What is RWA? Analyzing how the five major protocols compete for the trillion-dollar institutional capital market

Institutional-grade real-world asset digitization is in the fast lane. By January 2026, this market has approached $20 billion. But behind this figure lies a more important question: What is RWA, and why does it attract Wall Street giants to get involved?

Simply put, RWA (Real-World Assets) refers to the tokenization of traditional financial assets such as government bonds, stocks, private credit, etc., using blockchain technology to enable trading and settlement on-chain. Unlike purely digital assets, RWAs deeply integrate real-world finance with blockchain technology, which is precisely what institutional capital is focused on.

Currently, the RWA market is dominated by five protocols: Rayls, Ondo, Centrifuge, Canton, and Polymesh. They are not competitors but serve different market segments based on institutional needs.

Rapid Expansion of the RWA Market: From $6 Billion to $200 Billion

From early 2024’s $6-8 billion to nearly $200 billion today, the RWA market has tripled in 18 months. What does this growth rate reflect? Not just speculative enthusiasm, but genuine institutional capital deploying on-chain.

Looking at the market structure, government bonds and money market funds account for about 45%-50%, with a scale of $8-9 billion, remaining the main force. Private credit, though smaller ($2-6 billion), is growing fastest, representing 20%-30%. Public equity markets, though the smallest (over $400 million), are expanding rapidly.

Three core factors drive this growth: First, yield arbitrage mechanisms—tokenized government bond products offer annual yields of 4%-6%, and the traditional T+2 settlement cycle means funds can operate 24/7. Second, regulatory frameworks are improving—EU’s MiCA is implemented in 27 countries, and the US SEC’s “no-action letter” provides legitimacy for institutions like DTCC. Lastly, infrastructure maturity is increasing—Chronicle Labs handles over $20 billion in oracle demand, and audit firms like Halborn have completed institutional-level security certifications for major protocols.

Market Map of RWA Protocols: Roles of the Five Major Participants

The coexistence of these five protocols is due to their different market entry points. Understanding what RWA is hinges on understanding how these five solutions meet the diverse needs of institutions.

Rayls’ Privacy Fortress

Developed by Brazilian fintech Parfin, Rayls’ core strength is its zero-knowledge proof-based privacy stack. For banks and central banks, transaction confidentiality is critical, and Rayls was built for this purpose. A recent security audit by Halborn adds credibility for institutional deployment. The Central Bank of Brazil has adopted its technology in CBDC cross-border settlement pilots. The AmFi alliance has committed to deploying $1 billion in tokenized assets on Rayls by mid-2027, the largest institutional commitment in any current RWA ecosystem.

Ondo’s Retail Expansion

As of January 2026, Ondo’s locked assets reach $1.93 billion, with tokenized stocks exceeding $400 million, accounting for 53% of the market. Earlier this month, it launched 98 new assets covering AI, electric vehicles, and other thematic investment sectors—such speed is rare in DeFi. Its cross-chain strategy is also noteworthy: Ethereum provides DeFi liquidity and institutional legitimacy, BNB Chain targets exchange-native users, and Solana focuses on large-scale retail users. The logic behind this multi-chain deployment is clear: liquidity is more important than depth.

Centrifuge’s Asset Management Hub

Leading the market in institutional private credit tokenization, Centrifuge’s TVL is around $1.3-$1.45 billion. It has partnered with Janus Henderson, which manages $373 billion in assets, transferring its $21.4 billion AAA-rated collateralized loan ETF portfolio on-chain. This signals a move from pilot projects to large-scale deployment of RWAs. Recent collaboration with Chronicle Labs introduces the “Asset Proof Framework,” providing cryptographically verified holdings data and real-time NAV calculations, offering transparency for investors and auditors alike.

Canton’s Wall Street Gateway

Behind Canton are top Wall Street institutions like DTCC, BlackRock, Goldman Sachs, and Citadel Securities. This is no coincidence—Canton’s privacy architecture is based on Daml smart contracts, ensuring counterparties can see transaction details, but competitors and the public cannot. For Wall Street accustomed to dark pools, this design is acceptable infrastructure. DTCC plans to launch a government bond tokenization MVP in the first half of 2026, meaning the world’s second-largest clearinghouse, with an annual settlement volume of $37 trillion, will soon participate in RWA.

Polymesh’s Compliance-Native Design

Unlike other protocols that implement compliance at the smart contract layer, Polymesh embeds identity verification and transfer rules at the consensus layer. This means non-compliant transactions will fail at consensus without the need for audits. For issuers, this simplifies the process by eliminating the need for custom code audits. Platforms like Republic and AlphaPoint have integrated Polymesh, making it a new choice for regulated securities issuance.

Unsolved Challenges in the RWA Market

Despite high enthusiasm from institutions, the RWA market still faces three major challenges. Inter-chain liquidity fragmentation is the most severe—bridging costs are estimated at $1.3-$1.5 billion annually, causing 1%-3% price differences for the same assets traded across different chains. This not only erodes yields but also undermines market unity. Second, the inherent contradiction between privacy and transparency: institutions need confidentiality, regulators need auditability, and balancing these is difficult. Regulatory divergence is also a long-term risk—vast differences in rules across the EU, US, and other jurisdictions create legal barriers for cross-border capital flows.

Key Moments for RWA in 2026

The next 12 months will determine the future of RWA. Q1’s Ondo Solana launch will test whether retail-scale distribution can generate sustainable liquidity. Canton’s H1 MVP—if successful—could unlock trillions of dollars in government bonds migrating on-chain. Centrifuge’s ongoing Grove deployment (distributing $1 billion in institutional credit) is testing the feasibility of RWAs with real capital. Rayls’ AmFi ecosystem development will gauge market acceptance of bank-level privacy infrastructure.

Market forecasts suggest that by 2030, tokenized RWA assets could reach $2-4 trillion, a 50- to 100-fold increase from the current $197 million. Private credit may grow from $2-6 billion to $150-200 billion, and if government bonds complete large-scale migration from traditional markets to blockchain, the potential could even exceed $5 trillion.

What is RWA? Essentially a Battle of Infrastructure

Understanding what RWA is hinges on recognizing that it’s not about who “wins,” but about which infrastructure institutions choose. Rayls addresses bank privacy, Ondo leads retail distribution, Centrifuge serves asset managers, Canton facilitates Wall Street settlement, and Polymesh simplifies securities compliance.

From a market scale perspective, RWA has moved from experimental to institutional deployment. From early 2024’s $8.5 billion to now nearly $20 billion, growth has surpassed mere speculation. The real shift is that CFOs, asset managers, and banks are solving a simple math problem: yields, operational efficiency, and compliance costs.

The on-chain migration of traditional finance is not a choice but a timing issue. These five RWA protocols provide different tools for different institutions. Their success or failure will define the future landscape of financial infrastructure over the next decade.