The Reality and Challenges Behind the Heated Discussions in the RWA Market

Recently, although the cryptocurrency market has remained sluggish, Real World Assets (RWA) have become a hot topic. Some believe that RWA is a trillion-dollar market, citing that USDT and USDC, as the earliest and most successful dollar RWAs, have a market capitalization close to $300 billion. At the same time, a large number of off-chain assets such as real estate, stocks, and bonds can be tokenized on the blockchain, presenting enormous opportunities.

However, this viewpoint deserves further exploration. RWA is not a monolithic concept; there are significant differences between dollar RWA and other RWAs, making them almost incomparable. For other RWAs to achieve rapid development, they need to not only learn from the experiences of dollar RWA but also find a development model that suits their own needs.

To find investment opportunities in the RWA sector, it is first necessary to clarify the differences between dollar RWA and other RWA. Analyzing the differences between the two from four perspectives can help us gain insight into the current status and challenges of non-monetary RWA, thereby uncovering potential investment opportunities in the RWA field.

1. Use Case: Differences in Demand Clarity

USDT and USDC, as digital extensions of the US dollar, primarily serve the trading settlement, cross-border payment, and hedging needs of the cryptocurrency market. These scenarios are characterized by high frequency and essential demand. For example, in countries like Argentina and Turkey, where inflation is severe, dollar stablecoins have become an important tool for wealth protection, and user demand is strong.

In contrast, the main purpose of other RWAs (such as real estate tokenization) is to achieve global financing or enhance asset liquidity through blockchain. This type of demand is less frequent, and the user base is limited. Participants in the crypto market are more inclined to invest in native assets such as BTC, ETH, or Meme coins. Assets with good off-chain returns already have mature financing channels, while assets with poorer returns are actively seeking to go on-chain, which further restricts the market size.

In short, the dollar RWA is the "supplier" providing liquidity to the crypto market, while other RWAs are the "demanders" seeking liquidity. Although the names are similar, their essence is quite different. It is worth considering whether there are other non-monetary RWAs that can provide liquidity to the crypto market.

2. Compliance and Trust: Differences in Maturity

Regulatory Adaptability

USDC is issued by regulated institutions, with reserves audited regularly, complying with US monetary regulations. Although USDT has faced controversies, it has gained market trust through deep collaboration with exchanges. In contrast, the regulatory situation for other RWAs is more complex. For instance, putting real estate on-chain involves legal ownership verification and cross-border judicial issues, with a lack of unified standards currently making rapid expansion difficult.

Trust Foundation

The core of RWA lies in the tokenization of credit. USD RWA is anchored to the US dollar, backed by the credit of the United States, which has a very high level of user trust. Other RWAs, however, rely on the credit of off-chain asset issuers; for example, the tokenization of real estate requires authoritative institutions to prove ownership, otherwise users find it difficult to trust that the on-chain tokens truly correspond to physical assets.

Overall, the trust foundation of dollar RWA is unmatched, and other RWAs are difficult to reach that level. In the short term, RWA categories with lower compliance thresholds and easier trust establishment are more worthy of attention.

3. Technical Implementation: Differences in Complexity

The technological logic of USD stablecoins is relatively simple: on-chain issuance and redemption with low barriers to entry. USD and US Treasuries are standardized assets with relatively low auditing and tracking costs. In contrast, other RWAs involve complex processes such as asset valuation, dividend distribution, and settlement, which also require oracles to verify off-chain data in real time. The on-chain processes for different assets (like real estate) can vary greatly, with high compliance standards and technical implementation challenges, leading to naturally slow development.

Non-standardized RWAs need specific standards for each type of asset, and breakthroughs are difficult to achieve in the short term. In contrast, RWAs that are relatively easier to standardize, such as gold and bonds, are more readily achievable.

4. Promotion Methods: Differences in Development Models

The rise of USDT stems from user demand: due to regulatory restrictions on buying coins with fiat currency, exchanges launched USDT trading pairs to solve the problem. As usage increased, it evolved into a digital dollar, integrating into DeFi and cross-border payments. This is a result of market demand from the bottom up.

In contrast, real estate, stocks, and other RWAs are largely driven by large institutions, motivated by financing or liquidity needs, representing a top-down model. Ordinary users and entrepreneurs have lower levels of participation.

The bottom-up development approach is more suited to the characteristics of the cryptocurrency industry. RWA projects that pay more attention to community development are also more likely to gain user favor.

Summary and Outlook

The success of dollar RWA such as USDT and USDC is inseparable from clear demand, high liquidity, a solid trust foundation, low technical barriers, and market-driven forces from the bottom up. Other RWAs are hindered by ownership mapping challenges, regulatory uncertainty, technical complexity, and resistance from traditional interests, making development difficult.

In the future, if other RWAs want to break through, they must at least work in the following directions:

1. Regulatory collaboration: Promote the recognition of on-chain asset ownership across countries.
2. Compliance Framework: Establish detailed standards based on asset categories to accelerate the compliance process.
3. Infrastructure: Improve RWA Oracles, issuance platforms, and cross-chain liquidity protocols.

As investors, we should clearly understand the difference between dollar RWA and other RWAs, and be aware of the current development status of the RWA track. Firstly, it's important to pay attention to the development of the RWA compliance framework in the United States, while also focusing on RWA assets that are easily standardized and transparent (such as gold and bonds). Currently, more attention should be given to infrastructure-type projects in the RWA track, such as RWA oracles, RWA issuance platforms, and RWA liquidity protocols.