In-depth Analysis of Jiritsu: Former BlackRock Asset Management Manager Joins, Crypto-Native RWA Solution
In front of the windfall, everyone's sense of smell is sharp, but there are not many who can truly "hit the right spot."Author: 0xFacai, BlockBeats
According to data from Dune Analytics, RWA has become the only crypto narrative to achieve an increase in the past three months, aside from memes. This performance has caught our attention in an overall stagnant market environment. In fact, since June of last year, discussions around RWA have been ongoing, and this narrative was completely ignited after BlackRock launched its BUIDL on-chain fund.
In the face of a trend, everyone has a keen sense, but few can truly "hit the right timing." Over the past six months, countless teams have flocked to transform into RWA, but there are very few projects that have successfully seized the opportunity and begun to show results. Whether transforming or entering the space, recognizing the opportunity is the key for teams to obtain their ticket, and among many competitors, a project called Jiritsu has attracted our attention.
The Fragmentation of RWA Liquidity
The biggest benefit of tokenizing real-world assets is the ability to provide faster and more efficient trading and settlement processes for these assets, which is undoubtedly the main reason all institutions are interested in RWA. Although this idea is logically sound, it encounters many difficulties at the technical level during actual implementation, one of which is the fragmentation of liquidity after assets are on-chain.
When the on-chain process and trading of RWA are filled with complexities, the fragmented market exacerbates this issue. Digital Asset Research emphasized in its report last July that over 60% of current RWA institutions are trading through their own tokenized asset markets, meaning that after "going through hardships" to complete the on-chain process, assets can only attract a small number of fixed clients.
According to data from The Block, the total financing scale of the RWA sector has also reversed its downward trend this year, rising to $300 million. The current trend recovery of RWA has allowed many entrepreneurs to see new "narrative opportunities," and the number of RWA concept projects in the market is increasing at a visible pace. However, most of the projects that have received financing often focus on very small vertical fields, such as natural resources, specific commodities, and artworks, while RWA projects in the real estate sector are particularly notable in this regard.
How detailed can this vertical be subdivided? For example, platforms like Balcony and Mnzl provide tokenization processes for regional real estate resources, where the on-chain assets and the buyers and sellers trading through on-chain tools are often local institutions or government departments, which can basically be seen as a semi-closed asset market.
The verticalization and localization of RWA projects are certainly understandable, as many real-world assets have strong regional characteristics and often require specialized personnel to address specific issues. However, due to different regulatory restrictions in various regions, each RWA project is almost building its on-chain process and trading platform from scratch, while also facing different choices when selecting underlying public chains and smart contract development tools, which brings significant challenges to interoperability among different RWAs.
Many entrepreneurs have noticed this fragmentation of liquidity, leading to the emergence of RWA asset aggregation platforms or RWA launch platforms like Midas and Plume in the market during the same period. However, upon further reflection, you will find that they still face a dilemma: if they want to establish a unified market, they must first have a certain level of compatibility in terms of token and contract standards, which hinders the large-scale and diverse aggregation of RWA assets. On the other hand, if they aggregate different RWA protocols first, they will be limited to the role of a "launch platform" due to the technical stack differences between protocols. Although this brings some liquidity to small projects, on-chain assets still face the problem of market fragmentation.
Even the tokenized U.S. Treasury market, which has the best liquidity, is similar. Although the scaling issue for single categories has been resolved with the push from institutions like BlackRock and Franklin Templeton, you will still find that to provide future potential investors and partner projects with more choices, these assets are also dispersed across different public chains such as Ethereum, Stellar, and Avalanche.
This has also provided a narrative window for cross-chain interoperability protocols that have not seen much progress in terms of volume, such as Axelar, which began laying out RWA early on. Last year, it collaborated with Centrifuge and Ondo to launch Centrifuge Everywhere and Ondo Bridge, optimizing protocols for RWA tokenization products and inter-chain interoperability and liquidity. In the current market environment where fragmentation is evident, cross-chain interoperability could be a compensatory solution.
Jiritsu ZK - MPC: Trustless, Automated Off-Chain Asset Verification
In fact, the bottleneck for RWA to break through scaling limitations is not difficult to identify: it lacks automated processes or technologies like AMM in the DeFi space. For RWA products, tokenization is often just the beginning; ensuring continuous asset updates and transparency after the product is on-chain is the key to testing efficiency and cost, which typically includes the following aspects:
Financial Reporting: Asset managers need to regularly publish financial and performance reports for the assets. For example, real estate managers need to provide details on rent income payment dates and amounts, or information on arrears and vacancies, so that investors can better understand the cash flow dynamics of the property.
Debt Management: Products like RWA credit need to regularly update details regarding loan collateral, repayments, interest rate adjustments, and refinancing activities, allowing investors to understand their health status, which is the foundation for maintaining investor trust in such products.
Ownership Changes: If there are changes in the basic ownership of the underlying assets or the legal entities owning those assets, timely announcements are also required.
Market Regulation: When the regulatory environment of the market where the underlying assets are located changes, managers also need to report and make corresponding adjustments to ensure product compliance.
Of course, in addition to these, there are also complex details such as asset insurance and risk management strategies, asset valuation and inspection, and the legal entities issuing them. A real-world asset requires asset managers to invest a lot of energy and attention to various details throughout the investment lifecycle, from tokenization to information updates and maintenance. In summary, in the current market environment of "infrastructure redundancy," getting assets on-chain is no longer the most challenging aspect of RWA development; ongoing off-chain verification and legal regulation are the main reasons slowing down the growth of asset categories and scales, and diminishing the value of on-chain assets. All of this can only be discussed under the premise of eliminating the risks of centralized off-chain audits.
The scale and growth rate of RWA assets entirely depend on the strength of off-chain issuance and management institutions, which is also a crucial reason why U.S. Treasury RWA products have rapidly grown after BlackRock's entry. In contrast, other assets such as real estate and commodities have struggled to achieve scale effects due to a lack of enhanced automation in their processes. Of course, the value erosion of on-chain assets also signifies enormous business opportunities, and currently, this potential revenue is primarily flowing into the hands of asset issuers and managers like Securitize.
Is it possible to build a self-automated "asset oracle" system in the RWA field, similar to ChainLink in DeFi? We found some answers in the Jiritsu project.
Jiritsu is a dedicated Avalanche subnet for off-chain asset verification, aiming to achieve automation and trustlessness in off-chain asset registration and verification, while enhancing the economic efficiency and transparency of RWA tokenization and reducing on-chain wear and costs. By integrating ZK proofs and MPC (Multi-Party Computation), Jiritsu can ensure secure and private automated verification of detailed asset information, while embedding regulatory compliance and asset integrity into tokenized products. Interestingly, the name "Jiritsu" comes from the Japanese word "じりつ," meaning self-reliance. In the current RWA field, which heavily relies on centralized human resources in core processes, this is exactly what is needed to enhance its cryptonative attributes and achieve scale effects.
The Jiritsu ZK - MPC oracle aggregates data from multiple sources and verifies relevant computations, employing a multifunctional data retrieval mechanism to enhance the integration depth of different types of assets. This oracle includes two main mechanisms: "Push" and "Pull." The former allows data providers (such as asset managers) to send information directly to the oracle, while the latter enables the oracle to retrieve data directly from integrated information providers' systems, such as supply chain software and banking information, via API.
In terms of consensus mechanisms, Jiritsu introduces the concept of Proof of Workflow (PoWF), where nodes in the network run an operating system driven by a computing engine and workflow manager, utilizing generated ZK proofs to ensure a consensus mechanism for verifiable computation and smart contract execution, integrating the consensus mechanism directly into its MPC framework. Compared to existing oracles like ChainLink or Pyth, Jiritsu does not require cross-chain bridges for information transmission when aggregating information, and it also adds analysis and verification functions to simple data feedback.
After users or asset managers register the assets they wish to tokenize and their detailed information on Jiritsu, the ZK - MPC verifier analyzes this information and confirms the asset's value and compliance status. The analysis process involves two types of verifiers: one for reviewing business policies and regulatory compliance, and the other for handling financial data, executing spot price retrieval and market value assessments. Once the information is analyzed and verified, ZK - MPC generates ZK proofs and stores them on-chain, allowing users to claim these proofs and embed them into their smart contracts, thus completing the entire asset tokenization process.
Jiritsu officially demonstrated the complete process of its product using Paxos's tokenized gold product PAXG as an example:
First, Paxos purchases gold through reliable gold exchanges and deposits it with a custodian service. Subsequently, Jiritsu users can use the Jiritsu dApp on supported public chains to create verifiers on the ZK - MPC nodes of the Jiritsu network. Once the ZK - MPC nodes retrieve information about Paxos's gold custody, the verifiers generate the relevant ZK proofs.
During the verification process, the ZK - MPC nodes are responsible for conducting off-chain verification computations, and the generated ZK proofs have different levels of access and confidentiality permissions. For example, 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, making it far more efficient and reliable than Paxos's current quarterly manual inventory verification method.
Once the ZK proofs are uploaded to the Jiritsu network, Paxos can advance the tokenization process of its custodied gold. At this stage, Jiritsu also realizes 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 tokens are generated, Paxos pays fees to the nodes and verifiers through the Jiritsu dApp, part of which will be allocated to the Jiritsu network. The PAXG tokens purchased by investors will include proof of the underlying gold and can use this proof to access gold custody status information on the Jiritsu network, while Paxos can pass on the cost of fees to investors at this stage.
The dApps on the Jiritsu network are specifically designed to facilitate the writing of specific data, allowing users to create verifiers 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. Additionally, under its ZK - MPC cloud service, Jiritsu Proof significantly expands the categories of information verification assets. Beyond traditional financial verifications like banking information and corporate credit, it can also verify a range of real-world asset status information, such as equipment, inventory, and transaction and revenue information of company factories. Recently, Jiritsu provided inventory proof for an Amazon supply chain company with over 100,000 SKUs and a total value of approximately $20 million.
On this basis, Jiritsu also measures its impact on the on-chain of real-world assets through two data metrics: "Total Asset Verified" and "Total Asset Secured," using these metrics to provide DeFi protocols with more compatible and interoperable underlying asset Lego blocks. According to the official Dune dashboard data, Jiritsu has verified over $18 billion in assets to date, with over $60 million in assets ready for various protocols to use.
Recently, Jiritsu integrated with BlackRock's RWA ecosystem to provide automated on-chain proofs for the valuation and verification of its Bitcoin spot ETF and BUIDL fund's reserve assets, compliance, and KYC platform information, facilitating other protocols to more conveniently and quickly utilize these already on-chain assets. On the other hand, although iBIT and BUIDL have brought significant incremental funds to the crypto market and RWA, their asset verification still relies on self-reporting and only provides annual audits, while Jiritsu offers these products a more transparent and cost-effective solution.
Jiritsu has also integrated with the Republic platform, which is deeply involved in the RWA field, allowing any asset manager to directly implement and use similar solutions, providing a variety of tokenized products while improving compliance and operational efficiency. Asset managers can utilize the mature infrastructure provided by Republic in tokenization, compliance, marketing, and customer service. Through automated and trustless verification and auditing, Jiritsu moves the work previously done by institutions like Moody's and KPMG onto the blockchain, and this portion of traditional market fee revenue exceeds $150 billion. Even at a 10% estimate, this represents an incredibly imaginative business ceiling.
Team Background
The two co-founders of Jiritsu Network, Jacob Guedalia and David Guedalia, are both well-respected 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 of Science in Israel, while David has a master's degree in computational geography from Bar-Ilan University and a Ph.D. in neural computation from the Hebrew University of Jerusalem. Additionally, Jacob is a successful serial entrepreneur who has founded and exited four companies, and together, he and David hold over 100 U.S. patents.
Jiritsu has raised a total of $10.2 million in its last two funding rounds, led by gumi Cryptos Capital, with participation from Susquehanna Private Equity Investments, LLLP, Republic Capital, and other investors. Former BlackRock asset management manager Michael Lustig has also announced his joining of 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 Unlimited Verifiable Computation (UVC), aiming to provide an easy-to-program approach applicable to any workflow and generate workflow proofs.
