6 minute read 18 Aug. 2022
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Transforming real-world assets onto a blockchain: The power of digitizing real-world assets for supply chain visibility

By EY Canada

Multidisciplinary professional services organization

6 minute read 18 Aug. 2022

Co-authored by: Jason ZannetCeline Enage, Zack ParkerCara Sharko

Gaining access to new financial opportunities and thriving in a world of disruption by digitizing RWA and enhancing supply chain visibility.

In brief

  • Digitizing real-world assets (RWAs) can be complex, so it’s important organizations thoroughly understand how it can be executed and know its value to supply chain visibility.
  • Through the application of decentralized finance (DeFi) and tokenization processes, blockchain capabilities can be realized to their full potential, enhancing supply chain operations.

By digitizing RWAs, organizations can enhance their supply chain visibility, gain access to new financial opportunities and continue to thrive in a world of disruption. Through the digitization of RWAs, a multitude of opportunities exists to facilitate a reduction in operating costs, increase traceability and trackability of goods and improve supply chain visibility. This can then lead to increased stakeholder value and improvements to an organization’s long-term value chain.

Blockchain capabilities continue to transform how businesses look at their supply chain and operations activities. By applying (DeFi) and tokenization, the potential of these blockchain capabilities on supply chain operations can be fully realized. In the same way that DeFi is disrupting traditional finance, decentralized operations will disrupt traditional operations and ultimately transform the way organizations run their business. 

Through decentralized operations, an organization can reap several benefits that might have not otherwise been available to them, including:

  • The ability to access new markets and invest in assets that would otherwise be beyond financial limitations
  • Digitally manage inventory and track the transfer and trading storage without the need for an intermediary
  • Gaining supply chain visibility of end-to-end processes

Digitizing RWAs can be complex. It’s important to understand exactly what digitizing RWAs is, how it can be executed and some of the value it can have on an organization, particularly through its supply chain.

Digitizing assets through tokenization

The principle of digitizing assets is known as tokenization, which is the process of turning an asset, either real or virtual, into a token that represents the entirety of an asset that can be manipulated on a blockchain. Digitizing assets creates a bridge between RWAs and their transfer and trading storage in a digital world without the need for an intermediary.

While RWAs can be represented by a token, they can be further divided to offer fractional ownership to investors. Through this process, tokenization can provide liquidity to otherwise illiquid and non-fractional markets.

There’s a wide variety of tokens. However, for the purposes of this topic we will discuss three key types:

1) Fungible tokens: Fungible tokens are uniform like cash, as each token holds the same market value and is interchangeable. Fungible tokens can also be divided into smaller units that still possess equal value. Examples of fungible tokens include cash, gold and bitcoin.

2) Non-fungible tokens: Non-fungible tokens are non-interchangeable, as each token represents a unique value with an associated unique ID. As a result, these tokens are non-divisible but can instead offer fractional ownership to investors. Non-fungible tokens also provide a level of granularity through storing metadata such as the provenance, certifications and transaction history of an asset. Examples of non-fungible tokens include real estate, art and CryptoKitties.

3) Semi-fungible tokens: Semi-fungible tokens can be both fungible and non-fungible throughout their lifecycle. In the beginning, these tokens act like fungible tokens that can be traded with other identical semi-fungible tokens. However, once a semi-fungible token is redeemed, the fungible token loses its face value and thus is now considered non-fungible. As the token’s fungibility changes throughout its journey, for example when it’s used or redeemed, this is what deems the token as semi-fungible. Examples of semi-fungible tokens include concert tickets or vouchers.

For tokens to operate on a blockchain, there must be a set of rules to govern how and when units are delivered. Every participant on a blockchain will have access to a record of all the transactions alongside a set of rules on how the tokens will operate. Tokens can also be applied in smart contracts, which are self-executing contracts that have built-in terms between the buyer and seller, typically represented by lines of code outlining various process conditions.

The below graphic provides an overview of the process for digitizing an RWA, including an overview of how tokens are exchanged or updated to reflect the manufacturing of the physical product:

RWA Digitization graphic
DeFi and real-world assets

While the DeFi space has existed for several years to facilitate the sale of cryptocurrency or non-fungible tokens, the application of digitizing RWA has been relatively uncharted. Digitizing RWA is another disruptive application of DeFi, which is the term used to encompass all applications and processes relating to blockchain, cryptocurrency and a finance system that is not reliant on a centralized service such as a bank. 

The DeFi market is a great enabler for RWA digitization due to its market attractiveness, proof of ownership and new financing opportunities. For example, the DeFi market is more attractive for a much larger investment market, as it increases the quantities and types of investments available. This opens the investment market for small-scale investors to invest in products that would typically be beyond their financial abilities and reduces the high barriers to entry typically involved in investing on a centralized network. A key outcome is that this affords small-scale investors the opportunity to enter a market that typically has steep entry costs and high risk.   

Supply chain visibility through tokenized RWA

Inventory management is a critical component for achieving supply chain visibility, transparency and resilience. Inventory management includes ensuring accuracy among inventory values and making sure the inventory is available in the right place, at the right time, in the correct quantity, and for the right customer.

By digitizing RWAs, inventory accuracy and visibility among various stages such as storage, manufacturing or fulfilment are vastly improved. This level of tracking granularity and visibility provides organizations with opportunities to price inventory more accurately and trace how a product was processed along the end-to-end value chain.

Additional benefits from the tokenization of RWAs include:

  • Tone is set for future use cases
  • Elimination of intermediaries
  • Fractional ownership
  • Wider market reach
  • Tamper-resistance
  • Immutable chain of custody
  • Greater interoperability


Digitizing RWAs is an emerging concept. As such, few organizations have yet to fully digitize their RWAs and take the next step towards transforming their supply chain.

While most things in an organization can be tokenized, businesses should evaluate and start with their most critical assets by evaluating what transactions could benefit from additional verification on a blockchain and gain the benefits from tokenization. RWA digitization is only starting to be explored; with its complex development efforts and high startup fees, companies should begin to research and form a development group to learn how digitized RWAs can benefit their organization.

Companies can also engage external experts to capitalize on their expertise and help reduce the technological barriers to entry. Although not many organizations have implemented RWA tokenization, the numerous applications and key value it unlocks are essential to transforming organizational effectiveness and to get ahead on the technology revolution.

In our next article, we will discuss how digitizing RWAs can solve a myriad of supply chain challenges organizations are facing. In the meantime, learn more about tokenization and blockchain at EY:


To gain access to new financial opportunities and thrive in a world of disruption, organizations are adopting the concept of digitizing real-world assets. It’s important organizations thoroughly understand the complex process of how it can be executed, through the application of (DeFi) and tokenization processes to unlock blockchain capabilities.

About this article

By EY Canada

Multidisciplinary professional services organization