If you’re engaging with this post, there is a strong chance that either you’re planning to build your sovereign RWA chain or you want to transition your RWA-based dApp from a congested public chain to a custom chain due to its limitations. In this regard, Cosmos SDK has left no stone unturned with more than 20+ RWA chains deployed thus far.
Major financial players are launching their own sovereign L1s by choosing the Cosmos Stack. The recently announced Arc by Circle, which is a purpose-built L1 for stablecoin native finance, has a clear Cosmos lineage. Lombard Finance, Stable, Ondo, Provenance, Mantra, Noble, Coreum, Plume, Nillion, and a dozen more are building on Cosmos SDK for RWA Tokenization.
But what’s making Cosmos SDK the top choice for RWA projects is making them jump to this stack. In order to understand that, you need to first understand the top problems plaguing the RWA space and what Cosmos SDK has done to solve these from the ground up.
The Biggest Challenges of RWA Projects
Below are some of the critical challenges in RWA that hinder its overall growth and adoption for businesses:
1. Limited Customization at compliance level:
What’s needed is programmable compliance—the ability to encode jurisdiction-specific rules, KYC/AML checks, and governance frameworks directly at the protocol layer. Without this, platforms cannot provide the confidence and real-time auditability that regulated institutions demand.
2. Pervasive Security & Bridge Risks:
While generic security concerns like private key manipulation and all do exist, the single most critical vulnerability for RWAs has been cross-chain bridges. The conventional “lock, mint, & burn” model used by third-party bridges creates systemic risks. As per research, RWA protocol exploits have reached $14.6M in H1 2025 alone. These bridges often rely on small, trusted multisigs, creating a centralized point of failure for assets that are supposed to be on a decentralized ledger.
3. Inflexible Validator Setup:
Be it a permissioned, permissionless, or hybrid RWA chain, the network must be given flexibility to set up validators as per their real-time transaction load. Or else, the platform will end up incurring high operational costs while also keeping security at stake.
4. Inefficiency in Tracking & Management:
Without rich on-chain metadata capabilities, proving the link between a digital token and its underlying real-world asset becomes opaque. This increases the risk of fraud and makes auditing incredibly difficult. Ineffective tracking makes it very much difficult to prove the actual ownership of a token, leading to disputes among the holders of the asset.
5. Fragmenting Liquidity:
When an RWA is tokenized on a single chain, its liquidity is trapped. While bridges exist, they create fragmented versions of the same asset (e.g., bridgeUSDC vs. nativeUSDC), increasing risk and complexity for users. Fragmented ecosystems without powerful communication protocols cause asset lockups, trading delays, and reduced economic efficiency.
6. The EVM Incompatibility Dilemma
Most of the existing DeFi liquidity, developer tooling, and user base reside within the EVM ecosystem. RWA projects face a difficult choice: build on an EVM chain and sacrifice sovereignty and customizability, or build a custom chain and risk being isolated from this critical ecosystem. Both impact the liquidity and usability of tokenized assets.
7. Volatile Transaction Fees
Volatile or high transaction fees create a barrier to entry for institutional investors and key players in the RWA ecosystem. High, unpredictable fees make frequent trading, rebalancing, and settlement of tokenized assets economically unviable, hence impacting the widespread adoption.
8. Complex User Experience
Delayed transactions, the need to acquire and hold a separate volatile gas token, failed checkout, and lack of interoperability – all these appchain-level issues, when combined with a confusing UI, discourage users from joining the RWA network, which is a serious issue.
How does Cosmos SDK solve these problems?
Enough of the problems. Let’s now move on to the solutions that Cosmos already offers for RWA projects. Cosmos SDK is powered by capabilities that are highly suitable for customized RWA chains. All the problems that we discussed in the above section have already been tackled by Cosmos SDK.
Let’s understand these solutions and also validate the claims through the Cosmos SDK RWA chains utilizing them:
1.Extended customization with v0.53.0 to match specific compliance needs requirements:
Given that compliance is critical in RWA projects, Cosmos SDK enables extensive customization for network-level permissioning, governance frameworks, and capital flows so that regulatory adherence must be there across jurisdictions. With the release of v0.53.0, builders have greater modularity, the ability to push new features, and seamless legacy upgrades.
Also, recent updates across the stack also bring ABCI 2.0 compatibility (vote extensions, mempool optimizations) and stronger IBC improvements— from v8 to v2. This is useful for asset issuers who need send-restriction hooks and for appchain devs who want cleaner connectivity and upgradability.
Cosmos SDK already supports robust on-chain governance, where native token holders can vote and propose changes through a one-to-one voting system. Capital flows can also be tightly managed using the SDK’s core modules—bank, authz, group, feegrant, governance, and custom middleware—to codify programmable compliance such as role-based transfers, jurisdictional allowlists, asset freeze/unfreeze rules, and real-time reporting.
All the leading RWA chains, including Mantra, Provenance, Noble, Ondo Chain, have been utilizing the customization benefit of Cosmos SDK to maintain compliance for their network.
2. Aggregated Liquidity through cross-L1 Interoperability:
RWA chains in the Cosmos ecosystem benefit from unified liquidity through the IBC-enabled cross-chain connectivity. That means assets issued on any RWA tokenization chain can seamlessly and securely flow across 100+ IBC-enabled chains. Hence, users will be able to access the assets and tokens all across these chains.
Similar to compliance, aggregated liquidity and cross-chain interactions is the reason for all the RWA chains to opt for Cosmos.
Here’s what Coreum says:
IBC has evolved a lot, too. IBC v2, launched in March 2025, simplifies the protocol, removes complex handshakes, and uses ZK-enabled verification to lower the cost of connecting to expensive execution environments like Ethereum. The Solana integration is also on the roadmap.
The roadmap also includes IBC Attestations, a solution designed to connect with optimistic rollups and other chains that lack light clients. This will ensure the Cosmos ecosystem remains connected to the entire Web3 stack.
Let’s take the example of Novastro. It’s an RWAFi project that enables seamless RWA custody and liquidity by bridging assets from Ethereum via Axelar or Gravity Bridge, routing them through Osmosis AMMs for low-fee swaps, and using CosmWasm smart contracts to integrate oracle feeds, compliance controls, and asset logic.
This kind of complex bridging flow with borderless liquidity and policy control is possible only in Cosmos SDK. And that’s a reusable pattern.
3.Solving the EVM Dilemma:
Founders no longer have to choose between the Cosmos stack and the EVM ecosystem. Chains built with the Cosmos SDK can be fully EVM-compatible.
Let’s take MANTRA Chain for example. They are the “first purpose-built RWA chain that is both EVM-compatible and self-sovereign,” and allow developers to deploy dApps with all the EVM opcodes they know while leveraging MANTRA’s unique compliance infrastructure.
Realio Network, another L1 ecosystem for RWAs, has also gained EVM compatibility by integrating evmOS.
4. Strong security guarantees-
Sovereign, application-specific RWA chains built with Cosmos SDK will have strong security enabled through CometBFT and the Inter-Blockchain Communication (IBC) protocol.
Further, to solve critical security issues like bridging attacks, Cosmos is launching The Gravity Bridge where the bridge needs the validator set to be updated on the Ethereum smart contract by calling the ‘updateValset’ method at least once within each unbounding period, typically every 14-days period.
Read more about the bridge, its mechanism and value addition to Cosmos SDK here.
And, to take this security another level, Cosmos SDK has introduced specific security implications for chain builders where they get to implement ABCI++, Object-Capability Model (Ocap), AnteHandler, Chain Ecosystem Interdependencies and Inherited Risk. These features give developers more granular control over how security is enforced at the protocol level.
Today, many Cosmos RWA chains pair CometBFT finality with IBC Classic → IBC v2 migration paths. It ensures they can scale their security model as interchain connectivity expands. For ecosystems that don’t run Cosmos-style light clients, such as Base, Arbitrum, or Solana, Cosmos is enabling attestation-based IBC clients and conditional clients as mentioned above. These approaches combine data-availability proofs with rollup-state attestations, offering multiple verification models. The result is a flexible balance between speed and security, ensuring that institutional RWA flows can operate with confidence while keeping user experience smooth.
5. Faster time-to-cash:
RWA tokenization chains built with Cosmos SDK benefit from faster time-to-cash, driven by the CometBFT consensus engine and recent performance upgrades.
By design, Cosmos chains are account-based, and with ABCI 2.0 which includes optimized mempools and vote extensions, they deliver lower latency and higher throughput.
For institutions, this translates directly into quicker issuance, redemption, and secondary trading, alongside uninterrupted 24/7 global market access.
The most powerful example of this is Figure Technology, which built the Provenance blockchain using the Cosmos Stack.
- Figure has become the largest non-bank HELOC lender in the US, processing over 200,000 loans.
- By using Digital Asset Registration Technology (DART) on-chain instead of legacy systems, they offer loan approvals in minutes.
In its public filing, Figure reported $191 million in revenue and $29 million in profit for the first half of 2025. This demonstrates the immense efficiency gains of a purpose-built blockchain.
Another example could be Ondo.
Ondo Finance, with over $1.39B TVL, built Ondo Chain to access faster settlement and programmable compliance for tokenized U.S. Treasuries and lending platforms.
- Its Ondo GM platform ties tokenized assets directly to public exchange liquidity, enabling instant redemptions and preventing the dislocations seen in early tokenized equities.
- In 2025, Ondo moved ~$95M OUSG collateral into BlackRock’s BUIDL, allowing 24/7 redemptions compared to the traditional T+2 settlement cycle, and is now rolling out tokenized ETF access through its Cosmos-based stack.
These examples highlight how Cosmos SDK’s consensus and execution model enable institutional-grade settlement speed, and position RWA chains to operate at the pace of modern capital markets.
6. Custom validator setup:
Cosmos SDK chains to overcome static or rigid validator setup where on-chain governance allows the chain to include a certain number of validators (depending on the project) to bootstrap your AppChain network and allow it to validate the transactions on the network. With ecosystem expansion, the network must allow more validators to participate in the consensus and help AppChain to ensure security.
Here’s Provenance reiterating the same thesis
Take Ondo, as another example again. They choose to build on Cosmos precisely for this reason. They have permissioned validator sets, with staking secured by tokenized RWAs rather than volatile crypto assets. This design lets Ondo align with institutional risk management standards, reduce exposure to risks like front-running, and enforce compliance measures directly at the protocol layer. Gas fees on Ondo Chain can also be paid using tokenized assets. This further reduces volatility and aligns with the expectations of financial institutions.
7. Impressive UX for accelerated adoption:
Since the start, Cosmos SDK has been a lot focused on improving the UX. The support for native USD issuance and multiple innovative features with leap wallet is a solid example for this.
While these components are widely popular across all niches, Noble; the RWA chain that has issued $435.1M assets, has been enabling Issuance of native USD to its 6 Blue-chip issuers.
To make this accessible, Noble integrates directly with the Cosmos specific Leap Wallet, and allows users to onboard and transact with simplified flows, familiar UX patterns, and support for multiple issuers. All without needing to navigate through any kind of technical complexity. This ensures that RWA participation feels as seamless as interacting with familiar fintech products.
8.Specialized modules for Asset Tracking and Token Transparency:
Cosmos SDK offers production-grade modules that RWA chains can use to enable high level systems for metadata management and ownership tracking. With complete transparency, it’s easier for users as well as investors to participate in the network without any confusion or doubt for its sustainability.
Provenance (we already mentioned) that has $42b+ in transactions, $16.9b+ in active loan TVL, 79% of the private credit market in Web3, and 65+ Network Validators, has employed these Cosmos SDK-powered modules for metadata and ownership tracking. This is critical for loans and mortgage assets and adds trust and transparency to its ecosystem.
Though we’ve highlighted specific Cosmos SDK RWA chains for each feature/RWA solution, the names are not of course not limited to these. Other innovative RWA chains that are building and thriving with this appchain stack includes Neutron, Figure, Swift, Japan, Europe, The U.S., Joltify Finance, Injective, Commercio, Network, Titan, Stargaze (NFTs and social tokens), Chihuahua (community-driven NFTs). Plus, a lot of projects are on its way to launch on the Cosmos ecosystem in 2025 & beyond.
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Now that you have a clear picture about what challenges Cosmos SDK has been tackling and why so many RWA chains have chosen this appchain stack, your next step will probably be to plan your chain. On this step, Zeeve helps RWA projects to deploy and scale it to meet enterprise-grade standards.
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