Liquidity protocol WAT: Heterogeneous composite architecture achieves RWA physical asset on-chain.

1. Introduction

The heat of the RWA track continues to rise, and the integration of traditional assets and crypto assets has once again become the market focus. However, the technical implementation of asset on-chain, liquidity assurance, and investment security mechanisms remain the core challenges restricting the development of this track. The WAT protocol (World Asset Protocol), as a heterogeneous composite architecture solution, introduces high-quality traditional assets into the on-chain ecosystem through an innovative asset mapping mechanism, effectively bridging the value gap between traditional finance and the crypto ecosystem while addressing the liquidity dilemma of traditional assets and providing crypto investors with an investment infrastructure that combines asset security, stable returns, and immediate liquidity.

2. Core Mechanism of the WAT Protocol

The innovation of the WAT protocol lies in its five core functions ###.

1. Traditional high-quality assets on the blockchain:

Compliance Preprocessing Layer: Traditional enterprises submit legally certified asset certificates (property rights certificates, appraisal reports, historical income statements, etc.), which are audited for document authenticity and value assessment by licensed institutions such as JPMorgan Chase, creating asset endorsements that comply with SEC/FCA regulatory frameworks.

Digital ownership confirmation layer: The audited asset metadata (including cash flow model, collateral list, and risk parameters) is minted into an ERC 721 ownership confirmation NFT, and the on-chain ownership verification under the privacy protection of sensitive data is realized through zero-knowledge proof technology

Dynamic Mapping Layer: Deploy the WAT-Mint_Smart_Contract smart contract group, based on asset confirmation NFT minting anchored asset's on-chain token symbol ATC (1 ATC = 1 USDT), built-in cross-chain oracle for real-time synchronization of off-chain asset audit reports and financial data, ensuring the token value is a compliant mirror mapping of the underlying assets.

2. ICDAO (Investment Committee DAO):

As the first on-chain RWA investment governance protocol, it adopts a five-dimensional dynamic weighting model (reputation qualification, professional ability, liquidity management, governance contribution, game calibration) to construct an institutional-level decision-making system. Through an improved Shapley value algorithm, it quantifies the marginal contributions of members, enabling RWA asset on-chain auditing, dynamic risk assessment, and compliance regulation. Members receive a share of the minting tax (0.3%), private placement subscription privileges, and governance optimization rights based on their weight percentage. Additionally, it relies on an on-chain federated learning framework and a regulatory sandbox-compatible module to ensure that the decision-making mechanism maintains the rigor of traditional investment committees while retaining the agile advantages of DAO organizations.

3. Real USD earnings on-chain:

The traditional asset side is required to provide the real dollar returns of the asset. Through the foundation's WAT-AMM market-making mechanism, real dollars are injected, allowing the on-chain assets to be more than just the superficial mapping symbol ATC. It enables the injection of real dollar returns and supports the issuance of income tokens INC (Income Token), allowing investors not only to easily tokenize and invest in quality physical assets but also to obtain real dollar returns from the assets in reality, as well as additional future returns brought by the INC tokens.

4. Additional Liquidity Guarantee:

To protect the rights and interests of investors, the WAT protocol requires asset parties to provide additional liquidity pools to avoid liquidity shortages (asset parties must set aside at least 10% of the asset value in USDT to ensure liquidity trading of ATC), and provide additional INC token reward pools through the market-making mechanism of WAT-AMM, ensuring the safety and health of liquidity in all aspects, thus guaranteeing and enhancing the investment experience.

5. RWAFi:

The WAT protocol innovatively constructs an RWA+DeFi composite yield engine, achieving a deep coupling between traditional asset yields and on-chain composability through smart contracts: ① Establishing a layered yield structure, where the cash flow of underlying assets combines with on-chain strategies such as staking mining and liquidity certificate derivatives to form a yield stacking effect; ② Creating institutional-grade liquidity pools to attract funding from family offices and asset management institutions, building a dynamic balance model of capital efficiency and yield stability through market maker incentive algorithms and cross-market arbitrage mechanisms. This mechanism allows investors to obtain fixed yields from underlying assets while autonomously configuring DeFi strategies such as leveraged farming and yield rights staking, optimizing risk-adjusted returns.

The WAT protocol breaks the core paradox of the RWA ecosystem through a heterogeneous architecture design: its five-dimensional core mechanism constructs a composite protocol stack, utilizing a cryptographic verification framework to achieve dual guarantees of traditional asset liquidity transformation and the safety of crypto investors' assets. By constructing a three-layer structure of "physical assets - on-chain certificates - liquidity derivatives", it not only completes the standardized deconstruction of non-standard assets but also retains the composability advantages of DeFi, fundamentally bridging the structural contradictions between traditional financial asset liquidity and the investment logic of the crypto market.

3. Comparison of WAT Protocol with Other Types of Projects

From the table above, it can be seen that the WAT protocol provides real yields and liquidity support while bringing assets on-chain, filling the gap between RWA projects and DeFi protocols, making it more competitive in the market.

4. Application Scenarios of the WAT Protocol

Quality Asset Side:

High-quality assets with stable cash flow returns, such as equities, gold, energy, and real estate funds, are brought on-chain through the WAT protocol to enhance transparency, while also providing quality investment targets for the Crypto market.

Traditional financial institutions:

Banks and fund companies can utilize the WAT protocol to achieve the coordinated issuance of fund bonds, enhancing financial liquidity.

Crypto Investors:

Institutional and individual investors can gain access to safer and more stable investment opportunities through the WAT protocol, without worrying about liquidity risks. In addition to conveniently investing in quality assets, they can also obtain guaranteed USD returns and additional future earnings from ecological tokens.

WEB2 Investors:

By leveraging traditional quality assets to bridge the understanding and trust of WEB2 users, and through the convenient operations of RWA tokenization, traditional investors and funds will enter in large volumes to complete investment and wealth management activities.

DeFi Ecosystem:

The WAT protocol can be compatible with existing DeFi protocols, providing a richer variety of asset types for decentralized finance. It breaks the circle curse of the DeFi ecosystem by introducing financial rules, value support, and funds, addressing the hot potato problem in DeFi, and offering composite yield product services for WAT ecosystem investors.

5.Core mathematical modeling of WAT protocol mechanism

1. Traditional Asset On-Chain Model

After traditional assets are on-chain, their mapped value on the chain can be represented as:

Among them:

If R = 1, it means that the assets are fully on-chain. If R < 1, then some assets may be limited by compliance or liquidity factors and are not fully on-chain.

2. Real Yield On-chain Model

The WAT protocol requires traditional asset parties to map the real USD returns on-chain as well to ensure the stability of investments. The payoff is calculated as follows:

Among them:

S: The on-chain guarantee coefficient of income ( 0 ≤ S ≤ 1), reflecting the transparency and fulfillment capability of the income.

When S = 1, it indicates that all profits are fully mapped onto the chain. If S < 1, then part of the profits has not been put on the chain.

3. Additional Liquidity Support Model

The WAT protocol provides additional liquidity pools to ensure that investors can trade at any time without experiencing a liquidity shortage. The size of the liquidity pool can be defined as:

Among them:

L: The size of the total liquidity pool (including asset value and additional USDT provided by the assets)

α,β: Liquidity weight coefficient ( controls the liquidity contribution ratio of traditional assets and Crypto assets )

When L is large enough, investors can trade without barriers, whereas when L is too small, the WAT protocol may require additional liquidity support mechanisms.

4. Comprehensive Income Calculation

The comprehensive returns for investors in the WAT protocol include the real returns from traditional assets and DeFi returns, such as Staking, lending, etc. The new return calculation is as follows:

Among them:

Among them:

θ: DeFi Yield Applicability Rate ( 0 ≤ θ ≤ 1), indicating the proportion of assets that can be used for DeFi investment.

The comprehensive return calculation for investors includes the actual USD return on assets + future returns on tokens + DeFi returns, providing investors with richer and more flexible ways to appreciate their funds.

6. WAT Protocol Asset Management Scale

As of now, the WAT protocol has signed asset agreements totaling 270 million USD, which include: Aupera visual chip R&D company, JoHome real estate fund, Middle Eastern sovereign funds, Hong Kong Helix gold custody warehouse, quartz sand mine in Cambodia, natural gas in Turkmenistan, among others. It continues to explore and sign contracts to introduce more quality physical assets.

Asset tokenization trading and TGE trading are expected to begin in Q2 2025!

7. Conclusion

The WAT protocol constructs an RWA value exchange protocol layer through a heterogeneous multi-chain architecture, with its technological breakthroughs reflected in: ① the integration of a dynamic pricing mechanism and a zero-knowledge verification framework, achieving high-efficiency liquidity conversion of traditional assets and verifiability of on-chain returns; ② the use of a layered smart contract group (compliance verification module + risk isolation pool + liquidity derivative engine) to construct an optimized risk-return allocation scheme for crypto investors under a compliance framework audited by third parties. Industry observation data shows that its protocol layer design has already demonstrated a synergistic effect connecting traditional financial infrastructure with the DeFi ecosystem, providing key technical support for the standardization process of the RWA market.