WOO X Research: Can RWA Become the Next Wave of Wealth Growth?

Narrative

RWA (Real World Assets) refers to real-world assets. Its value lies in bridging traditional assets and the web3 world to achieve the digital representation of real assets, effectively utilizing or deploying real assets (such as real estate, artworks, etc.) and enhancing asset liquidity. With the combination of RWA and blockchain technology, RWA can transcend geographical limitations, allowing users to conveniently complete transactions or utilize assets regardless of geographical location, currency systems, or other influencing factors. When RWA is mentioned, real estate, stocks, and similar assets often come to mind. From the basic characteristics of RWA tokenization, stablecoins also belong to the RWA product category. It seems that RWA is closer to us. This is another layer of the narrative of RWA, which is "inclusiveness," allowing investors without sufficient capital to enter high-value markets to indirectly invest in high-value RWA tokenized products.

What About the Future?

In the past year, the overall TVL of RWA has shown a fluctuating upward trend. In this cycle, RWA, AI, MEME, and others are relatively popular tracks. RWA has always been one of the more closely watched tracks.

Image source: https://defillama.com/protocols/RWA

In the future, RWA is likely to continue this trend, and the combination of RWA and the DeFi track may attract more and more investors' attention. In fact, high-value assets like real estate and commodities face settlement difficulties in transactions, and the relevant laws and regulations vary from country to country, which may greatly hinder the development of projects related to such high-value assets due to implementation and regulation. Therefore, if projects in the RWA track want to achieve better development, there must be significant progress in PayFi or cross-border settlement regulation and RWA asset certification, rather than relying on third parties in various locations for clearing or certification. Additionally, RWA projects related to stablecoins are relatively stable, with the mainstream market likely still dominated by the US dollar, followed by the euro and others. However, in the future, there may be a differentiation of such projects by country/region, meaning "investors in a certain country/region basically choose a specific stablecoin." In this case, stablecoins that obtain local regulatory licenses can seize the market first. The last trend, which is expected to be significant in the future, is that stablecoins may have their anchor assets in bonds, securities, stocks, or funds, leading to more products and projects in the future. The reason for this is that, as mentioned earlier, the settlement and regulatory aspects have better advantages compared to assets like real estate. However, in the early future, such projects may only generate considerable economic benefits if they involve institutions (like BlackRock) that have a certain voice in traditional finance. After that, projects involving institutions/organizations with significant influence in the web3 space may emerge, featuring more community cultural characteristics in RWA projects.

Projects

Here is an overview of recent financing projects, presented objectively for discussion.

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#### OpenTrade

OpenTrade was established at the end of 2022 and is headquartered in London, UK. Its investors include a16z CSX, Circle, Draper Dragon, CMCC Global, Ryze Labs, Polygon, and Kronos Ventures. The total financing amount has reached $8.7 million.

Currently, it offers four products:

1. U.S. Treasury Bond Vaults: Fixed-term, fixed-rate USDC returns guaranteed by U.S. Treasury bonds;
2. USDC Vault: Variable yield USDC, guaranteed by short-term U.S. Treasury bonds, money market funds, and other cash equivalents;
3. EURC Vault: Variable yield EURC, guaranteed by euros and short-term euro bonds, money market funds, and other cash equivalents;
4. Rate+ Vault: Fixed-term, guaranteed by investment-grade corporate bonds, commercial paper, emerging market bonds, etc.

Vault tokens are used as indicators in accounting and other operations.

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#### USUAL - Government Bonds

Currently, it has raised a total of $8.5 million and is a Binance Launchpool project.

Overall, it revolves around three tokens:

1. USD0: A permissionless and fully compliant stablecoin backed 1:1 by real-world assets (RWA), aggregating various U.S. Treasury bond tokens.
2. USD0 ++: An enhanced Treasury bond, locking the principal as collateral through USD0, using USUAL as an incentive.
3. USUAL is its governance token.

Tokenomics: Total supply of 4 billion tokens, with an initial circulation ratio of 12.37%.

Source: https://docs.usual.money/usual-products/usual-governance-token/usual-tokenomics/distribution-model

Token distribution is as follows:

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#### Huma Finance

Currently, it has raised a total of $46.3 million, with a co-founder being of Chinese descent. Overall, it is a PayFi lending project. The recent round of financing includes $10 million in equity investment and $28 million in Huma platform real asset investment. Distributed Global led the investment, with participation from Hashkey Capital, Folius Ventures, Stellar Development Foundation, and others. On April 17, 2024, it merged with Arf, focusing on the tokenization of real-world assets related to PayFi.

Huma Points are used to track the contributions of protocol contributors. It currently offers cross-border payment financing and credit cards backed by digital assets. This is achieved through various funding pools, such as the Arf - cross-border payment financing pool (based on USDC instant settlement, simplifying cross-border payments); Rain accounts receivable pool (helping DAOs and other entities manage expenses through payroll cards); and Jia Pioneer Fund pool (providing decentralized financing for small businesses, rewarding borrowers who repay with ownership, i.e., "small business credit") to facilitate cross-border payment financing.