RWA (Real-world Asset) is one of the fastest growing sectors in this cycle. According to Artemis data, from the beginning of this year to date, the market value of RWA ranks first with a growth rate of 301%, far exceeding popular sectors such as MEME, AI, DeFi, and DePIN.
Traditional financial giants have also launched various products in the RWA track in recent years. For example, BlackRock has issued a tokenized fund BUIDL, which holds US Treasury bonds, cash and repurchase agreements. Franklin launched the OnChain US Government Money Fund.
When looking at the RWA track from the perspective of traditional finance, we will find that blockchain technology is an innovation in traditional finance. Compared with RWA starting from the blockchain industry, RWA in the traditional financial field is more concerned with how to combine DeFi technology to realize the tokenization of assets, so as to empower the traditional financial system, reduce costs, improve efficiency, ensure security, etc., and solve the current pain points of traditional finance.
Compared with the native RWA products, RWA products that can start from the perspective of real-world assets have greater industry advantages, can truly touch the pain points in the industry and serve more users in need.
At present, RWA projects such as real estate, bonds, and artworks are emerging in an endless stream, but few projects have actually been successful. The core issues that need to be considered in the tokenization of real assets are: what kind of assets are suitable for blockchain? What can blockchain itself bring to the asset? And in the process of blockchaining real assets, what are the detailed implementation steps?
With such questions in mind, I recently noticed a project in the market: Asteroid X, a project focused on tokenizing Australia’s exploration and mining assets. After understanding it, I think Asteroid X may bring new ideas to this field.
High-quality assets + clear legal supervision
The Asteroid X project was created by Web3in Tech-Lab, a technology company based in Western Australia. Through this project, users can invest in some early-stage high-quality Western Australian mining projects.
Specifically, Asteroid X helps early mining projects raise funds by tokenizing investments in early mining projects and selling tokens to investors who are optimistic about the mining projects. In this process, the financing cycle of mining projects is simplified and financing costs are reduced. It also provides investors with a channel to invest in early mining projects and obtain high returns.
Why did they choose the Australian mining industry as a physical asset for tokenization? The core of this question is what kind of physical assets are suitable for blockchain.
First of all, it must be a scarce target with a high return on investment. Australian mining projects are physical assets that meet this requirement. The mining industry is the economic pillar of Western Australia. More than 25% of the entities listed on the Australian Stock Exchange (ASX) are related to the mining and energy industries, with a total market value of more than A$300 billion. According to the Australian Minerals Council, in the 2022-23 fiscal year, the industry's export revenue alone reached an unprecedented approximately A$455 billion.
The existing investment market and development potential of the mining industry are huge. In Australia's traditional financial market, people have strong confidence in mining-related land. According to the mid-year report of Herbert Smith Freehills and HLB IPO Watch, in 2022, mining IPOs accounted for as much as 80.5% of total IPOs.
At the same time, more than 400 mining and energy companies seek financing each year, and the growing demand for new energy resources has led to an increase in the proportion of IPOs in these industries (BISWorld, 2024). In the first five months of 2023 alone, 90% of IPOs came from the energy and mining industries (HLB, 2024).
In the traditional mining industry, mining companies face many challenges in obtaining mining rights, financing and equity transactions: long financing cycle, high financing costs, limited investor groups, insufficient equity transaction liquidity, complex reporting, etc. Asteroid X can undoubtedly help these early mining companies to obtain financing more conveniently.
For investors who buy RWA products, there are two things they care about: the return on investment and whether the product is safe. Based on the return on investment of mining-related stocks in the traditional financial securities investment market in Australia, it can be basically judged that the return on investment of the high-quality Western Australian mining projects that Asteroid X is targeting in the early stages of development is guaranteed.
In terms of security, first of all, the traceability and non-tamperability of the process brought by blockchain technology ensures security at the technical level.
In the RWA track, blockchain actually only plays a partial technical role, such as making the process transparent. There are still many professional roles such as law and management that cannot be replaced by smart contracts. RWA is undoubtedly a track that is more connected to reality. Therefore, another difficulty in ensuring security is compliance in the real world, whether the project itself is subject to the laws of the real world.
To achieve large-scale application of real-world asset tokenization, legal and regulatory compliance is one of the necessary prerequisites. This requires a series of legal safeguards to protect investors from fraud, combat financial crimes, maintain investor privacy, and provide a recourse mechanism when problems arise.
In terms of compliance, Asteroid X adopts an issuance model similar to STO, which is currently subject to supervision by regulatory agencies such as the U.S. Securities and Exchange Commission. The adoption of an issuance model similar to STO lays the foundation for future supervision, allowing the platform to meet strict legal and financial standards, bringing security and compliance.
In addition to general compliance documents, the editor found that Asteroid X also has an extremely strict approval process for mining companies that go online, such as:
1. Equity control protection: In order to safeguard the interests of NFT holders, Asteroid X will retain ownership shares of the mining companies that issue these tokens. If any fraudulent activities occur within these companies, Asteroid X, as a shareholder of the mining company, will initiate legal proceedings against the offending party. This move is intended to effectively curb some possible misconduct of the mining companies listed online and provide an additional layer of security for investors on the chain.
Second, geological data requires third-party audits: To further enhance trust and accuracy, all mining companies that wish to be listed on the platform must integrate their operations with real-time government mining data. Asteroid X will conduct audits with qualified third-party geological auditors who specialize in exploration and mining technology and verify the legality, whether the reserves are exaggerated, and the feasibility of mining before each mining project is listed. This rigorous verification process is essential to maintaining the long-term development of the platform and providing investors and stakeholders with quality and compliance assurances.
The development of RWA is not just a project. If blockchain and smart contracts are to be widely used in real-world scenarios, tokenized legal tender on the chain, such as CBDC and tokenized deposits, are also an indispensable part.
Australia has done a lot in this regard. For example, Australia's third largest bank, ANZ, has issued the Australian dollar stablecoin A$DC, and many good projects have emerged in Australia's CBDC pilot. What Australia has done has undoubtedly paved the way for the large-scale deployment of the RWA project.
RWA is not a new track in the industry. It was originally called STO, and in the past one or two years it has been called RWA. The industry has been trying to find physical assets suitable for blockchain. Currently, there are two types of RWA products that have been proven to have a large demand in the industry: stablecoins and U.S. Treasury bonds on the blockchain. The former is a rigid demand for transactions and value storage in the blockchain industry, while the latter is a high-quality asset that is global. Although there are corresponding RWA products for real estate, artworks, intellectual property, etc., none of them have produced products with a large enough volume.
The experience that Asteroid X's practice can provide to the industry is that, for an RWA project that starts from the perspective of real assets, what needs to be considered is the local policy support for the blockchain industry and RWA. Another point is whether the real assets themselves are of high quality. This is the cornerstone for an RWA project to go far and be widely spread.
Not only a new financing channel, but also the democratization of investment
For real-world assets, RWA is undoubtedly a very innovative financing channel. As for how to implement such financing, the specific operation of the Asteroid X project can provide some experience that can be used as a reference for all RWA projects.
First, Asteroid X simplifies the financing cycle by issuing shard NFTs, which are equivalent to equity in the mining project. This innovative approach democratizes access to mining investment, allowing investors to obtain smaller, more affordable shares of mining rights and speed up the financing process.
By tokenizing mining project investments, Asteroid X eliminates intermediaries in traditional investments, and the high efficiency of blockchain transactions reduces overall costs, making it easier for small projects to obtain funding.
Another point worth praising is that it has created a trading market, which facilitates investors' buying and selling and introduces liquidity to the equity transactions of mining projects. This can also be regarded as a solution to a major pain point in the blockchain RWA industry - the lack of liquidity.
On the other hand, Hashkey Group recently announced a partnership with Asteroid X in the RWA field. Hashkey Group not only has investment and incubation businesses, but also a compliant exchange, Hashkey Exchange. By cooperating with exchanges other than Asteroid X, it can inject liquidity into the blockchain industry for projects.
In terms of information transparency, Asteroid X not only makes transactions transparent through blockchain technology itself, but also makes efforts from the perspective of Web2 technology. In order to solve the problem that mining industry reports are too complicated and investors cannot understand them, Asteroid X uses 3D visualization technology to convert technical data into an easy-to-understand format. This improves transparency and investor participation, making information about mining projects easily accessible and understandable.
This year, Asteroid X has progressed to the stage of seeking comprehensive “legal opinions”, and in the next phase, the mainnet product is about to be launched.
The editor saw in the product demo that the typical traditional mining projects that have been added to Asteroid X are the following: MT Resource Project, a lithium exploration project; Matsa Resource Project, a gold exploration project in Coolgardie, Western Australia; Zwphyr Heavy Mineral, a mineral sand mining project; Jimberlana Project, a nickel and cobalt mining project...
According to the project plan, in the next two years, Asteroid X will launch at least 12 mining projects and will also list the currency on centralized exchanges. As RWA projects are regulated in more and more countries, the RWA market will become larger and larger, and there will be more and more projects.
At that stage, how can a good RWA project stand out from the competition? At this time, the project's profitability and hematopoietic ability are tested.
In terms of profit model, Asteroid X will charge a service fee of 2-4% based on the amount of financing for the project. Users who purchase NFTs representing the equity of the project will be charged a transaction fee of 0.2%. For successful sales of an NFT, customers will be charged a royalty fee of 0.2%.
This business model is relatively clear and concise, and it is sustainable. However, Asteroid X still needs to face challenges in the industry. Exploration and mining projects involve exploration risks, environmental risks, mining feasibility, and market price fluctuations. Even with strict auditing and risk control measures, these risks cannot be completely eliminated. Investors need to have a clear understanding of this, rationally assess investment risks, and avoid blindly following the trend.
In addition to its unique business model and industry innovation, Asteroid X also has a Web3 native points system to encourage early users to participate and contribute before the platform is officially released. This system accumulates points through completing tasks, participating in product testing, submitting product feedback, and interacting on social media, ensuring that users who participate in the product and community early on can be recorded and fairly rewarded.
The editor also tested their Dapp, filled out a feedback form, and made some comments and suggestions about the product. This model can't help but remind people of Xiaomi in its early days. A good team should focus on products and users, actively listen to users and improve products, and choose to "make friends with users."
(Points introduction link: https://medium.com/@ASTEROID_X/asteroid-x-points-system-guide-b746bf323db3)
Conclusion
Asteroid X has explored an innovative path by combining blockchain technology with the mining industry. Its unique business model, technological innovation and legal compliance have set a new benchmark for the RWA field. Against the backdrop of global digital transformation, Asteroid X's practice provides new ideas for the upgrading of traditional industries.
From a fundamental perspective, Asteroid X has the quality soil required for a high-quality RWA project. However, any new thing needs to be tested by the market. Whether Asteroid X can gain a foothold in the fiercely competitive market depends on whether it can continue to provide high-quality mining projects, maintain its operations within the compliance framework, and create actual returns for investors. This is the focus of the project and the entire RWA track.
For investors, the tokenization of RWA brings new opportunities, but also new risks. Only by looking at new technologies and new models rationally and understanding the essence of the project in depth can we seize opportunities in this era of change.