 

‍

Get into Social Mining today! These are our channels for you to follow and become part of our great community:

‍

🌐 Socials
Telegram  |  Discord  |  X Social  |  Official Blog  |  Reddit  |  Medium  |  YouTube

🌎 More useful Links

Website |DAOVERSE |Social Mining Basics

‍