Although various institutions have shouted the importance of real-world asset RWA in the past year, is RWA really safe? Just last week, the decentralized stablecoin protocol MakerDAO decided to stop providing additional loans to Harbor Trade, one of its RWA vaults, with a total of about 2.1 million assets in default.
Learn about RWA and various cases in one article: Real World Assets RWA ─ A bridge of friendship between traditional finance and DeFi
Harbor Trade's Lending Vault Formed for Accounts Receivable
According to MakerDAO’s Real Assets report for May, Harbor Trade’s vaults had loan balances of about 1.5 million DAI as of the end of May. The loan is backed by a portfolio of supply chain financial assets, specifically loans secured by the company's accounts receivable.
The vault is currently on hold as its remaining assets of about 2.1 million are in default. This includes $1.8 million in DROP tokens (the debt certificate tokens of its partner Defi protocol Centrifuge ecosystem, representing principal plus interest) that are collateralized by accounts receivable from a consumer electronics company. And TIN tokens representing subprime loans (repayment order lower than DROP) have nearly $340,000.
The default began in April 2023 and Harbor Trade is currently undergoing a resolution process to recover as much of the accounts receivable debt as possible. Harbor Trade is optimistic that the loan will be recovered meaningfully or fully, but estimates that the resolution process could take six months or more.
The MakerDAO community launched a vote last week. In the statistics that ended on 7/20 , the community unanimously agreed to stop providing additional loans to the credit pool managed by the financial technology company Harbor Trade.
Is the real world asset RWA really safe?
According to its latest financial report at the end of May, although the project has accumulated an income of US$150,000 so far, with an average annualized rate of return of 7%, if the 2.1 million loan cannot be recovered, it will greatly affect RWA's income.
In the Crypto Winter that started last year, many protocol projects have moved closer to the real-world asset RWA. After all, the U.S. Treasury bonds that are now known as risk-free have an annualized rate of return of 4% to 5%. But is RWA really 100% safe? I'm afraid it still depends on the risk control ability of the agreement party. After all, even the bank's loan will face the risk of bad debts.
According to MakerDAO's statistics, RWA assets earned $5.2 million in May, of which $3.9 million came from the Monetailis Clydesdale project, which is its project to invest in U.S. Treasury bonds.
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