Interpretation of Binance RWA research report: Traditional institutions actively participate in the market, and asset returns may decline under the expectation of interest rate cuts

Author: Xiaobai Navigation coderworld

The RWA sector has been making a fortune in silence during this atypical bull market.

When people's emotions are easily driven by memes, if you look closely at the data, you will find that the RWA trackTokenTheir performance so far this year is probably better than most other tracks.Token.

When U.S. Treasuries become the largest RWA, the trend of the track being affected by the macro economy will become more obvious.

Recently,BinanceThe institute published a《RWA: A safe haven for on-chain income?》The long report provides a detailed analysis of the RWA track’s landscape, projects, and revenue performance.

Xiaobai Navigation Coderworld interpreted and refined the report, and the key contents are as follows.

Key Takeaways

• The total on-chain RWA amounted to $12 billion, not including the $175 billion stablecoin market.

• RWA领域的主要类别包括Token化的美国国债、私人信贷、大宗商品、股票、真实的房地产和其他非美国债券。新兴类别包括航空权、碳信用额和美术品。

• Institutional and traditional finance (“TradFi”) participation in RWAs is increasing, with BlackRock’s BUIDL tokenized Treasury product being the category leader (market cap > $500 million); Franklin Templeton’s FBOXX is the second largest tokenized Treasury product.

• The report focuses on 6 projects: Ondo (structured finance), Open Eden (tokenized treasury bonds), Pagge (tokenization, structured credit, aggregation), Parcl (synthetic real estate), Toucan (tokenized carbon credits), and Jiritsu (zero-knowledge tokenization).

• Technical risks that cannot be ignored: centralization, third-party dependence (especially for asset custody), the robustness of the oracle, and the complexity of the system design are worth the benefits you get.

• From a macroeconomic perspective,We are about to begin a historic rate cut cycle in the U.S., which may have an impact on many RWA protocols, especially those focused on tokenization.U.S. Treasury Bondsagreement.

RWA Data Fundamentals

Aggregate RWA Definition: Tangible and IntangibleBlockchainA tokenized on-chain version of an asset, e.g., currency, real estate, bonds, commodities, etc. A broader class of assets, including stablecoins, government debt (dominated by U.S. government bonds, i.e., Treasuries), stocks, and commodities.

Total on-chain RWAs reached an all-time high of over $12 billion (excluding the $175 billion+ stablecoin market)

Key Category 1: Tokenized Treasury Bonds

• It experienced explosive growth in 2024, from $769 million at the beginning of the year to $2.2 billion by September.

• Growth could be affected by the fact that U.S. interest rates are at a 23-year high, with the federal funds target rate remaining steady at 5.25-5.5% since July 2023. This makes the yield on U.S. government-backed Treasury bonds an attractive investment vehicle for many investors.

• Government backing - U.S. debt is widely considered the strongest in the market.SafetyOne of the highest yielding assets, often referred to as “risk-free”.

• The Fed will begin its rate cut cycle at the September FOMC meeting later this month, so keep an eye on RWArate of returnHow this evolves when it starts to decline will be important.

Key Category 2: On-chain Private Credit

• Definition: Debt financing provided by non-bank financial institutions, usually to small and medium-sized companies.

• The IMF estimates that the market space will exceed US$2.1 trillion in 2023, while the on-chain will only account for about 0.4%, or about US$9 billion.

• On-chain private credit is growing extremely fast, with active loans increasing by approximately 56% over the past year.

• The bulk of the growth came from Figure, a program that provides lines of credit secured by home equity.

• Other major players in the on-chain private credit market include Mongolge, Maple, and Goldfinch.

• Despite the recent growth, total active loans are still down about $571T from the same period last year. This is consistent with the Federal Reserve's aggressive rate hikes, which has impacted many borrowers (especially private credit loans with floating rate agreements) with increased interest payments, resulting in a corresponding decrease in active loans.

Key Category 3: Commodities (Gold)

• The leading two tokens, Paxos Gold ($PAXG) and Tether Gold ($XAUT), have a market share of approximately 98% in a market of approximately $970 million.

• But gold ETFs are very successful, with a market capitalization of over $110 billion. Investors are still reluctant to move their gold holdings further on-chain.

Key Category 4: Bonds and Stocks

• The market is relatively small, with a market value of approximately $80 million.

• Popular tokenized stocks include Coinbase, NVIDIA, and an S&P 500 tracker (all issued by Backed).

Key Category 5: Real estate, clean air rights, etc.

• While it hasn’t reached the point of mass adoption yet, the category still exists.

• The concept of renewable finance (ReFi) accompanies this, attempting to combine financial incentives with eco-friendly and sustainable outcomes, such as tokenizing carbon emissions.

Key Components of RWA

intelligentcontract:

• Leverage token standards such as ERC 20, ERC 721, or ERC 1155 to create digital representations of off-chain assets.

• The key features areAutomatic income accumulation mechanism, which distributes off-chain revenue to the chain. This is achieved through rebase tokens (such as stETH) or non-rebase tokens (such as wstETH).

Oracle:

• Key trends:RWA onlyOracle.Legal compliance, accurate valuation, and regulatory oversight are all issues that general oracles may not be able to fully address.

• For example, in private lending, lenders may issue RWA mortgages on-chain. Without a high-quality oracle to communicate how the funds are used, borrowers may not comply with the loan agreement, taking on risks and even defaulting.

(Source: original report, compiled and edited by coderworld)

• Projects working on dedicated oracles: ChXiaobai NavigationRonaldo Protocol, Chainlink, DIA, and Tellor

Identity/Compliance

• Emerging technologies for authentication, such assoul bindingBitcoin tokens (“SBT”), while zero-knowledge SBT (“zkSBT”) offers a promising way to verify identity while protecting sensitive user information.

Asset Custody

• A combination of on-chain and off-chain solutions to manage:

• On-chain:SafetyMulti-Signaturewalletor Multi-Party Computation (“MPC”)walletUsed to manage digital assets. Off-chain: Traditional custodians holding physical assets follow legal integration to ensure proper ownership and transfer mechanisms.

Traditional financial institutions enter the game

BlackRock (asset management scale: US$10.5 trillion)

• The USD Institutional Digital Liquidity Fund (“BUIDL”) is the market leader at over $510 million.

• It only launched in late March and has quickly become the biggest product in its space.

• Securitize is a key partner of BlackRock in BUIDL and serves as transfer agent, tokenization platform and placement agent.

• At the same time, BlackRock is the largest issuer of spot Bitcoin and spot Ethereum ETFs.

Franklin Templeton (asset management scale: US$1.5 trillion)

• Their on-chain U.S. Government Money Fund (“FOBXX”) is currently the second largest tokenized Treasury product with a market cap of over $440 million.

• BlackRock’s BUIDL runs on Ethereum, but FOBXX is active on Stellar, Polygon, and Arbitrum

• BlockchainThe integrated investment platform Benji adds further functionality to FOBXX, allowing users to browse tokenized securities while also investing in FOBXX.

WisdomTree Investments (AUM: $110 billion)

• Originally a global ETF giant and asset management company, it has gone a step further and launched multiple "digital funds". The total AUM of all these RWA products is more than US$23 million.

Project Analysis

• The projects analyzed in the report focus on Ondo (structured finance), Open Eden (tokenized treasury bonds), Pagge (tokenization, structured credit, aggregation), Parcl (synthetic real estate), Toucan (tokenized carbon credits) and Jiritsu (zero-knowledge tokenization).

• The business model and technical implementation of each project are described in detail in the report, which will not be elaborated here due to space limitations.

• The comprehensive comparison and characteristics of each project are as follows:

(Source: original report, compiled and edited by coderworld)

Overall results and outlook

• RWA can bring benefits, but whether the technical risks VS benefits are worth it is a matter of opinion.The technical risks are as follows:

Centralization: IntelligencecontractOr a higher degree of centralization in the overall architecture, which is inevitable considering regulatory requirements

Third-party dependence: high reliance on off-chain intermediaries, especially asset custody

• Some new technology trends:

The emergence of RWA-specific oracle protocols. Established companies like Chainlink are also paying more attention to tokenized assets.

Zero-knowledge technology is emerging as a potential solution for balancing regulatory compliance with user privacy and autonomy.

• Does RWA need its own chain?

Benefits: Easier to launch new protocols on these chains without having to build their own KYC frameworks and cross regulatory hurdles, thus promoting the growth of more RWA protocols; hopefully adopting someBlockchainA functional traditional institution or Web2 company can ensure that all its users are KYC/meet necessary regulatory requirements.

Disadvantages: Faces “cold start” problems; difficult to bootstrap new chains with liquidity and ensure sufficient economySafety；更高的准入门槛，用户可能需要设置新钱包，学习新工作流程，并熟悉新产品

• Outlook for the next rate cut expectations

The market expects the Fed to begin a rate-cutting cycle at its next meeting on September 18. What does this mean for RWA projects, which thrive in a high-interest rate environment?

While yields on some RWA products may decline, they will continue to offer unique benefits such as diversification, transparency, and accessibility, which may continue to position them as attractive options in a low-rate environment.

• Concerns about the legal environment

Many protocols still remain significantly centralized, and various technologies, including zk, have a lot of room for improvement.

Decentralize authority while still maintaining regulatory compliance; this may also require some changes to traditional compliance systems to recognize new forms of verification.

Most RWA protocols still have some way to go before they can truly preserve financial products for professional investors and enable permissionless access.

The article comes from the Internet:Interpretation of Binance RWA research report: Traditional institutions actively participate in the market, and asset returns may decline under the expectation of interest rate cuts

Related recommendations: A 10,000-word review of Telegram’s history: rebellious geeks,cryptocurrencyAnd the wild dream of freedom

Telegram founder Pavel Durov was arrested this morning and faces charges of terrorism, fraud, money laundering, etc. Musk and others support Telegram founder. Written by: Mario Gabriele, The Generalist Translated by: Dopamine Star, RockFlow As one of the most successful social media in the world…