A reader asked the following two questions in a comment after the article:
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 US Treasury bonds and it is around 5%. This yield is not very attractive in the crypto space. What is the advantage of introducing tokenized US Treasury bonds?
These are questions about RWA. Both of these questions are very good, and it is worth our taking this opportunity to review and examine the RWA track.
Let’s look at the first question first.
I searched online, and I guess I searched in the wrong way, so I didn’t find any information related to AKB and US Treasury bonds; but I did find information related to Maker DAO and US Treasury bonds.
What I found is that Maker DAO recently announced that it would 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. debt tokenization project that readers are referring to?
If so, according to my understanding, Maker DAO's investment is a disguised purchase of U.S. Treasury bonds through the purchase of 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 government bonds include BlackRock and Ondo.
BlackRock needs no further explanation, and Ondo itself is a project that has close ties with traditional centralized institutions. So we can see what kind of institutions are so active and positive in this field.
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 becoming popular, I wrote an article sharing my thoughts on the RWA track in detail.
In that article, I expressed a similar view: the benefits brought by the tokenization of such physical assets are actually not attractive to investors (retail investors) in the crypto ecosystem.
Not to mention a 5% yield on government bonds, even a generally good stock with an annualized yield of 15% is not that attractive to us.
In that article, I also expressed the following views:
What kinds of tokenized assets might be attractive to certain investors?
Only assets with high returns that are 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 world.
Is there any country in the world whose real estate returns can compare to the assets in the crypto ecosystem? I don’t think it’s easy.
Can the returns from the traditional financial world's stock markets, financial assets or financial derivatives compare to those from the crypto ecosystem?
I don't think it's easy either.
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 level of excitement is in no way inferior to the stock market, financial assets and financial derivatives in the traditional financial world.
So from a purely investment perspective, it’s hard for me to see any type of tokenized asset (RWA) that can match the yield of the crypto ecosystem.
If there is one, there is probably only one: the tokens for implementing RWA projects. Currently, such tokens generally only have governance functions, and perhaps in the future these tokens will be empowered by the project's revenue.
However, if the token is pegged to the project’s earnings, its price will be valued purely in the same way as traditional stocks (such as P/E), and the upside brought about by this valuation is very limited.
If this type of token does not look at fundamentals but at imagination and emotional value, then I might as well play with MEME coins.
Therefore, the view that I have always held remains unchanged: the RWA track does not mean much to us retail investors, but it means more to institutional investors and traditional financial institutions - because it has a large enough imagination space to tell a story: tokenize everything.
This way, traditional financial institutions that are qualified to handle the tokenization process will have enough business to do.
Therefore, I basically just observed the RWA track and rarely participated in it.
"Disclaimer: This article does not constitute investment advice. Please learn and communicate with netizens, be rational, establish correct concepts, improve risk awareness, and abide by the relevant laws and regulations of the country and region where you are located."
