Decentralized finance (DeFi) has revolutionized access to financial opportunities, but it’s time for a critical conversation about where crypto yields actually come from. Retail users have accepted a standard of unsustainable yields, calling into question the sustainability of DeFi as a whole. If DeFi is to evolve—and fulfill its promise of transforming global finance—it must move beyond speculation.
The future is RWAfi (Real World Asset Finance), the natural progression of DeFi, and the only way forward.
The Evolution of Yield in DeFi
DeFi’s history can be seen as an ongoing quest for better yield sources. Each stage brought innovation, but also exposed the limits of what DeFi could achieve without connecting to real-world value.
Stage 1: Emissions and Ponzinomics
Early DeFi protocols like OlympusDAO (OHM) and Wonderland (TIME) pioneered a model of high-yield rewards driven by emissions-heavy tokenomics. Users were enticed with triple-digit APRs, but these yields came from inflationary mechanisms—essentially paying early users with funds from later participants.
This stage introduced the world to the power of decentralized financial systems, but it was inherently unsustainable. Once emissions dried up or new participants stopped joining, the entire model unraveled.
Stage 2: Real Yields
The next phase of DeFi sought to create yields tied to tangible, measurable activity. Protocols like GMX sourced yields from trading fees instead of emissions. This approach was more sustainable but still relied heavily on speculative markets, and when the crypto market became less active, those fees dropped substantially.
However, because of “real yield”, delta neutral strategies became more commonplace in crypto, and users learned to look for APRs sourced from generation of real value.
Stage 3: Liquid Staking Tokens (LSTs)
Ethereum’s transition to a Proof-of-Stake model and the resulting liquid staking tokens like Lido’s staked ETH (stETH) created another layer of sophistication. By staking assets, users could earn yields while contributing to network security – another big step forward. Yet, a deeper question loomed: What are we actually securing?
Even with LSTs, the crypto-financial system they secure has limited utility outside of speculation and fully “DeFi-native” activity. In order to meaningfully expand beyond previous all-time high market caps for crypto, the industry needs to connect off-chain value to the on-chain world.
Stage 4: RWAfi
This brings us to the logical conclusion of DeFi’s evolution: Real World Asset Finance (RWAfi). RWAfi is the only way for DeFi to mature beyond speculation and deliver material utility. By sourcing yields from real-world assets—like tokenized solar farms, private credit, and real estate—RWAfi anchors DeFi in tangible, productive value, closing the gap between traditional asset investing and a decentralized future.
As an industry, we’ve learned so much from our experiments with DeFi primitives, and now it’s time to apply those primitives to real-world financial assets and institutional-grade investment products.
If DeFi is to reach its full potential, RWAfi is its logical evolution and inevitable future.
What is RWAfi?
RWAfi is the integration of tokenized real-world assets into composable DeFi ecosystems, leveraging existing DeFi primitives to bring institutional-grade products to the masses.
To build a more sustainable and impactful DeFi ecosystem, we must tap into value generated by real-world economic activity. RWAfi addresses this need by tokenizing real-world assets (RWAs) and integrating them into DeFi protocols.
RWAfi represents the true future of DeFi—an ecosystem where yields are:
- Sustainable: Backed by real-world economic activity.
- Inclusive: Accessible to retail users, not just institutions.
- Composable: Built on DeFi’s core principle of interoperability.
DeFi has given us an incredible toolkit to simplify finance and make it accessible to all – not only in accessibility, but also usability. That means we’re not only providing access to assets and investment opportunities that are previously nearly impossible for retail to find and deploy into, but we’re also leveraging blockchain-native tooling like increased composability for new asset combinations, levered looping, simplified rehypothecation, and more to ensure that retail has all the same abilities as institutional investors.
How Plume Network Powers RWAfi
At Plume Network, we’re building the infrastructure to make RWAfi a reality. Here’s how:
Arc: Simplifying Tokenization
Tokenizing real-world assets is complex, involving legal, administrative, and technical challenges. Arc, Plume’s tokenization engine, eliminates these barriers. With over 90 integrations, Arc streamlines tokenization by handling complexities such as:
- Setting up legal entities and SPVs
- On/off-ramps and custodians
- Optional compliance with KYC/AML regulations
- Document administration and cap table management
Builders can pick and choose which integrations they want to use – for example, whether or not to incorporate KYC. This comprehensive, modular approach makes it easy for asset owners to tokenize their holdings and bring real-world value onto the blockchain.
Nest: One-Click Access to Real Yields
RWAfi is only as powerful as its accessibility. Plume’s Nest Yield Vaults simplify the process for users, offering managed, diversified RWA strategies. With a single click, users can access real-world-backed yields like tokenized solar revenue or private credit portfolios.
DeFi Primitives for Real Assets
RWAfi doesn’t just tokenize assets—it brings them into the composable world of DeFi. Users can leverage real-world-backed assets with DeFi strategies like:
- Levered looping for amplified returns
- Liquid staking and rehypothecation
- Re-rehypothecation to maximize capital efficiency
These tools unlock new possibilities for financial innovation, all while grounded in real-world value.
RWAfi: Democratizing Finance
One of the most exciting aspects of RWAfi is its potential to democratize access to high-quality financial opportunities. Traditionally, investments in private credit, real estate, or infrastructure projects were restricted to institutions or high-net-worth individuals due to high barriers like minimum check sizes. RWAfi changes that:
- Lower Barriers to Entry: Tokenization enables fractional ownership, allowing retail users to participate in asset classes previously out of reach.
- Transparency: Blockchain technology ensures greater visibility into asset performance and management.
- Inclusivity: By connecting real-world yields to DeFi, RWAfi brings the benefits of traditional finance to a global, decentralized audience.
The Future of DeFi is RWAfi
DeFi’s promise has always been about more than just financial returns—it’s about decentralization, inclusion, and empowerment. RWAfi takes this promise to the next level by anchoring DeFi in real-world economic activity. It’s not just a way to generate better yields; it’s a pathway to a more meaningful and impactful financial system.
At Plume Network, we’re proud to lead this transformation. Through tools like Arc and Nest, we’re creating an ecosystem where real-world assets and DeFi come together to build a better future for everyone. The future of finance isn’t just decentralized—it’s real.
About Nest
Nest is a flagship staking protocol for RWAs deployed exclusively on Plume. By decoupling yield streams from the assets themselves, Nest enables the creation of new financial instruments, giving users the ability to earn, trade, and manage yield independently of the underlying asset.
About Plume
Plume is the first fully integrated L1 modular blockchain focused on RWAfi, offering a composable, EVM-compatible environment for onboarding and managing diverse real-world assets. With 180+ projects on its private devnet, Plume provides an end-to-end tokenization engine and a network of financial infrastructure partners, simplifying asset onboarding and enabling seamless DeFi integration for RWAs.
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