Author Top.one
Release Date May 28

1. Why is RWA being hyped again?

If you have recently swiped Twitter and domestic channels, you can hardly avoid one word: RWA (Real World Assets). Whether it's Wall Street giant BlackRock's on-chain treasury bonds or MakerDAO's plan to expand asset management to the "real economy", RWA seems to have become a bridge between the chain 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 RWA has been called "future". As early as 2019, there were projects in the circle that tried to "move real estate, metals, artworks and other assets to the chain", but there was always thunder and rain. What is the difference between today's craze? Can RWAs truly land and become a new growth engine in the crypto industry?

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

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

Real asset tokenization, which is simply understood as "using blockchain technology to express rights or values in the traditional world", such as turning U.S. bonds, real estate, or accounts receivable into on-chain tokens that can be traded, staked, or used in 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 and the infrastructure in the eFi field has formed a relatively complete module system after several rounds of bulls and bears, including decentralized trading, lending, stablecoins, asset management, etc., providing composable RWAs. Where it comes in."

2. The active approach of mainstream financial institutions: it is no longer the unilateral "imaginary reality" of Web3 projects, but real TradFi players have begun 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 on the chain of real assets

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

Pain point 1: Off-chain asset data is difficult to verify.
The "authenticity" of assets such as real estate, creditor's rights, and metals is highly dependent on information from the off-chain world. On-chain systems naturally do not trust external data and require oracles or trusted bridging solutions. Currently, both Chainlink's oracle network and Ethereum's Layer2 + zk series solutions are solving this problem.

Pain point 2: Complex asset life cycle management.
For example, after an accounts 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 the on-chain status still requires a complete "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 The

United States is the most active and critical battlefield for regulation.
Currently, the United States is promoting the "stablecoin + RWA" combination path, and Circle, BlackRock, etc. are participating in the on-chain of dollar-denominated bonds. China, the European Union, Singapore and other countries have also issued 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. If the "equivalence of on-chain rights and real ownership" cannot be clearly defined, then RWA is difficult to become a universally accepted asset class.

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

3. Business model: asset on-chain ≠ liquidity revolution Even

if the technology is well understood and compliance is done, RWA projects still face a fundamental problem: who will pay for it?

Many projects want to "put TradFi users on the chain", but the reality is that
traditional users do not need blockchain, and are more accustomed to compliant, efficient, and secure traditional financial channels. The acceptance of RWAs 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 how do you ensure that someone is willing to hold the asset for a long time or circulate quickly in the secondary market?

This directly points to 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: from "project-based" to "protocol-layer assets"

Currently, most RWA projects are "packaged one by one", without a unified interface and poor composability. However, in the future, the industry is likely to give birth 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"

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

This will be the beginning of the deep integration of traditional finance and Web3. You may be buying a "customized US 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 the chain.

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

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

But we also cannot fantasize that RWA is the antidote to all problems.

It still has to deal with the complexity of the traditional world, uncertain regulation, and a difficult network of trust. But precisely because it is difficult, it is worth doing.

If you are an investor, developer, or entrepreneur, RWA is worth your serious research. It could be the first step we take to stand on-chain and look at the real world.