by Top.oneRelease
date: May 28

1. Why is RWA being hyped again?

If you have recently swiped the cryptocurrency circle Twitter and domestic video accounts, there is almost one word: RWA (Real World Assets). Whether it is the on-chain treasury bonds of Wall Street giant BlackRock, or MakerDAO's plan to expand asset management to the "real economy", RWA seems to have become a bridge between the chain circle and traditional finance, and some people even call it "the asset base of the next generation of DeFi".

But this is not the first time that RWA has been shouted "future". As early as 2019, there were projects in the circle that tried to "put real estate, metals, artworks and other assets on the chain", but the thunder was always loud and the rain was small. What's so different about today's craze? Can RWA actually land and become a new growth engine for the crypto industry?

Top.one tries to deconstruct the current development status of RWA from three dimensions: technical architecture, practical dilemmas, and compliance challenges, and puts forward thoughts on its future evolution direction.

Second, RWA is not a new concept, but it has finally waited for the "mature market background"

to tokenize real assets, which is simply understood as "using blockchain technology to represent rights or values in the traditional world", such as turning U.S. bonds, real estate or accounts receivable into on-chain tokens, which can be traded, pledged or used for DeFi.

However, the implementation of this vision is inseparable from two key conditions:

1. The underlying building blocks of on-chain finance are mature enough:D the infrastructure in the eFi field has formed a relatively complete modular system after several rounds of bulls and bears, including decentralized trading, lending, stablecoins, asset management, etc., providing RWA with composable" Where it comes in".

2. Mainstream financial institutions are approaching actively: it is no longer Web3 projects that unilaterally "imagine reality", but real TradFi players are beginning to try "on-chain asset management".

From this perspective, today's RWA is no longer an "imaginary future", but has a development tipping point of "technical feasibility + scenario reality + regulatory transition".

3. Three core challenges that cannot be avoided when real assets are on the

chain1. Technical level: the credibility of data and the controllability of assets

Pain point 1: It is difficult to verify off-chain asset data.
The "authenticity" of assets such as real estate, creditor's rights, and metals is highly dependent on information in the off-chain world. On-chain systems, on the other hand, do not trust external data and require oracles or trusted bridging solutions. Both Chainlink's oracle networks and Ethereum's Layer 2 + zk series are solving this problem.

Pain point 2: Asset lifecycle management is complex.
For example, after an account receivable is put on the chain, it involves various dynamic operations such as debt transfer, default, and early repayment, and how to synchronize off-chain progress and update on-chain status still needs to improve the "off-chain collaboration standard" and smart contract framework.

2. Legal compliance: Regulation has not yet been finalized, and cross-border issues are more difficult to gnaw,

and the United States is the most active and critical battlefield for regulation.
At present, the United States is promoting the combination path of "stablecoin + RWA", and Circle, BlackRock, etc. are participating in the on-chain of dollar-denominated bonds. China, the European Union, Singapore and other countries have also introduced regulatory frameworks for "tokenized securities" or "compliant issuance".

However, the problem is that RWA involves the whole chain of asset issuance, custody, circulation, liquidation, etc., and each link may involve the attribution of legal liability. Without a clear definition of the "equivalence of on-chain rights to actual ownership", it will be difficult for RWA to become a universally accepted asset class.

In addition, cross-border issuance and trading involve complex foreign exchange controls and securities rules, which are extremely challenging for most project parties.

3. Business model: Even if the liquidity revolution ≠ assets on the chain

is successful, RWA projects still face a fundamental problem: who will pay?

Many projects want to "get TradFi users on the chain", but the reality is that
traditional users don't need blockchain, and are more accustomed to traditional financial channels that are compliant, efficient, and secure; On the other hand, the acceptance of RWA by native users on the chain is limited by "asset liquidity, yield, and transparency".

For example, it is not difficult to put a Dubai apartment on the chain, but the difficult thing is how do you ensure that the asset is willing to be held for a long time or quickly circulated in the secondary market?

This directly points to the fact that the core value of RWA is not "the asset itself", but "whether it can provide stable cash flow and credit anchoring for the chain".

4. Future trend conjecture: RWA will move towards "standardization" and "asset as a service"

1. Towards standardization: Shift from "project-based" to "protocol-layer assets".

At present, most RWA projects are "asset packaged", with no unified interface and poor composability. However, in the future, the industry is very likely to give rise to a number of on-chain asset issuance and management standards (RWA-20?) like ERC20 stablecoins. ）。

These standards will provide "modular asset custody capabilities" from the dimensions of on-chain ledgers, security mechanisms, and equity structures, opening up new sources of assets for DeFi protocols.

2. Asset-as-a-Service: Financial institutions will become on-chain "asset API providers",

future on-chain asset issuance may be handled by professional financial institutions for asset selection, risk control, legal packaging, and then access to DeFi protocols in the form of "compliant APIs".

This will be the beginning of the deep integration of traditional finance and Web3. What you buy on-chain may be a "customized USD Treasury liquidity portfolio" provided by BlackRock, JPMorgan Chase, etc., while the underlying transaction is still completed off-chain, and only one mapping certificate is presented on-chain.

5. Write at the end: RWA is the "new narrative" of the next stop, but it is not a "panacea

Every round of bull market will have an "asset narrative": the last round was liquidity mining and stablecoins, and this round is likely to be RWA. For the first time, it made the on-chain world think seriously: how to move the real-world credit system into the crypto system?

But we also can't be under the illusion that RWA is the antidote to all problems.

It still has to deal with the complexities of the traditional world, uncertain regulation, and a network of trust that is difficult to build. But because it's hard, it's worth doing.

If you're an investor, developer, or entrepreneur, RWA deserves your serious research. It could be our first step in standing on-chain and looking into the real world.