The crypto industry still suffers from high market volatility and needs some stability for long-term growth. Real World Asset (RWA) tokenization can bring that elusive stability to turbulent crypto markets.
In this session, we talked to Ben Shyong, Co-Founder of Anzen, about RWA’s role in the crypto industry, the choice of collateral for stablecoins, and the future of RWA-backed stablecoins.
Q. Hello. Would you please introduce yourself and share your professional journey with our readers?
Hey, thanks for having me here. I’m the Co-Founder of Anzen Finance, a digital asset platform that issues USDz, a Real World Asset (RWA) backed stablecoin.
I’ve been a VC across tech, healthcare, and web3 for a number of years and have experience building products as a software engineer in a range of industries.
Academically, I have a degree in business strategy and finance and I come from a strong technical background. I was at the University of Pennsylvania and did my MBA from the University of Chicago Booth School of Business.
As an entrepreneur and tech venture capitalist, I’ve recognized the immense potential of the web3 industry. However, I’ve realized that the crypto market volatility and sudden price fluctuations can harm the industry’s long-term growth.
With Anzen, I’ve tried to bring more stability into the crypto industry with a stablecoin backed by a new class of RWAs.
Q. Before we talk about Anzen, would you elaborate on the importance of Real World Assets (RWAs) in the crypto industry? What role do RWAs play in the web3 sector?
I think RWA tokenization plays a crucial role in injecting liquidity into traditional assets which profoundly impacts the adoption and utility of these assets. It enables fractional ownership and facilitates seamless global transactions without navigating complex bureaucratic processes, which improves efficiency and cuts out administrative costs.
Tokenized RWAs open the market to a wider range of digitally savvy investors by lowering entry barriers and providing flexible investment opportunities. Thus, digitized RWAs positively affect retail and institutional investors and the financial markets.
Investors can diversify their portfolios and distribute capital reserves across a wider range of assets. This helps in effective wealth creation, mitigates investment-related risks, and maximizes potential returns.
Consequently, the liquidity influx enhances market efficiency and provides stability, which results in growth and innovation. The capital flows ensure productive investment deployments across multiple sectors for holistic industry development.
Anzen is a perfect example that demonstrates how RWA-backed digital tokens can bring more stability into the crypto industry with their backing in the real world.
Q. Tell us more about Anzen and why you decided to open this company.
Anzen is a web3 protocol for minting and staking USDz, a stablecoin backed by a portfolio of private credit assets.
USDz is a composable digital asset with multiple utilities across different crypto platforms. Token holders can use their USDz to participate in DeFi protocols, trade on exchanges, and use it for online payments.
Users can buy or sell USDz permissionlessly on Automated Market Makers (AMMs) with USDC. Qualified Market Makers can directly mint USDz with Anzen if they fulfill the KYC/KYB requirements. Moreover, users can stake USDz in certain jurisdictions to receive sUSDz and earn staking rewards.
As an ERC-20 compatible token, USDz functions across all crypto protocols. It is also compatible with the LayerZero Omnichain Fungible Token (OFT) standard for bridging across multiple blockchains. We’re working with many partners to increase the usefulness of USDz across the entire DeFi ecosystem.
To answer the second part of your question, I founded Anzen to provide a robust, useful token for crypto users. I believe that USDz has the potential to become one of the most stable, secure, and reliable digital assets in the crypto domain.
Q. It’s difficult to generate steady yields from stablecoins during high crypto market volatility. How do you think stablecoins can have relatively fixed yield generation during market turbulence?
Most cryptocurrencies are vulnerable to speculative trading activities that impact their pricing every minute. However, stablecoins like USDz navigate market uncertainties because their value is grounded in the value of real assets backing the coin.
Users who stake USDz on Ethereum receive staking rewards which are unrelated to the crypto market conditions. Instead, the protocol can afford to pay rewards because of the income earned through its RWA portfolio.
Because only a fraction of users stake, the rewards have a multiplier effect driven by the number of stakers and total value locked in staking. Since the value of USDz is relatively stable, Anzen investors can always be assured that their rewards are secure compared to rewards which fluctuate in value based on crypto prices.
Q. In the past, we’ve seen collateralized stablecoins like USDC and DAI getting depegged and rapidly losing value. So, how does the choice of collateral affect price stability for a stablecoin?
If you look at USDC, it got depegged because most of its cash reserves were at the Silicon Valley Bank (SVB). When SVB collapsed, USDC lost its collateral and crashed simultaneously. Similarly, DAI faced price fluctuations because half of its collateral was tied to USDC.
The de-pegging of USDC and DAI is an important reminder to have robust collateral for stablecoins with adequate safety measures.
For instance, Anzen mints USDz in a 1:1 ratio with Secured Private Credit Token (SPCT). These SPCTs are permissioned tokens that represent RWAs and provide a transparent on-chain record about USDz’s collateralization.
Thus, users can transparently verify USDz’s solvency anytime and get real-time updates about its liquidity reserves.
Anzen’s private credit-backed assets aren’t random portfolio assortments. Instead, they’re carefully selected, vetted by qualified professionals, and pledged as collateral with specific underwriting criteria and risk mitigation strategies.
To this end, Anzen has chosen to work with Percent for underwriting and custody of assets. Percent has a track record of handling over $1 billion in private credit deals with a 16% APY and 2% default rate.
There are investment criteria in place such as a 5% asset concentration limit which means the portfolio remains diversified across a minimum of 20 different assets. This creates a balanced risk profile and minimizes the impact of a particular asset’s performance on the overall portfolio.
These steps ensure that USDz has robust collateral that helps provide certainty even during uncertain market conditions.
Q. What role will RWA-backed stablecoins play in the future of the crypto industry?
According to DeFiLama, the combined total value locked in RWAs is $4.27 billion. However, tokenized RWAs have a far greater potential in the DeFi sector.
Since RWA-backed stablecoins like USDz are composable across web3 platforms, they can access the $107 billion DeFi market.
With the booming $8 trillion private credit market in the United States, digital assets like USDz will bring more liquidity into the crypto sector.
Amidst sudden price changes and high market volatility, RWA-backed stablecoins can bring much-needed stability to the crypto sector. This will help in long-term sustainable growth for the overall web3 industry.