Author: 0xFacai, BlockBeats
According to Dune Analytics data, RWA has become the only crypto narrative that has risen in the past three months, except for memes. This performance has attracted our attention in an environment where the market as a whole is stagnant. In fact, since June last year, there have been voices about RWA, and after BlackRock launched the BUIDL on-chain fund, this narrative was completely ignited.
Everyone has a good sense of smell when it comes to the wind, but not many people can really "step on the right spot". In the past six months, countless teams have flocked to transform into RWA, but only a few projects have successfully seized the opportunity and achieved initial results. Whether it is transformation or entry, seeing the opportunity clearly is the key for the team to get a ticket, and among the many competitors, a project called Jiritsu attracted our attention.
RWA’s liquidity fragmentation problem
The biggest benefit of tokenizing real-world assets is that it can provide faster and more efficient trading and settlement processes for these assets, which is undoubtedly the main reason why all institutions are interested in RWA. Although this idea is logically sound, it will encounter many difficulties at the technical level when it is actually promoted, and the fragmentation of liquidity after assets are put on the chain is one of them.
While the on-chain and trading of RWAs are full of complexity, the fragmented market makes the problem worse. In a report last July, Digital Asset Research emphasized that among the current RWA institutions, more than 60% are trading through their own tokenized asset markets, which means that after the assets have been "hard to go through" to complete the on-chain, they can only attract a small number of fixed customers.
According to statistics from The Block, the total financing scale of the RWA track has also reversed the downward trend this year and rebounded to US$300 million. The current trend of RWA recovery has allowed many entrepreneurs to see new "narrative opportunities", and the RWA concept projects in the market are also increasing at a visible rate. However, most of the projects that have received financing tend to focus on very small vertical fields, such as natural resources, specific commodities, and artworks, and RWA projects in the real estate field are particularly obvious in this regard.
To what extent can this vertical category be subdivided? For example, platforms such as Balcony and Mnzl provide tokenization processes for regional real estate resources. Often, the assets on the chain and the buyers and sellers who trade through on-chain tools are local institutions or government departments, which can basically be regarded as a semi-closed asset market.
The verticalization and regionalization of RWA projects are understandable. After all, many real-world assets are highly regionalized and often require dedicated personnel and targeted solutions. However, due to different regulatory restrictions in different regions, each RWA project is almost building its own on-chain process and trading platform from scratch. At the same time, there are different choices when choosing the underlying public chain and smart contract development tools and other technology stacks, which brings huge challenges to the interoperability between different RWAs.
Many entrepreneurs saw this liquidity split, so at the same time, RWA asset aggregation platforms or RWA launch platforms such as Midas and Plume began to appear in the market. But when you think about it further, you will find that they are still facing a dilemma: if you want to establish a unified market, you must first have a certain degree of compatibility in tokens and contract standards, which hinders the platform from aggregating RWA assets on a large scale and in multiple categories. If different RWA protocols are aggregated first, they will be limited to the role of "launch platform" due to the differences in the technical stacks between the protocols. Although it brings some liquidity to small projects, the assets on the chain still have to face the problem of market fragmentation.
This is true even for the most liquid tokenized U.S. Treasury bond market. Although the scalability problem of a single product category has been solved under the impetus of institutions such as BlackRock and Franklin Templeton, you will still find that in order to provide more choices for potential investors and cooperation projects in the future, these assets are also dispersed on different public chains such as Ethereum, Stellar, and Avalanche.
This also provides a narrative window for cross-chain interoperability protocols that have been slow to gain momentum, such as Axelar, which started to deploy RWA very early. Last year, it launched Centrifuge Everywhere and Ondo Bridge in cooperation with Centrifuge and Ondo, respectively, to optimize the protocol and inter-chain interoperability and liquidity for RWA tokenized products. In the current market environment where fragmentation is obvious, cross-chain interoperability is a compensatory solution.
Jiritsu ZK - MPC: Trustless, automated off-chain asset verification
In fact, it is not difficult to see that the bottleneck for RWA to break through the scale limitation is the lack of automated processes or technologies such as AMM in the DeFi field. For RWA products, tokenization is often just the beginning. After the product is on the chain, ensuring continuous asset updates and transparency is the key to testing efficiency and cost, which generally includes the following aspects:
1. Financial reporting: Asset managers need to publish financial and performance reports on their assets on a regular basis. For example, real estate managers need to regularly provide payment dates and amounts of rental income, or details of outstanding balances and vacancies, so that investors can have a clearer understanding of the cash flow dynamics of the property.
2. Debt management: Products such as RWA credit need to regularly update details such as loan collateral, repayments, interest rate adjustments, and refinancing activities to let investors understand their health. This is the basis for such products to maintain investor trust.
3. Change of ownership: If there is a change in the basic ownership of the underlying asset or the legal entity that owns the asset, it also needs to be announced in a timely manner.
4. Market regulation: When the market regulatory environment of the underlying assets changes, the manager also needs to report and make corresponding adjustments to ensure product compliance.
Of course, in addition to this, there are also complicated details such as asset insurance and risk management strategies, asset valuation and inspection, and the legal entity of issuance. From tokenization to information update and maintenance, a real-world asset requires asset managers to devote a lot of energy and attention to various details throughout the investment life cycle. In short, in the current market environment of "infrastructure redundancy", asset chain is no longer the most difficult part of RWA development. Off-chain continuous verification and legal supervision are the main reasons for slowing down the growth of asset categories and scale and eroding the value of asset chain. All of this can only be discussed under the premise of putting aside the centralized audit risks of off-chain entities.
The scale and growth rate of RWA assets depend entirely on the strength of the off-chain issuing and management institutions, which is also the important reason why the U.S. Treasury RWA products have grown rapidly after BlackRock entered the market. In contrast, other assets such as real estate and commodities are difficult to achieve scale effects because they do not enhance automation in the process. Of course, the value of on-chain assets also means huge business opportunities, and for now, this part of the potential income has basically flowed into the hands of asset issuers and managers like Securitize.
Is it possible to build an automated “asset oracle” system in the RWA field, just like ChainLink does for DeFi? We found some answers in the Jiritsu project.
Jiritsu is an Avalanche subnet specifically for off-chain asset verification. It aims to automate and de-trust off-chain asset registration and verification, while improving the economic efficiency and transparency of RWA tokenization and reducing on-chain wear and cost. By integrating ZK proofs and MPC multi-party computations, Jiritsu can ensure secure and private automated verification of asset details while embedding regulatory compliance and asset integrity into tokenized products. Interestingly, the name "Jiritsu" comes from the Japanese word "じりつ", which means self-reliance. In the current RWA field, where the core links are heavily dependent on centralized manpower, this is exactly what it needs most to enhance its crypto-native properties and achieve economies of scale.
Jiritsu ZK - MPC Oracle aggregates data from multiple sources and verifies related calculations, and adopts a multi-functional data retrieval mechanism to enhance the integration depth of different types of assets. The oracle includes two main mechanisms: "Push" and "Pull". The former is that data providers (such as asset managers) send information directly to the oracle, and the latter allows the oracle to directly obtain data from the integrated information provider's systems such as supply chain software, bank information, etc. through APIs.
In terms of consensus mechanism, Jiritsu introduces the concept of Proof of Workflow (PoWF). The nodes in the network run an operating system driven by a computing engine and a workflow manager, and use the generated ZK proof to ensure the consensus mechanism of verifiable computing and smart contract execution, so as to integrate the consensus mechanism directly into its MPC framework. Compared with existing oracles such as ChainLink or Pyth, Jiritsu does not need to use a cross-chain bridge for information transmission when aggregating information, and also adds information analysis and verification functions in addition to simple data feedback.
After a user or asset manager registers the assets they wish to tokenize and their details on Jiritsu, the ZK-MPC validator will analyze this information and confirm the value and compliance status of the assets. The analysis process involves two types of validators, one for reviewing business policies and regulatory compliance, and the other for processing financial data, performing tasks such as spot price retrieval and market price assessment. After the information is analyzed and verified, ZK-MPC will generate ZK proofs and store them on the chain. Users can then claim these proofs and embed them into their own smart contracts, and the entire asset tokenization process is complete.
Jiritsu officials used Paxos’ tokenized gold product PAXG as an example to demonstrate the complete process of using its products:
First, Paxos purchases gold through a reliable gold exchange and deposits it in a custodian service. Subsequently, Jiritsu users can use the Jiritsu dApp on a supported public chain to create a validator on the ZK-MPC node of the Jiritsu network. After the ZK-MPC node retrieves the gold custody information about Paxos, the validator generates the relevant ZK proof.
During the verification process, the ZK-MPC node is responsible for off-chain verification calculations, and the generated ZK proofs also have different levels of access and confidentiality permissions, such as auditors can have full access to all information, while asset managers can only see specific information related to their roles. This verification process can update information at preset times or on demand, which is far more efficient and reliable than Paxos' current method of manually verifying inventory every quarter.
After the ZK proof is uploaded to the Jiritsu network, Paxos can move forward with the tokenization of its custodial gold. At this stage, Jiritsu also implements the concept of "chain abstraction", allowing asset issuers like Paxos to mint corresponding tokens on ideal target chains such as Solana, Avalanche or BNB Chain.
After the token is generated, Paxos pays fees to nodes and validators through the Jiritsu dApp, a portion of which will be allocated to the Jiritsu network. The PAXG tokens purchased by investors will contain an underlying gold certificate, which can be used to access the gold custody status information on the Jiritsu network, and Paxos can pass the cost of the fee on to investors at this stage.
dApps on the Jiritsu network are specifically designed to facilitate the writing of specific data, allowing users to create validators for any business logic, data readers, and smart contract integrations. This adaptability ensures that Jiritsu can provide customized solutions for a wide range of business needs. Ability. In addition, Jiritsu Proof under its ZK-MPC cloud service has significantly expanded the asset categories for information verification. In addition to traditional financial verification such as bank information and company credit, it can also verify the status information of a range of real-world assets, such as company plants. Equipment, inventory, transaction and revenue information, etc. Jiritsu recently provided inventory certificates for an Amazon supply chain company with over 100,000 SKUs and a total value of approximately US$20 million.
On this basis, Jiritsu also uses two data indicators, "Total Asset Verified" and "Totl Asset Secured", to measure its influence on the on-chain of real-world assets, and uses these data indicators to provide DeFi protocols with more compatible and interoperable underlying asset LEGOs. According to the official Dune dashboard data, Jiritsu has verified more than $18 billion in assets so far, and has more than $60 million in assets waiting to be used by various protocols at any time.
Not long ago, Jiritsu integrated BlackRock's RWA ecosystem to provide automated on-chain proofs for reserve asset valuation and verification, compliance, and KYC platform information for its Bitcoin spot ETF and BUIDL fund, so that other protocols can use these assets on the chain more conveniently and quickly. On the other hand, although iBIT and BUIDL bring huge incremental funds to the crypto market and RWA, their asset verification still relies on self-reporting and only provides annual audits, while Jiritsu brings more transparent and cost-effective solutions to these products.
Jiritsu has also integrated with the Republic platform, which is deeply involved in the RWA field, so that any asset manager can directly implement and use similar solutions, improve compliance and operational efficiency while providing a variety of tokenized products. Asset managers can use the mature infrastructure provided by Republic in tokenization, compliance, marketing and customer service. Through automated and trustless verification and auditing, Jiritsu has moved the work previously done by institutions such as Moody's and KPMG to the chain, and this part of the traditional market has a fee income of more than 150 billion US dollars. Even if calculated at 10%, this is an imaginative business ceiling.
Team Background
Jacob Guedalia and David Guedalia, two co-founders of Jiritsu Network, are both well-known in the academic field. Jacob holds a bachelor's degree in physics and philosophy from New York University and a graduate degree in applied physics from the Weizmann Institute in Israel, while David holds a master's degree in computational geography from Bar-Ilan University and a doctorate in neural computing from the Hebrew University of Jerusalem. In addition, Jacob is a successful serial entrepreneur who has founded and exited 4 companies. He and David together hold more than 100 US patents.
Jiritsu has raised a total of $10.2 million in the past two rounds of financing, led by gumi Cryptos Capital, with participation from Susquehanna Private Equity Investments, LLLP, Republic Capital and other investors, while former BlackRock asset manager Michael Lustig also announced that he has joined the Jiritsu team. The company plans to use the new funds to "accelerate the development and adoption of the UVC platform and Tomei RWA." Founded in 2020, Jiritsu has developed technologies such as Infinite Verifiable Computation (UVC), which aims to provide an easily programmable method that can be applied to any workflow and generate workflow proofs.
