In the real world this conversion is done by Banks. You present your real estate to the bank who takes a charge on them and lends you money against it. Aka - You stake your asset and mint dollars.
A similar process is already available in the defi space where you can take a range of onchain assets and mint a stable coin against it.
We aim to extend the same process by adding tokenized real world assets as collateral to the mix. Maker DAI uses ETH and a basket of onchain assets as collateral. Maker also plans to use real world assets as collateral. Our approach is similar, where we start with onchain assets, however in the long run we will be more heavily weighted towards off-chain assets as collateral.
As long as there are suitable mechanisms to maintain the peg and liquidity of the stable coin, you have instantaneous creation of credit on demand and a global defi bank that can create sound money backed by real world productive assets.
The key problems to then address are:
How is off chain enforcement done in a seamless manner, and
How is parity and liquidity maintained for the stable coin.