RWA Market Analysis: Comparison of US Dollar Stablecoins with Other Assets

The cryptocurrency market has been sluggish recently, but the topic of RWA (Real World Assets) has sparked heated discussions. Some believe that RWA represents a trillion-dollar market, citing the fact that the US dollar stablecoin, as the earliest and most successful RWA, has a market value close to $300 billion. However, this viewpoint is debatable. There are significant differences between US dollar stablecoins and other RWAs, and the latter needs to find its own development path in order to achieve rapid growth.

To find investment opportunities in the RWA sector, it is essential to understand the difference between US dollar stablecoins and other RWAs. The following analysis examines the differences from four perspectives and explores the current status and challenges of non-monetary RWAs.

1. Use Cases: Clear Demand vs Ambiguous Demand

The US dollar stablecoin serves the trading settlement, cross-border payments, and hedging needs of the cryptocurrency market, which are high-frequency and essential scenarios. In countries with severe inflation, the US dollar stablecoin has become an important tool for wealth protection.

In contrast, other RWAs (such as real estate tokenization) primarily aim to achieve global financing or enhance asset liquidity through blockchain. This type of demand is infrequent and the user base is limited. Crypto market participants are more inclined to invest in native crypto assets. Assets with good off-chain yields already have mature financing channels, while those with poor yields are actively seeking to go on-chain, which further restricts the market size.

The US dollar stablecoin serves as the "supplier" of liquidity for the crypto market, while other RWAs are the "demanders" seeking liquidity. It is worth considering whether there are other non-monetary RWAs that can provide liquidity to the crypto market.

2. Compliance and Trust: Mature vs. Lacking

regulatory adaptability

Mainstream US dollar stablecoins are issued by regulated entities, with reserves subject to regular audits, in compliance with relevant monetary regulations. The regulation of other RWA is much more complex. For example, real estate on the chain involves legal ownership confirmation and cross-border judicial issues, and currently lacks unified standards, making rapid expansion difficult.

Trust Foundation

The core of RWA is the tokenization of credit. USD stablecoins are pegged to the US dollar, backed by national credit, which results in high user trust. Other RWAs rely on the credit of off-chain asset issuers, such as the tokenization of real estate, which requires authoritative institutions to prove ownership; otherwise, users find it difficult to trust the relationship between on-chain tokens and physical assets.

The trust foundation of the US dollar stablecoin is unparalleled, and other RWAs are hard to match. RWA categories with lower compliance thresholds and easier trust establishment are more worthy of attention in the short term.

3. Technical Implementation: Relatively Simple vs Relatively Complex

The technical logic of the US dollar stablecoin is clear: on-chain issuance and redemption, with low thresholds. The US dollar and US Treasuries are standardized assets, with low costs for auditing and tracking. Other RWA involves complex aspects such as asset valuation, dividend distribution, and settlement, and requires oracles to verify off-chain data in real time. The on-chain processes for different assets (such as real estate) vary greatly, with high compliance standards and technical implementation difficulties, leading to slow development.

Non-standardized RWAs need to customize standards for each type of asset, and breakthroughs are difficult in the short term. In contrast, RWAs that are relatively easy to standardize, such as gold and bonds, can be achieved more readily.

4. Approaches: Bottom-up vs Top-down

The rise of mainstream USD stablecoins originates from user demand: fiat currency purchases of coins are subject to regulatory restrictions, and exchanges have launched stablecoin trading pairs to address this issue. As usage has increased, it has evolved into a digital dollar, integrating into DeFi and cross-border payments. This is the result of market demand from the bottom up.

Real estate, stocks, and other RWAs are largely driven by large institutions due to financing or liquidity needs, belonging to a top-down model. Ordinary users and entrepreneurs have low participation.

The bottom-up development approach is more suited to the characteristics of the crypto industry. RWA projects that focus more on community development are also more likely to gain users.

Summary and Outlook

The success of the US dollar stablecoin relies on clear demand, high liquidity, a solid trust foundation, low technical barriers, and bottom-up market driving forces. Other RWAs are hindered by ownership mapping challenges, regulatory uncertainty, technical complexity, and resistance from traditional interests, resulting in slow development.

In the future, if other RWAs want to break through, they must at least work in the following directions:

1. Regulatory cooperation: Promote cross-border legal recognition of on-chain asset ownership.
2. Compliance Framework: Develop subdivision standards according to asset categories to accelerate the compliance process.
3. Infrastructure: Improve RWA Oracles, issuance platforms, and cross-chain liquidity protocols.

As an investor, one should pay attention to the development of the RWA compliance framework in the United States, while also focusing on RWA assets that are easy to standardize and make transparent (such as gold and bonds). Currently, more attention should be given to infrastructure projects in the RWA space, such as RWA oracles, RWA issuance platforms, and RWA liquidity protocols.