Key Takeaways
- RWA protocols require context-aware security reviews. Risks in RWA systems often stem from legal, operational, or permission alignment, not just code-level exploits. Security reviews need to evaluate whether the protocol reflects how real-world capital is governed and accessed.
- Standard correctness checks don’t catch system-level mismatches. Issues like delegation persistence, redemption eligibility, and vault value drift may pass formal verification but still cause real operational problems. Reviews must test edge cases that matter in production.
- Institutional trust depends on behavior under real-world conditions. For protocols seeking institutional adoption, reliability depends on whether logic exists across user roles, timing gaps, and compliance boundaries, not just on clean code.
Introduction
Real-world asset (RWA) protocols are built to bridge on-chain execution with off-chain expectations, legal agreements, participant eligibility, and structured value flows. That complexity introduces a different class of risk: not just exploits, but failures of alignment between what the protocol allows and what regulated participants assume it will do. This article explores the issues that surface when RWAs are encoded into smart contracts, and what it takes to review those systems with the context, depth, and accuracy institutional capital demands.
Challenges RWA Protocols Face
Real-world asset (RWA) protocols do more than move tokens; they carry legal rules, operational workflows, and permission structures into code. That creates new kinds of risk, not the kind that shows up as an exploit but that surfaces quietly when systems don’t behave as participants expect.
Access control is one of the first areas where this happens; RWA protocols typically use tools like member registries, allowlists, or freeze states to define who can interact with the system. If those checks are missing, inconsistent, or applied in the wrong place, actions like redemptions or transfers can slip through when they shouldn't.
Cross-chain execution adds another layer, and protocols often rely on asynchronous messaging, processing actions after a delay. That creates windows where user permissions might change mid-transfer. If the system isn’t accounting for that, assets can end up in unexpected places or get stuck entirely.
Even token behavior can create friction; RWA protocols often aim to follow standards like ERC-4626 or ERC-1404, but the edge cases matter. Small mismatches like incorrect preview values, rounding issues, or fee-on-transfer logic can confuse what the interface shows and what happens in the contract.
These aren’t dramatic failures, but they’re exactly the kinds of issues that can erode trust over time, especially when institutions are involved. Getting them right requires knowing how technical logic connects back to real-world constraints.
Organizations Advancing the RWAfi Stack
As real-world asset protocols evolve, some infrastructure layers are being purpose-built to meet their unique demands. One notable example is Plume Network, a layer-1 blockchain designed specifically for tokenizing and trading RWAs like private credit, renewable energy financing, and tokenized commodities.
Unlike general-purpose chains, Plume offers a full-stack tokenization engine with native EVM compatibility. This allows asset issuers to deploy contracts and compliance frameworks without bridging fragmented systems. Its architecture supports seamless DeFi integration and global distribution, critical for both institutional actors and crypto-native users navigating real-world asset finance.
For protocols building or expanding in the RWA space, platforms like Plume demonstrate how infrastructure tailored to compliance, tokenization, and liquidity can remove friction and open new opportunities. These design choices improve execution and help ensure RWAs behave consistently across legal, operational, and technical layers.
Real-world RWA Audit Findings
Centrifuge engaged us in auditing an RWA protocol across two separate review periods. The focus was on system behavior related to permissions, cross-chain flows, and vault accounting areas, which are especially important for protocols handling asset-backed structures and regulated participant access. The reviews surfaced a set of refinements that improved how the protocol applies rules, maintains state, and delivers accurate value reporting.
- Redemption conditions and frozen-state checks: Initial redemption logic was applied uniformly across accounts, regardless of the freeze state. This was later refined to incorporate explicit frozen-state checks. In the context of RWAs, where participant eligibility and compliance controls are central, this behavior could lead to redemptions from ineligible or restricted accounts. The updated logic now includes explicit frozen-state checks, reinforcing permission boundaries in line with real-world controls. Flexibility around non-member redemption remains a deliberate product decision.
- Cross-chain messaging and membership transitions: Asynchronous token transfers introduced edge cases where a user's membership status could change while a cross-chain operation was still in transit. For RWAs where membership is directly tied to legal access rights, this prompted refinements to handle better scenarios where membership status might change during async execution, aligning final delivery with current eligibility. The protocol now accounts for these transitions to align eligibility with final settlement behavior better.
- ERC-4626 preview function alignment: Preview functions such as previewDeposit() and previewMint() were updated to reflect vault behavior across edge conditions more closely, improving alignment with ERC-4626 expectations. For protocols issuing structured assets, accurate previews are important for user expectations and integrations, NAV reporting, and compliance traceability.
These updates reflect the value of context-aware reviews that evaluate how protocol logic performs under real-world operational constraints and how protocol behavior reflects legal, operational, and economic constraints on which real-world capital depends.
To browse the full security reports, you can review them below:
How Spearbit Approaches Complex RWA Reviews
Reviews of RWA protocols demand more than standard issue-spotting. The systems often combine on-chain automation with off-chain legal, operational, and compliance requirements. That means risks can emerge not from isolated bugs but from how business logic, permissions, and accounting interact over time, especially in edge conditions.
We structure these reviews to reflect that complexity; each engagement pairs two researchers with overlapping focus areas: one often centers on contract logic and invariants, while the other traces operational flow, who can do what, under what conditions, and how state transitions are handled across chains or over time. This layered perspective helps surface issues that wouldn’t be visible in a single-track audit.
We also run live, time-boxed reviews, in which researchers work in parallel, compare findings in real time, and iterate on emerging hypotheses throughout the engagement. This format increases signal density, especially for systems with complex state machines or multi-role permissions.
Fix validation is a standard part of our process. When a client ships changes, we test how those changes behave through transaction replays, diff reviews, or manual state manipulation. It's how we confirm that identified issues don’t just get patched but are resolved in a way that holds up under protocol usage.
This approach allowed us to catch issues like delegation persistence after token burns or preview values that diverged from actual vault behavior. More importantly, it helps us give clients confidence that the protocol will behave consistently in the conditions they and their users care about.
Takeaways for Builders and Institutions
The most valuable outcomes from security reviews often come after the findings, when teams apply what was uncovered to shape design decisions, integration practices, or diligence frameworks. RWA protocols require a different lens for builders and institutional stakeholders: one that tests for behavior under constraints, not just correctness in isolation.
For Builders
If you're developing RWA infrastructure, focus on how protocol logic holds up across user states, time windows, and cross-contract interactions. Ask where assumptions might break if a user’s status changes mid-operation, or if a standard function, like a preview, relies on conditions that shift post-deployment.
Structure reviews to test protocol behavior as a system, not as a checklist of isolated contracts. That means looking for indirect effects: Does access logic remain consistent across upgrade paths? Are role-based permissions reflected everywhere they should be?
Expect findings to influence product thinking, not just bug fixes. Some of the most valuable feedback will surface design choices that aren’t wrong, but may need stronger guarantees for the environments you’re targeting.
For Institutions
When reviewing protocols for integration or allocation, move beyond severity labels. Ask how the system handles governance changes, participant eligibility, or asset pricing under edge conditions, not just whether the code compiles cleanly or passes a static audit.
Look for evidence that findings were addressed and understood in context. Did the team rethink how roles are assigned or how redemptions reflect off-chain rules? Was preview logic updated to reflect actual flows, not just ERC alignment?
Use technical review outputs as conversation starters. Good reviews raise questions that inform better diligence, especially when the protocol bridges on-chain infrastructure with real-world legal and operational structures. That’s where trust gets built or tested.
Conclusion
Securing RWA protocols means validating more than correctness, confirming that code reflects how real-world capital is expected to behave. From permissions and governance to settlement and pricing, small misalignments can erode trust, create operational friction, or complicate compliance. Reviews that surface these issues early don’t just reduce risk, they support confidence, clarity, and readiness for institutional participation. That standard Spearbit brings to every system designed to hold real-world value. If you're building or assessing an RWA protocol and want a review grounded in operational relevance, not just exploitability, reach out to schedule a security consultation.