Understanding and analysis of the RWA track

Author: Daoshuo Blockchain

The tokenization of U.S. Treasury bonds is distributed in two projects, AKB and Maker DAO. Can it be understood that these two tokens mean the purchase of U.S. Treasury bonds?

I looked at the yield of U.S. Treasury bonds, which is about 5%. This yield is not very attractive in the crypto zone. What is the advantage of introducing tokenized U.S. Treasury bonds?

This is a question about RWA. Both of these questions are very good. It is worthwhile for us to take this opportunity to review and examine the RWA track.

Let's look at the first question first.

I searched on the Internet. I guess I searched in the wrong way. I didn't find any information about AKB and U.S. Treasury bonds; but I found information about Maker DAO and U.S. Treasury bonds.

What I found is that Maker DAO recently announced that it is ready to invest $1 billion in tokenized U.S. Treasury bonds. The issuers of this batch of tokenized U.S. Treasury bonds mainly include BlackRock and Ondo.

I wonder if this is the U.S. Treasury tokenization project that readers are referring to?

If so, according to my understanding, Maker DAO's investment is to purchase U.S. Treasury bonds in disguise by purchasing tokens. The value of this token and the interest that can be obtained are completely equivalent to U.S. Treasury bonds.

Here, there is a detail worth our attention, that is, the issuers of tokenized Treasury bonds include BlackRock and Ondo.

BlackRock needs no further explanation, and Ondo itself is also a project that has a close relationship with traditional centralized institutions. So we can see what kind of institutions will be so active and active in this track.

Let's look at the second question.

Even if you get this 5% return, it is really not attractive to investors in the crypto ecosystem, so what are the advantages of this product?

Last year or the year before last, when RWA was just emerging and being hyped, I wrote an article sharing my thoughts on the RWA track in more detail.

In that article, I expressed a similar view: the returns brought by the tokenization of such physical assets are actually not attractive to investors (retail investors) in the crypto ecosystem.

Don't even mention the 5% return on government bonds, even a stock that can be considered good in a general sense and has an annualized return of 15% is not that attractive to us.

In that article, I also expressed the following views:

What kind of tokenized assets may be attractive to certain investors?

Only assets with high returns and not easily available to ordinary people.

Generally speaking, there are two types of such assets: one is real estate around the world; the other is the stock market, financial assets or financial derivatives in the traditional financial sector.

Is there any country in the world whose real estate returns can compare with the assets of the crypto ecosystem? I don’t think it’s easy.

Can the returns of the stock market, financial assets or financial derivatives in the traditional financial sector be comparable to those of the assets in the crypto ecosystem?

I don’t think it’s easy.

In terms of high and stable returns, the annualized returns of Bitcoin and Ethereum exceed many financial assets; in terms of excitement and heartbeat, the crypto ecosystem has more than 100 times leverage for everyone to use, and this degree of excitement is not inferior to the stock market, financial assets and financial derivatives in the traditional financial sector.

So from a purely investment perspective, it is difficult for me to see which type of tokenized assets (RWA) has a return rate comparable to that of the crypto ecosystem.

If there is one, there may be only one: the tokens that implement the RWA project. Such tokens generally only have governance functions now, and perhaps in the future these tokens can be empowered by the project’s income.

But if the token is linked to the project's earnings, its price is purely valued in the traditional way of stocks (such as P/E), and the room for growth brought by this valuation is very limited.

If this type of token does not look at fundamentals but looks at imagination and emotional value, then I might as well play MEME coins.

Therefore, the view I have always held is unchanged: the RWA track is not very meaningful to us retail investors, but it is more meaningful to institutional investors and traditional financial institutions---because it has a large enough imagination space to tell a story: tokenize everything.

In this way, traditional financial institutions that are qualified to operate the tokenization process will have enough business to do.

Therefore, I basically just observe the RWA track, and I really participate very little.