Tokenization and real-world assets on the blockchain will drive DeFi growth

Asset tokenization refers to the act of turning the ownership of a real-world asset into a digital token. This can be done in various ways, but all result in the legally upheld bridge between the physical asset and its representative token.

The ambition is to bridge the gap between real-world assets and cryptocurrencies. Specifically, in the DeFi space, that aims to provide a borderless financial infrastructure. These first steps are being made to allow real-world assets to be used as collateral for loan issuance.

DeFi applications are predominantly built on the Ethereum blockchain and promise to give more people access to borrowing, lending, and other services because they eliminate the need to transact through a financial institution.