Qiao Wang: Real-world asset RWA, real-world application

原文标题：Real World Assets, Real World Application

原文作者:Qiao Wang

Original source: medium

编译:Kate, 火星财经

Previously, it was thought that stablecoins and other tokenized real-world assets (RWAs) were the types of crypto applications that would be added to the norm. Ten years ago, bitcointalk.org talk about remittances was disgusting. A few years ago, with the advent of smart contract chains, our industry began to envision Wall Street replacing DTCCs with on-chain stock settlement.

As it turns out, the first wave of stablecoin and RWA adoption never came from spec or crypto agnostic. They must first pass crypto-native use cases.

For example, stablecoins first found a suitable product for the market through crypto-native tokens: 1) to engage in cross-trade arbitrage, and 2) to need a place to take on the risk of volatile crypto assets. Once the stablecoin infrastructure is built and battle-tested, crypto-agnostic use cases can follow. Such transactions include payments, remittances, and inflation hedging against the rapid inflation of currencies such as the Turkish lira and the Argentine peso. These use cases weren't crypto-native from the start, but on-chain and anecdotal evidence suggests that these use cases are growing very fast in the Global South.

Other RWAs may follow the same route. Treasuries were able to find their way on-chain because crypto natives wanted a stable yield after the Fed raised interest rates from 0% to 5%. Many of these crypto natives are DAOdaos like MakerDAO and crypto startups that need to be decentralized. Use cases that have nothing to do with passwords are starting to emerge here as well. Crypto neobanks that enable countries outside the U.S. to save USDC/USDT are now racing to provide their customers with a secure source of U.S. earnings.

The adoption curve of these two phases – crypto-native and then crypto-agnostic – is not surprising in hindsight. For any crypto product, it is naturally easier to adopt it first by those who are already familiar with crypto and have installed the necessary infrastructure such as self-custody wallets.

Now the question is, where are the various types of RWAs today on the adoption curve of these two phases, and what are the most important use cases for these RWAs?

The short answer is:

Stablecoins are firmly in a crypto-agnostic phase. The most important use cases at this stage are currency hedging and cross-border payments.

Other RWAs, such as treasuries, stocks, real estate, and luxury watches, are in the crypto-native stage. The most important use case is diversification.

Stablecoins: Hedging and payouts

Stablecoins settle on-chain at $10 trillion per year, dwarfing PayPal, comparable to Visa and an order of magnitude behind ACH. Take a moment to make yourself aware of this. This is an amazing achievement in just a few years of development.

Equally striking is the fact that the total supply of stablecoins is around $150 billion. In other words, every dollar is turned around 60-70 times a year on-chain.

None of these statistics would be possible without a borderless and permissionless ledger. A common ideological criticism of stablecoins (and RWAs in general) is that they are not truly crypto-native and therefore uninteresting. But pragmatism runs counter to ideology. The idea of allowing traditional assets to move freely on such borderless and permissionless ledgers is empirically valued by the market.

One can reasonably assume that the majority of this on-chain transaction volume is speculative rather than "real-world use" such as currency hedging and cross-border payments. We'll never know exactly what the breakdown between speculation and actual use will be, but even if 1% of the $100 trillion in annual trading volume does go to actual use, it would be astronomical. In addition, our anecdotes are consistent with the data.

Over the years, we've experienced first-hand the magic of on-chain payments, as we often use USDC to fund startups. We also know that many of our startups use USDC/USDT to pay their employees or suppliers. But a year ago, we became particularly interested in this space when AllianceDAO alumnus Felipe told us about Colombia's p2p stablecoin market, where people meet in real life at shopping malls to exchange physical pesos for Tron USDT.

Over the next few months, we visited 100+ stablecoin-related startups serving users in Latin America, Africa, Southeast Asia, and Eastern Europe. The most striking finding is that most people with live products have at least early signs of product-market fit (PMF). By PMF, I mean 10%+ per month. It doesn't matter how good the team is.

In contrast, the vast majority of crypto startups outside of this vertical don't have any PMFs.

The founder of Accrue, an African payments startup we ultimately funded, told us that stablecoins are ubiquitous in his family. His sister saved her tuition fees in stablecoins for almost a year, which insulated her from the 130% depreciation of the Ghanaian Cedi during that time. She then paid for her master's tuition in Sweden with a stablecoin-backed debit card. His brother often transfers money from GHS to CAD through Accrue and Kraken's stablecoins. His parents in Ghana often send money to their relatives in Nigeria through stablecoins through Accrue's proxy network.

The founder of GoBankless, another African stablecoin startup we funded, tells a painful story of life and death. A hospital in South Africa refused to accept a patient from Mozambique until payment was settled. However, fiat payment methods cannot be settled because they are cross-border (Mozambique and South Africa) and are made outside normal banking hours. So patients and hospitals settle in stablecoins. This is not a one-time event, as patients from neighbouring countries often travel to South Africa for medical treatment due to poor or non-existent healthcare infrastructure in their home countries.

These are all examples of everyday people using stablecoins to solve life's simmering problems. This is the crypto-agnostic stage of stablecoin adoption.

Other RWAs: Diversification

Stablecoins are just the first and most prominent type of RWA. Other asset classes are also joining.

There are now $3 trillion (about 1% of global wealth) stored on-chain. Again, this is a staggering statistic. The holders of these wealth can do two things with it. They can use it as a store of value or exchange it for something else.

So far, in the history of cryptocurrencies, when they swapped it, they mostly did so in the hope of selling it for a higher price or generating some gain. The problem with these crypto assets is that they are highly correlated and highly volatile. As the crypto asset class reaches maturity relative to other asset classes, diversification is bound to occur.

Diversity is a simple but proven need. Bridgewaters, the world's largest hedge fund, has built its entire philosophy (all-weather portfolios) on the idea that combining uncorrelated sources of return can yield higher risk-adjusted returns. The fact that they have grown to become the largest asset manager in the hedge fund space is a testament to the need for diversification among investors. By the same token, Bitcoin ETFs are in strong demand because they provide an uncorrelated source of returns for TradFi asset allocators.

RWA is the answer to the need for diversification among crypto natives, allowing them to access new revenue streams that are irrelevant and less volatile. RWA is to crypto natives what BTC ETFs are to TradFi asset allocators.

In 2023, we were shocked that MakerDAO grew its RWA portfolio from almost $0 to $4 billion in less than a year. Today, most of them are U.S. Treasuries. Recently, BlackRock launched a $100 million Treasury tokenization program with Coinbase. Ondo has $200 million in Treasury bonds. Franklin Templeton also has a $300 million Treasury fund on-chain. The race is on.

Compared to the $150 billion stablecoin, $4 billion seems like a relatively small number. But that's mostly because stablecoins have been around for almost a decade. On the other hand, by definition, Treasuries have become attractive in the post-zero interest rate era, which began only two years ago. Users need more time to get used to the reliability of the new product. Are they tracking the index correctly, are the creation and redemption processes seamless, and are there enough liquidity in the secondary market?

After U.S. Treasuries, U.S. stocks and U.S. real estate are next. Legal challenges are real, but once they are resolved, there is no fundamental reason why there is no pent-up demand for tokenized U.S. stocks and U.S. real estate similar to U.S. Treasuries. We expect most of the demand for U.S. equities and real estate to come from overseas. Dinari, a startup we funded that offers tokenized US stocks, is seeing strong demand from China and Russia. International demand for U.S. equities and real estate is currently unmet, largely due to capital controls, difficulties in creating brokerage accounts, and friction over international capital flows. For example, in China, it is easier to open a Binance account than a U.S. stockbroking account due to capital controls. In Russia, ordinary people are barred from participating in the American market by the United States due to the war in Ukraine. If U.S. assets can be freely traded on-chain as RWA, all international investors need to do is find a way to switch from fiat currencies to cryptocurrencies. No more financial mazes.

A common economic argument against these products is that crypto-native assets and yields offer better returns. The reality is that these crypto-native assets and yields are too similar. For example, ETH is actually just an ETH beta because the basis widens when ETH rises. On the other hand, stocks and real estate are both uncorrelated sources of returns, from which $3 trillion in on-chain wealth can be profited.

Once the infrastructure for these RWAs matures, we also suspect that there will be use cases that are not related to encryption. For example, the ability to use stocks and real estate as collateral for loans, or the ability for anyone to build a global portfolio on-chain without having to navigate the legal and banking maze for each asset. But this will be the second phase of RWA adoption, the one that has nothing to do with encryption.

conclusion

For years, we've been asking ourselves what our first non-speculative killer app will be. The mainstream media, TradFi/Web2, and even the crypto community itself don't realize that we actually already have one. It has nothing to do with cryptocurrencies and uses stablecoins to hedge against currency depreciation and make cross-border payments. However, because stablecoins don't fluctuate wildly and tend to be adopted by emerging markets, they have largely been overlooked by Twitter discussions.

But stablecoins are only the first type of RWA. Early signs are that the demand for on-chain assets for crypto-native tokens is pent-up. The natural next step is to tokenize stocks, real estate, and even luxury watches. These historically unrelated, high-quality sources of returns are now available through trillions of dollars of on-chain wealth eager to diversify.

Appendix: Consortium Startups in the Payments and RWA Space

Accrue is building a network of agents in Africa to enable fast and affordable cross-border payments. Any individual or business that interacts with the proxy network trades in their local fiat currency, while behind-the-scenes settlement takes place through stablecoins. They have positive cash flow, payment requests are growing at a monthly rate of more than 20%, and businesses such as Opera and Eco are building infrastructure for Africa.

Gobankless is another payment network in Africa powered by stablecoins. After just a few months of operation, they are processing more than $1 million per month. The demand is so strong that they are constrained by working capital.

Lulubit is a crypto neobank in Central America. Among other products and services, they offer stablecoin on-ramp and outlet, cross-border payments, and credit cards, enabling users to pay for actual goods and services with cryptocurrency. The month-on-month increase was 30%.

Fractal Payments is a payment solution for businesses that starts with crypto-native payments. Unlike TradFi fund transfer products, they do not rely on SWIFT and instead utilize stablecoins to facilitate cross-border payments, making transactions cheaper and faster. Their products have facilitated over $5 million in payments, growing by 30% per month and are used by leading global businesses such as Aragon, Zerion, and Orange DAO.

Villcaso: Previously, most real estate RWA startups tokenized their personal property in the form of NFTs, which led to a lack of liquidity. Instead, Villcaso tokenizes a pool of real estate assets. Alternative methods lead to greater mobility. In addition, the token structure is legal and can be combined with DeFi. In other words, investors can seamlessly transfer, trade, stake, and stake their assets on existing DeFi tracks.

ZwapX: There's a surprisingly large overlap between luxury watch collectors and crypto investors. By tokenizing watches, ZwapX not only enables faster and more secure transactions than traditional OTC marketplaces, but also allows collectors to digitally display their watches. Just like NFT collectors. They currently have over $1 million in TVL.

Dinari: Previously, most stock trading was in the form of derivatives. In Dinari, the ratio of tokens to actual shares is 1:1. Similar to stablecoins and Villcaso, these tokens can be combined with DeFi. The founder previously built a unicorn in the biotech space, an area that is just as challenging as cryptocurrency.

Fig: Similar to Ethena, Fig productizes proven hedge fund strategies. Ethena is marketed as a stablecoin, but is actually a tokenized hedge fund that generates yield from perpetual contracts. Similarly, Fig generates income from options, making what was once restricted more accessible.