For an RWA project to break through, it must ensure compliance, verify assets, enhance connectivity, and clarify returns. The most critical aspect is to have real assets, real returns, and real users. Only then can RWA truly bridge the gap between on-chain and reality, allowing traditional assets to release new liquidity in the Web3 world.
Having discussed DeFi, let's look at RWA projects.
What does RWA do? RWA stands for Real World Assets. It maps real-world assets, such as US dollars, gold, bonds, real estate, and even artworks, onto the blockchain, allowing them to be traded, split, combined, and even used for collateral, lending, and yield aggregation just like on-chain assets.
Now, let's examine the current issues in the RWA space: RWA aims to bring trillions of real-world assets onto the chain, which is an ambitious goal, but there are even more problems.
1. High compliance difficulty: RWA involves asset ownership, legal regulations, KYC identity verification, etc., which cannot be solved by a single set of code on the chain. If you issue a token claiming to represent a building, does that building legally belong to you? If something goes wrong, who do users hold accountable? In 2024, the US SEC and the EU MiCA will have strict regulations on tokenized assets, requiring projects to hire lawyers and obtain licenses, with costs easily reaching hundreds of thousands of dollars. Moreover, many countries remain gray areas, making compliance feel like "walking a tightrope," where one misstep could lead to disaster.
2. Difficulty in verifying asset authenticity: On-chain, it looks like a token, but is there really an asset behind it in reality? Is there custody? Is there an audit? Is there third-party supervision? Without these guarantees, it becomes "air RWA." In 2024, fake RWA scams accounted for 5% of crypto losses; for instance, some "real estate tokens" have no actual properties behind them, unlike some DeFi protocols where on-chain data is clear and verifiable. The trust issue in RWA is very tricky.
3. Low efficiency in linking off-chain assets and on-chain systems: For example, if an on-chain RWA loan requires manual evaluation and registration of real-world properties or bonds, then automation and efficiency are out of the question. If off-chain processes are not smooth, on-chain finance cannot function.
4. Complex return structures and long cycles: RWA does not allow for the instant liquidation and second-level settlement that on-chain tokens do. Many real assets have fixed holding periods, weak liquidity, and low return volatility. If you issue an RWA token claiming an annualized return of 8%, what is the source of that return? How are dividends distributed? When will they be credited? If users cannot understand this, they will not invest. In 2024, the average annualized return for RWA is 4%-8%, but the cycle lasts 1-5 years. When compared to some DeFi projects offering annualized returns of 10%-50%, the attractiveness diminishes significantly.
Now, looking back at this RWA project, which of the above problems does it solve?
You claim compliance; which country are you registered in? Do you have a license? Is there a KYC/AML mechanism? You say your assets are real; is there off-chain custody? Is there an audit report? Is there third-party guarantee? You claim high efficiency; how do you achieve that? Is there automated synchronization of on-chain and off-chain data? You say your returns are high; is the source of your returns clear? Can you provide stable dividends? Is there historical data to support this?
Ultimately, it comes back to these three points:
- Are you more transparent and efficient than traditional financial products? Are you more compliant and trustworthy than existing RWA projects?
- Do you have technological innovations? For example, real-time on-chain asset integration, on-chain settlement and clearing, automated auditing, etc.?
- Do you have real assets? Do you have real returns? Are there real users investing, rather than just discussing the concept of "real assets on-chain"?
For an RWA project to break through, it must ensure compliance, verify assets, enhance connectivity, and clarify returns. The most critical aspect is to have real assets, real returns, and real users. Only then can RWA truly bridge the gap between on-chain and reality, allowing traditional assets to release new liquidity in the Web3 world.
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