Since last year, we have found that some traditional financial giants are actively deploying RWA (Real World Assets). For example, Goldman Sachs launched GS Dap (the platform is developed based on Digital Asset's Daml smart contract language and privacy blockchain Canton) to tokenize traditional assets, Siemens issued a $60 million bond with the help of RWA, and BlackRock launched the tokenized investment fund BUIDL (the fund mainly focuses on investing in liquid assets such as U.S. Treasury bonds, repurchase agreements and cash), and so on.
Previously, Citi also released a research report "Money, Tokens, and Games". They predicted that by 2030, there will be 4 trillion to 5 trillion US dollars of tokenized digital securities, and trade finance transactions based on distributed ledger technology will reach 1 trillion US dollars.
In the past two years, RWA has experienced a rapid development, and its TVL has grown from US$100 million to US$6.4 billion, as shown in the figure below.
This does not include the US dollar asset reserves of various stablecoins. If these are also included, the TVL of RWA has exceeded 11 billion US dollars. As shown in the figure below.
Although the development potential of the RWA market (mainly concentrated in tokenized real estate, stocks, foreign exchange, etc.) seems exciting from the TVL data above, the largest RWA at present is actually tokenized US Treasuries, which accounts for more than $2 billion in TVL. As shown in the figure below.
From the above figure, we can also see that the current yield of US Treasuries is about 5%, while some on-chain lending protocols can provide higher yields than this, as shown in the figure below.
So, logically, DeFi yields should always be higher than bond yields, because DeFi lending protocols involve more risk than funding the U.S. government (U.S. Treasuries). This means that in an efficient market, tokenized Treasury yields should be lower than DeFi yields.
But for institutions, precisely because the yield of DeFi is easily affected by token volatility, technical security, etc., large funds will not easily choose to enter. Institutions often seek lower-risk, high-yield products, such as U.S. Treasuries, and RWA based on U.S. Treasuries has become a new possible option.
At present, one of the main motivations for introducing RWA into the DeFi field is that RWA can provide a stable risk-free return for the crypto market. And DeFi protocols can capture the interest-bearing value of underlying assets through RWA projects (essentially building a dollar-based asset class).
1.RWA and DeFi
RWA and DeFi can generate two-way benefits and meet different needs, such as asset risk management:
At present, DeFi income mainly comes from staking, trading, and lending. If the market is relatively active, the relevant yield will be relatively high. Once the crypto market enters a downturn and the relevant activities on the chain are not active enough, the yield of DeFi will decline.
For a long time, U.S. Treasury bonds have maintained a relatively high yield, as shown in the figure below. Against this background, some traditional DeFi protocols have seen opportunities and have begun to gradually introduce U.S. Treasury bonds, which will not only help to ensure the security of the protocol treasury assets, but also obtain stable returns (risk-free returns) based on U.S. Treasury bonds.
Take MakerDAO, which we are familiar with, for example. The protocol has focused on the RWA field and accumulated U.S. Treasury assets since last year. Currently, RWA accounts for more than 40% of its asset categories. As shown in the figure below.
In addition, MakerDAO recently planned to overhaul its collateral ecosystem. In addition to unwinding WBTC positions (because Sun Yuchen entered WBTC and raised security concerns about the asset), MakerDAO also began accepting applications for RWA tokenization and innovative products based on short-term Treasury bills, and plans to tokenize up to $1 billion in assets (the plan will depend on community proposals, and the application process will last until September 20, but Maker has the final say).
Different people may have different understandings of risk management. For example, some retail investors may think that they have to make ten or a hundred times the profit when they enter the crypto field. However, for many large funds, products with lower risks and higher returns (compared to the returns in the real world) are the first choice, such as RWA and BTC ETF.
2. Classification of RWA
-From the perspective of asset class
Currently, RWA can mainly include US Treasuries, Private Credit, Tokenized Commodities, Tokenized Stocks, etc. Among them:
In terms of US Treasuries, the current Total Value is US$1.94 billion, and the Avg. Yield to Maturity can reach 4.95%. Representative protocols in this sub-field include Securitize, Ondo, Hashnote, etc.
In terms of Private Credit, the current Active Loans Value is $8.85 billion, the Total Loans Value is $14.09 billion, and the Current Avg. APR is 9.02%. Representative protocols in this sub-field include Figure, Centrifuge, Maple, etc., as shown in the figure below.
-From the perspective of project categories
Currently, RWA-related projects include Tokenization Platform, Real Estate, Infrastructure, Collectibles, etc.
For specific project classification, I found that the one made by HouseofChimera is quite comprehensive, so I will provide it to you directly. As shown in the figure below.
As for the introduction of some specific projects of RWA, Huali Huawai has already sorted out and introduced a lot of content in this regard, so we will not repeat it here. Interested friends can also look back at the historical articles. As shown in the figure below.
In summary, from a short-term perspective, the current participation and audience of RWA seem to be mainly concentrated in institutional users, and it is difficult for retail investors to find an entry point (except for speculating on RWA-related concept coins). From a long-term perspective, RWA, as a financial innovation, can be well combined with DeFi. Although it will face various problems on the road of development (such as regulatory issues, etc.), it is indeed full of imagination. We are still in the early stages of this field.
At the end of the article, let’s take a look at what other information is worth paying attention to in the past two days:
On August 23, at 10:00 p.m. Beijing time, Powell will give a speech, and it seems that many people are paying attention to this matter today. The market currently predicts that the interest rate will be cut by 25 basis points in September. If Powell's speech today denies the market's prediction, it may have a new adverse impact on the market (especially the risk market), and market sentiment seems to be undergoing some changes.
On August 23, Sony Block Solution Labs, a subsidiary of Sony, announced the launch of the Ethereum Layer 2 network Soneium. Soneium is based on Optimism Rollup technology and built using the OP Stack of the Optimism blockchain ecosystem. It is expected to be launched on the test network in the next few days. As shown in the figure below.
On August 22, Babylon launched the first phase of Bitcoin staking on the mainnet. It reached the staking limit of 1,000 BTC in just over 3 hours, and the final number of users participating in the staking was about 12,700. However, the first phase of staking will not provide direct rewards. Babylon has designed a points system to motivate players to stake. During the period when 1,000 Bitcoins are staked, 3,125 points will be generated for each Bitcoin block, which will be distributed proportionally to all staking addresses during the staking period.
On August 22, NFT market Magic Eden officially announced its token ME. More information about the ME token, including token economics and utility details, will be announced later. It is unknown how many users may receive the Magic Eden airdrop this time. As shown in the figure below.
This is where we share the content for this issue. You can view more articles on the homepage of Hualihuawai.
Disclaimer: The above content is only a personal point of view and analysis, and is only used for learning records and communication purposes, and does not constitute any investment advice. The encryption field is an extremely high-risk market, and many projects have the risk of returning to zero at any time. Please treat it rationally and be responsible for yourself.
