Colin: I just mentioned that the core of the current RWA narrative is U.S. debt. What do you think are the key factors for success for U.S. debt RWA type projects?
In the past year or so, all kinds of so-called compliant CeFi have basically exploded, so at this point in time, everyone's trust in CeFi can be said to be negative, even large groups like DCG have problems with insolvency. Another key point is that the asset issuers of RWA's treasury bonds are actually facing competition from Defi projects. Although they have a cooperative relationship, for example, these asset issuers also hope that we will take over their assets as collateral or underlying reserves, but I think there is still a certain degree of competition with Defi to some extent.
For example, MakerDao did not follow these platforms. Its RWA mainly uses its own trust structure and legal structure to tokenize RWA assets. However, its tokenization is not circulated in the market. It can be understood as purely off-chain. After exchanging stablecoins for US dollars, it buys government bonds and realizes income through the chain plus trust method, which can be reflected at the Dai holder level. Therefore, it does not cooperate with several current partners in the market. MakerDao can now be regarded as the largest holder of RWA assets, and there is actually a certain competitive relationship between it and Defi project parties. For Defi project parties, the most critical thing is how to distribute the income in the form of tokens.
The current RWA issuers face several problems. The first is that all asset issuances must undergo KYC, whether it is trading or buying assets with T-Bills, KYC must be done, which is the same structure as the issuance of stablecoins. Everyone knows USDC and USDT. If you want to participate in its minting and coin elimination, you must do KYC, which is a basic requirement. However, this requirement is no longer required when entering secondary circulation.
RWA assets are actually stricter than stablecoins. Even at the secondary circulation level, a whitelist system is required. For example, Matrixdock's T-Bill Token also has a pool on Curve, which matches the stablecoin. If you want to buy or sell, you must be a whitelisted account to trade in the Curve pool. From this point of view, I think it will greatly limit the issuance scale of the issuer of the T-Bill token. But for DeFi project parties, there are actually many ways to solve this problem. For example, Ondo Finance has created a Flux Finance. It uses the pool model to use Ondo's T-Bill token as the underlying collateral. It is done by market makers or project parties themselves, and will not let other retail investors operate the collateral. But he can use the collateral to borrow the stablecoin in Flux Finance, borrow it to exchange it for US dollars, and then buy treasury bonds to form a cycle. In this way, he disguised the income of T-Bill to the depositor of the stablecoin through the loan agreement. The advantage here is that the stablecoin depositor does not need to do any KYC, because it does not hold or purchase any T-Bills, but simply lends the money to the market maker to buy or leverage. I think this is a smarter structure.
In addition, the structure of MakerDao does not allow Dai holders to directly access any T-Bill tokens. MakerDao uses a Trust to hold tokens and maps these earnings through monetary policy. It is even more isolated than Ondo, and there is no relationship between the two. It is not that I have to give 100% of the money I earn to Dai holders. He only opened one there. For example, if I earn 5 points on T-Bill, I can give my monetary policy 3.5 points and adjust the interest rate to 3.5 points, but there is actually no relationship between the two in terms of transaction structure. They are two independent monetary policies. This is also what I think is relatively smart.
Back to your question, it is hard to say how RWA project owners can seize the big market. Because I just said that if the DeFi project owner becomes big, it may directly skip the issuer and set up its own structure, or the DeFI project becomes a very strong distribution channel. Under the distribution channel, the underlying so-called KYC treasury bond issuers may become in a weak position.
