Recently, the cryptocurrency market has been continuously sluggish, but the market has begun to discuss RWA (Real World Assets).
Some argue that RWA is a trillion-dollar market, reasoning that: "USDT and USDC are the earliest and most successful USD RWAs, with a market value approaching $300 billion. A large number of off-chain assets such as real estate, stocks, and bonds can be tokenized, which is a huge opportunity."
This sounds reasonable at first, but upon careful consideration, there are issues. RWA is not monolithic, and USD RWA and other RWAs differ dramatically, and are even incomparable. For other RWAs to develop rapidly, they need to find their own development paradigm while learning from USD RWAs.
As an investor seeking Alpha opportunities in the RWA track, one must first clarify the differences between USD RWA and other RWAs.
Below, ABC Alpha will analyze the differences from four perspectives, helping you understand the current situation and challenges of non-monetary RWAs, and thus find opportunities to capture Alpha in the RWA track.
1. Use Cases: Clear Demand for USD RWA, Most RWAs Still Have Blurry Demand
USDT and USDC are digital extensions of the US dollar, serving trading settlement, cross-border payments, and hedging needs in the cryptocurrency market. These scenarios are high-frequency and essential. For example, in countries with severe inflation (such as Argentina and Turkey), USD stablecoins have become tools for wealth protection, with strong user demand.
In contrast, other RWAs, such as real estate tokenization, primarily aim to achieve global financing or enhance asset liquidity through blockchain. These demands are low-frequency, with a limited user base. Crypto market players are more willing to invest funds in native assets like BTC, ETH, or meme coins. Assets with good off-chain returns already have mature financing channels, while assets with poor returns actively seek tokenization, further limiting market scale.
Summary: USD RWAs are "suppliers" providing liquidity to the crypto market, while other RWAs are "demanders" seeking liquidity. Though the names are the same, the essence is different. So, are there any non-monetary RWAs that can provide liquidity to the crypto market?
2. Compliance and Trust: Mature USD RWA, Most Other RWAs Still Lacking
Regulatory Adaptability
USDC is issued by the regulated Circle, with reserves regularly audited and compliant with US monetary regulations; USDT, despite past controversies, has won market trust through deep cooperation with trading platforms. Regulation of other RWAs is much more complex. For instance, real estate tokenization involves legal ownership confirmation and cross-border judicial issues, currently lacking unified standards and difficult to expand quickly.
Trust Foundation
The core of RWA is credit tokenization. USD RWAs are anchored to the US dollar, backed by US national credit, with extremely high user trust. Other RWAs rely on the credit of off-chain asset issuers; for example, real estate tokenization requires authoritative institutions to prove ownership, otherwise users won't believe the on-chain token truly corresponds to the physical asset.
Summary: The trust foundation of USD RWAs is unparalleled, and other RWAs find it difficult to match. RWA categories with lower compliance thresholds and easier trust-building are worth paying attention to in the short term.
3. Technical Implementation: Relatively Simple USD RWA, More Complex Other RWAs
The technical logic of USD stablecoins is clear: on-chain issuance and redemption with low barriers. US dollars and US bonds are standardized assets with low audit and tracking costs. Other RWAs involve complex elements like asset valuation, dividend distribution, and liquidation, requiring oracles to verify off-chain data in real-time. Tokenization processes for different assets (like real estate) vary dramatically, with high compliance standards and technical implementation difficulties, naturally slowing development.
Summary: Non-standard RWAs need to customize standards for each asset type, making short-term breakthroughs difficult. RWAs like gold and bonds that are relatively easy to standardize are more feasible.
4. Promotion Methods: Bottom-Up for USD RWA, Top-Down for Other RWAs
USDT's rise originated from user demand: legal currency purchases were restricted, so trading platforms introduced USDT trading pairs to solve the problem. As usage increased, it evolved into a digital dollar, integrating into DeFi and cross-border payments. This is a result of bottom-up market demand.
Real estate, stocks, and other RWAs are mostly driven by large institutions for financing or liquidity needs, a top-down approach. Ordinary users and entrepreneurs have low participation rates.
Summary: Bottom-up development is also more suitable for the characteristics of the Crypto industry. RWA projects that focus more on community development are more likely to gain user traction.
Summary and Outlook
The success of USD RWAs like USDT and USDC is inseparable from clear demand, high liquidity, solid trust foundations, low technical barriers, and bottom-up market drivers. Other RWAs are hindered by ownership mapping challenges, regulatory uncertainties, technical complexities, and traditional interest resistance, making development difficult.
In the future, for other RWAs to break through, they must at least work in the following directions:
1. Regulatory Collaboration: Promote cross-national legal recognition of on-chain asset ownership.
2. Compliance Framework: Develop detailed standards by asset category to accelerate compliance processes.
3. Infrastructure: Improve RWA oracles, issuance platforms, and cross-chain liquidity protocols.
As investors, we should clarify the differences between USD RWAs and other RWAs and understand the current development of the RWA track.
First, we need to focus on the development of the US RWA compliance framework. Additionally, pay attention to easily standardized and transparent RWA assets (gold, bonds), and currently focus more on infrastructure-type projects in the RWA track, such as RWA oracles, RWA issuance platforms, RWA liquidity protocols, and so on.
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