Layer 1 blockchain Pharos has announced the formation of the RealFi Alliance to standardize the development of RWA infrastructure for institutional players. If successful, the organization will supercharge real-world asset adoption by enabling developers to use tooling and infrastructure that works consistently industry-wide.
More than just an ambitious attempt at standardizing RWAs, the RealFi Alliance looks odds-on to realize its goals thanks to the backing of major infra companies. Founding member Pharos is joined by 10 other entities in the form of Chainlink, Asseto Finance, Ember, Faroo, LayerZero, R25, Re7 Labs, TopNod, and Centrifuge, the majority of whom need no introduction.
Making RWAs Great
With the promise of tokenizing trillions of dollars in capital, allowing it to be traded 24/7 and plugged into new financial markets, the bull case for RWAs doesn’t need retelling. Everyone knows the upside and numerous blockchain builders are working tirelessly to deliver it. But exciting as all this innovation is, it’s no secret that the blockchain industry suffers from fragmentation due to the number of competing chains and protocols, each with their own programming languages and quirks.
The RealFi Alliance can’t solve that, but what it can do is ensure that RWAs operate seamlessly across the omnichain landscape, regardless of which network they were issued on. This is important because tokenizing real-world assets is only the first step. Unlocking their true value calls for making them fully composable and thus capable of being integrated into new onchain markets. Which is why the need for a single standard to govern all cross-chain infra is so valuable.
Institutional-Grade Execution
The term “institutional-grade” is used a lot in DeFi, but in the case of engineering RWA infrastructure, it’s the correct term. The layers on which tokenized assets operate need to be not just fast and efficient but also secure and with robust risk management tooling built in. You know: stuff that meets the standard of institutions, who are bound by strict guidelines mandating what they can and cannot do with capital.
To facilitate this, the RealFi Alliance is aiming to tackle the industry’s most pressing pain points, starting with fragmented liquidity, inconsistent architecture, and regulatory silos. Broadly speaking, these are all infrastructure challenges. If there was a universal layer on which RWAs could operate, however, allowing them to be slotted into existing protocols and money markets, these points of friction would be significantly smoothed off – if not eliminated altogether.
Four Pillars That Work as One
Every newly formed organization needs a mandate and a roadmap so that it can get off to a flying start, and the RealFi Alliance has already outlined its vision delineating how it intends to get there. It’s identified four core pillars that will form its focus initially. First, there’s asset enablement to ensure RWAs are secure and composable. This foundation is accompanied by infrastructure and compliance alignment.
It’s here that founding member Pharos will have a pivotal role to play, enabling deep-parallel execution and integrated compliance modules. Thirdly, the Alliance is targeting liquidity and utility design. Making RWAs that support as many use cases as possible, in other words, and that can be easily traded at market value. Finally, market transparency forms a core pillar, making it easier for industry participants to gauge risk.
If the RealFi Alliance succeeds with its goals, it will benefit its 11 founding members, whose infra will see increased adoption and adaptation. But the real winners will be institutions, who’ll be able to enjoy greater capital efficiency, deeper liquidity, and more ways to put their tokenized assets to work.
This article was written by FM Contributors at www.financemagnates.com.
Source link
