🔸RWA has attracted a lot of attention recently. 🔸@humafinance in the RWA track has become one of the hot projects this week with $38 million in financing. 🔸Binance Research also released a research report, which deeply explored the current situation of RWA. ❓What is RWA? What are the advantages? What are the main categories? ❓Why is the oracle so important in the RWA protocol? ❓Which 6 projects did Binance mention in its research report? What are they? ❓Finally, what are the risks of RWA? 🔻 1⃣What is RWA? RWAs (real world assets) refer to the conversion of off-chain tangible and intangible assets, such as currency, real estate, bonds, commodities, etc., into on-chain forms through tokenization. The issuer of RWAs is usually the most important role in the entire process, responsible for acquiring assets in the real world, tokenizing assets, and ultimately distributing RWA tokens. Although stablecoins (such as USDC) are the basis of RWA, they are considered independent of the RWA market, which is only worth $12 billion, because stablecoins have a market value of more than $175 billion. 2⃣What are the advantages of RWA? 1/ Allow traditional financial ("TradFi") users to enjoy the efficiency, transparency and speed brought by blockchain technology; 2/ Allow Web3 users to have access to traditional financial investments; 3/ Build a bridge between TradFi and DeFi to find application methods for traditional investment categories in DeFi. 3⃣What are the main categories of RWA at present? The main categories in the RWA field include: tokenized U.S. Treasuries, private credit, commodities, stocks, real estate and other non-U.S. bonds. Emerging categories of RWA include: air rights, carbon credits and art. 1/Tokenized Treasuries U.S. Treasuries experienced explosive growth in 2024, soaring from $769 million at the beginning of the year to $2.2 billion at present. Since July 2023, the federal funds target rate has remained between 5.25% and 5.5%, making the yield on U.S. Treasuries more attractive. 2/Private credit Private credit refers to the business of "non-bank financial institutions" providing debt financing to businesses, usually for small and medium-sized companies. The size of this market in 2023 exceeded $2.1 trillion, and the on-chain private credit market only accounted for about 0.4% of this size, about $9 billion. 3/Commodities This category is mainly dominated by tokenized gold products, however, gold ETFs have successfully solved this problem, with a market value of more than $110 billion. Apparently, investors are still reluctant to move their gold holdings further onto the blockchain. 4/Bonds and stocks These markets are small and relatively early in development, with a market value of about $80 million. In terms of bonds, in addition to U.S. Treasuries, there are also small amounts of European debt and tokenized corporate bonds. 5/Real estate, air rights, and other categories: Real estate: @Parcl pioneered tokenized real estate on Solana. Air rights: @SkyTradeNetwork is dedicated to tokenizing and trading air rights, the right to build or use space above a specific piece of land. Carbon credits: @ToucanProtocol facilitates the tokenization of carbon credits. Artworks: @plumenetwork aims to tokenize a variety of assets, from watches to artworks. 4⃣ Why are oracles so important to RWA? In the RWA protocol, oracles (Oracles) assume two key functions: 1/Data feed: Oracles provide access to off-chain data, such as Treasury rates and asset valuations, to ensure that on-chain tokenized assets accurately reflect real-world values. 2/Legal agreement triggers: Oracles can trigger on-chain actions based on off-chain legal agreements, such as triggering smart contract functions when a loan defaults. * Why is data accuracy so important? Taking private credit as an example, lenders may issue RWA mortgages on-chain. Without high-quality oracles to transmit the use of funds, borrowers may not comply with loan agreements, risk using funds, or even default. 5⃣ Which RWA projects are mentioned in the Binance research report? 1/Ondo @OndoFinance provides tokenized U.S. Treasury bond investment opportunities through its products. Users can access Ondo's services through two main products: USDY and OUSD. 2/Openeden @OpenEden_Labs provides users with direct investment opportunities in short-term U.S. Treasury bonds by minting TBILL tokens. Users can mint and redeem TBILL tokens with USDC, which are backed by U.S. Treasury bonds and a small portion of the U.S. dollar in a 1:1 ratio. 3/Centrifuge @centrifuge is a blockchain dedicated to RWA that aims to tokenize real-world assets. By creating NFTs representing assets such as invoices and real estate, Centrifuge Chain enables these assets to interact with DeFi platforms and facilitate financial services such as lending and borrowing. 4/Parcl @Parcl creates indices that represent real estate markets in different geographic regions. For example, users can invest in an index that tracks the real estate market in New York, Los Angeles, or other global cities. Users trade perpetual synthetic assets on the Parcl platform to gain exposure to the underlying real estate market price. Users can buy, sell and trade these tokens based on their expectations for various real estate markets. 5/Toucan @ToucanProtocol is a platform that tokenizes carbon credits, allowing companies and individuals to buy, trade and cancel carbon credits in a decentralized manner to offset their carbon emissions. Toucan has established multiple markets where users can buy and sell tokenized carbon credits. Users can stake carbon credits to earn returns or use them in various DeFi protocols. 6/Jiritsu @Jiritsu_Network is an L1 blockchain that allows users to tokenize RWA and embed compliance and valuation mechanisms. The platform uses a dual verification system: one validator is responsible for compliance and valuation of commercial assets, and the other validator focuses on real-time market valuation of assets like bonds. 6⃣What are the risks of RWA? 1/Centralization: Due to the nature of RWA and regulatory requirements, RWA protocols usually have a high degree of centralization in smart contracts or overall architecture. 2/Third-party dependence: RWA protocols rely heavily on off-chain intermediaries, especially asset custody. 3/Return considerations: The returns generated by RWA tokens do not always justify the complexity of the system, and investors need to weigh the relationship between complexity and return. 4/Oracle solutions: The growing demand for more powerful oracle solutions has led to the emergence of RWA-specific oracle protocols. 5/Privacy and compliance: Zero-knowledge technology is emerging as a potential solution for balancing regulatory compliance with user privacy and autonomy. 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