Original title: How MANTRA is Leading the RWA Market Revolution
Original author: RYAN YOON AND YOON LEE
Original source: reports.tiger
Compiled by: Mars Finance, Daisy
Leading compliance and innovation in tokenization of real-world assets
Summarize
The real world asset (RWA) market is growing rapidly and is expected to reach $16 trillion by 2030, but faces regulatory challenges that need to be addressed to realize the market’s full potential.
MANTRA pioneers compliance and innovation in RWA tokenization by implementing a regulatory mechanism at the protocol level through the MANTRA Chain with the “MANTRA Compliance” feature.
MANTRA is actively building its ecosystem through a self-developed platform, strategic partnerships, and a $500 million asset tokenization deal with MAG Group, which is expected to set standards in the RWA market.
1. The RWA market is growing, but how is it actually performing?
Source: Boston Consulting Group
Recently, real-world assets (RWA) have become a development trend in the blockchain industry. RWA refers to the conversion of real-world assets such as stocks, real estate, and commercial paper into tokens that can be traded on the blockchain.
Many consider RWA to be a promising area in the blockchain market. Larry Fink, CEO of BlackRock, said, “The next generation of markets, the next generation of securities, will be the tokenization of securities.” Boston Consulting Group predicts that the RWA market will grow to $16 trillion by 2030.
Source: rwa.xyz, Tiger Research
Currently, the RWA space is dominated by stablecoins, with U.S. Treasuries being the most commonly tokenized asset. This suggests that the RWA market is still in its infancy and has much room for improvement in terms of liquidity provision and investment opportunities. Future developments may see a wider variety of physical assets being tokenized, while new financial services are developed to meet changing market expectations.
Tokenization of underlying assets is only the first step in the growth of the RWA market. It is essential to develop sophisticated financial products and services that can fully exploit the potential of blockchain. This potential can even extend to revitalizing existing financial markets. However, in order to properly develop the next phase of the RWA market, regulatory challenges need to be addressed first.
2. Regulated RWA Market
Due to the involvement of tangible assets, the risk asset market is subject to strict financial regulation. Jurisdictions that allow the tokenization of risk assets, such as the UAE, Singapore, and the United States, have implemented comprehensive financial regulations on risk asset products. These regulations include necessary know-your-customer (KYC) procedures and anti-money laundering (AML) measures, which are comparable to the regulatory standards for traditional financial products.
Regulators around the world are introducing regulatory sandboxes to promote the healthy development of the RWA market. For example, as a previous report pointed out, RWA-related businesses are currently being tested in regulatory sandboxes in Indonesia and other countries.
Source: Tiger Research
South Korea’s approach is to use financial sandboxes to simultaneously test and implement regulation. This strategy was highlighted in guidelines issued by South Korea’s Financial Services Commission (FSC) in February 2023. These guidelines reiterate that the fundamental nature of securities does not change, regardless of the form in which they are issued. Despite the emergence of new types of RWAs, the inherent characteristics and scrutiny of securities remain. While acknowledging the need for new forms of issuance, regulatory standards remain the same.
This suggests that the RWA market will not be immune from regulatory oversight. Therefore, despite its innovative nature, RWAs are classified as financial instruments and are expected to comply with the existing securities regulatory framework.
3. Necessity of a regulatory mechanism at the protocol level
Source: Tiger Research
The main challenge facing the RWA market is to effectively achieve regulatory compliance. Currently, most RWA Dapps focus on application-level compliance, limiting the full use of blockchain interoperability and compatibility. For example, investors must undergo a separate KYC process on each platform to purchase and trade real estate tokens, which is similar to the procedures of traditional stock exchanges.
In order for the RWA market to fully leverage the benefits of blockchain technology, compliance mechanisms need to be embedded into the blockchain protocol layer. This approach involves creating a standardized method of value exchange by supporting compliance at the protocol level rather than the application level. By internalizing compliance mechanisms into the underlying blockchain infrastructure rather than in isolated silos on which each exchange is built, the market can promote a more organic and efficient trading environment. This shift will increase transparency, streamline operations, and promote wider adoption of the RWA platform.
Currently, each application independently identifies and verifies users. However, with the ability to verify users at the protocol layer, all participants can transparently verify individuals. This development lays the foundation for future on-chain transactions of asset ownership and real-world value.
Source: Tiger Research
This change could take the RWA market to the next level. For example, investors can purchase real estate tokens using their favorite cryptocurrencies (including stablecoins) and have ownership of the actual property. Real estate tokens represent the rights to the property, and rental income can be automatically distributed to real estate token holders without the need for intermediaries, all operations are completed on-chain.
In order to bring more assets on-chain, a regulatory mechanism needs to be implemented at the protocol level. This will ultimately promote the development of the RWA market and allow more assets to be freely transferred and traded on the blockchain. Of course, this requires close consultation between regulators and the blockchain industry to establish a regulatory framework optimized for RWA.
4. MANTRA’s next steps in entering the RWA market
MANTRA represents the advanced regulatory compliance approach required by the evolving RWA market. MANTRA CEO John Patrick Mullin has been actively involved in security token offerings (STOs) and RWA tokenization projects since 2018. His extensive experience has given him a deep understanding of how regulatory compliance can drive the RWA market forward.
Leveraging this expertise, MANTRA has developed an innovative RWA tokenization system that addresses the pressing need for a protocol-level regulatory mechanism. At the heart of the system is the "MANTRA Compliance" feature, an advanced solution designed to manage regulatory tasks at the blockchain's foundational level. This approach ensures that regulatory compliance is seamlessly integrated into the blockchain protocol rather than handled separately by the application. This enhances the interoperability and efficiency of the RWA platform, paving the way for a more robust and compliant RWA marketplace.
Source: MANTRA
MANTRA compliance uses a decentralized identity (DID) system to verify personal identity securely and efficiently. Once verified, users will receive a unique decentralized ID (Soulbound NFT/ID) that can be used for KYC verification across multiple platforms.
Source: Tiger Research
Previously, investors who wanted to purchase tokens representing real-world assets typically had to authenticate themselves on each platform separately. With a decentralized ID issued through MANTRA compliance, investors can use just that ID to seamlessly authenticate themselves on multiple platforms. This process saves a lot of time and money while improving the user experience.
Additionally, MANTRA facilitates collaboration with regulators. If a country’s regulator introduces new regulations for RWA transactions, MANTRA compliance can quickly reflect this change unilaterally and extend it to developers building applications on the platform. This ensures effective compliance across the entire RWA ecosystem.
As more and more RWA projects adopt the system, the overall security and integrity of the RWA market is expected to improve. By introducing more types of RWA tokens (such as real estate tokens, art tokens, and bond tokens) in a compliant manner, investors and asset owners can accumulate on-chain transaction records under supervision, thereby attracting more participants to participate in the market with confidence.
In this way, MANTRA effectively balances regulation and technology to chart a new direction for the RWA market. MANTRA’s approach is expected to play a key role in the development of the RWA market into a more mature and trusted financial ecosystem.
5. Self-developed ecosystem
Similar to other Layer 1 platforms, MANTRA works with a number of partners. However, unlike platforms that rely on external technology, MANTRA actively develops the RWA market using its own expertise. This self-sufficient approach enables MANTRA to establish leadership in the RWA market and drive innovation.
5.1. Building the RWA DAPP
Source: MANTRA
MANTRA prioritizes regulatory compliance and global expansion while strengthening its position in the RWA market through its proprietary platforms, MANTRA Finance and SOMA Finance.
A notable aspect of MANTRA's strategy is its expansion into the UAE. They are applying for a license from the UAE Virtual Asset Regulatory Authority (VARA), demonstrating their commitment to regulatory compliance and potential for global growth. With this license, MANTRA intends to utilize the MANTRA Chain to develop various financial products and expand its global reach.
MANTRA also has a strong interest in the Asian market, especially South Korea. South Korea has high-quality assets, intellectual property rights, and a strong interest in blockchain technology, making it a key focus of MANTRA's Asian strategy.
MANTRA's strategy is characterized by a customized approach that takes into account the unique characteristics and requirements of each region. By leveraging its proprietary platform, MANTRA aims to secure a leading position in the global RWA market by providing RWA solutions tailored to the regulatory environment and market characteristics of different regions.
5.2. Determine investment products
At the end of the day, investors ultimately care about the actual investment value of a financial instrument. This is also true in the RWA market. MANTRA recognizes this and focuses on identifying investable assets and tokenizing them. It is important for the growth of the RWA market to be able to provide investors with attractive assets that can provide real returns on their investment, not just a technology to tokenize assets.
Source: MANTRA
MANTRA operates its own incubator program to identify and nurture various RWA projects and promote their development on the MANTRA chain. The main features of the incubator program include:
Investment and Financing: MANTRA provides seed investments of up to $1 million for selected RWA projects
Global Guidance: MANTRA team provides multidisciplinary guidance in areas such as compliance, marketing, business strategy, etc.
Global coverage: MANTRA has branches in Dubai, Hong Kong, Singapore and other regions to help projects enter the global market
Access to investor network: Projects can access MANTRA’s extensive investor network to obtain additional funding
Source: MAG Group
MANTRA is actively creating its own exchange rather than just acting as a platform for external assets. One notable achievement was a $500 million asset tokenization deal with Middle Eastern real estate developer MAG Group. The plan involves tokenizing real estate assets in multiple tranches, with the first tranche including the Keturah Reserve residential project at Meydan in Dubai and a $75 million super-mansion at The Ritz-Carlton Residences in Dubai Creek.
This transaction demonstrates MANTRA’s ability to execute the tokenization of high-value real-world assets and highlights its commitment to adding real value to the RWA market. By focusing on increasing the value of real-world assets through tokenization, MANTRA aims to drive significant growth and innovation in the RWA space, rather than just providing technology solutions.
6. Whoever sets the standard first will lead the market
Currently, there are many blockchains in the RWA market competing to become the "standard". However, many of these blockchains are general-purpose and have not yet been equipped to meet the regulatory and technical needs of the RWA industry. In contrast, MANTRA has a deep understanding and expertise in the RWA market and is poised to grow by simultaneously promoting compliance and technological innovation.
MANTRA Chain provides the necessary technical infrastructure, while MANTRA's strategic transactions attract investors. Establishing a standard requires attracting both providers (asset managers) and consumers (investors). MANTRA is expected to set this standard by providing asset managers with powerful technology, attracting investors with profitable transactions, and integrating both groups into a cohesive platform.
In this context, MANTRA emerges as a strong contender to set standards in the RWA market. Although the blockchain-based RWA market is still in its infancy, it is expected to develop rapidly. MANTRA has the ability to provide a unified platform that coordinates technology and regulation, paving the way for future growth and innovation.
