ABCDE: Discuss the recent changes in the RWA track from the VC perspective.

The previous article discussed the views on the market from a first-level perspective in both Eastern and Western contexts. Today, taking the opportunity of YZi Labs officially announcing their investment in the RWA platform Plume Network, I would like to share my observations on the recent changes in the RWA sector.

This matter should be divided into four parts to discuss:

• Does RWA really have application scenarios, or can we say PMF?
• Which RWA assets are suitable for on-chain, and which are not?
• What were the past solutions, and what are the current solutions?
• Have you noticed the trend of RWA in the past few months?

First, let’s talk about 1 - Does RWA really have application scenarios?

Or rather PMF - (here we first exclude the stablecoin track of US Treasury bonds, Usual, MKR, etc., which can be considered as having found PMF) taking US stocks on-chain as an example, this is the most contentious type discussed on Twi. Many people feel that putting US stocks on-chain is redundant; if one really wants to trade US stocks, there are channels for that. Any asset on-chain is more volatile than US stocks, so there’s no need to play stocks on-chain.

I have a different opinion on this. Personally, I believe that US stocks have their significance on the blockchain.

1. In terms of channels - indeed, most big players above A8 and A9 use securities platforms like Futu and FirstTrade for diversified investments in cryptocurrencies, stocks, gold, etc. But I believe that most retail investors in the circle do not have US stock accounts. On-chain US stock trading can at least open their purchasing channels without any barriers.

From another point of view, the total market capitalization of stablecoins such as USDT/USDC is increasing, which is another way to spread the hegemony of the US dollar relative to traditional finance. If Crypto’s smart wallet through stablecoin + Payfi+ Alipay-like experience really goes to Mass Option one day, do you think Lao Mei is willing to take over US stocks from all over the world? People in most other countries in the world would rather open an account with various banks and brokerages for a few days to buy half-dead stocks in their own country, or simply place an order for investment with the seven sisters of the world’s largest economy as simple as Taobao shopping?

2. From the perspective of the application scenario, imagine such a case, as a P player, you have made a lot of 100,000 U in Mubarak in the past few days, you know that Tesla has recently cut in half, it is a good time to buy the bottom, and then you want to exchange the 100,000 U for Tesla stock.

Even if you have a U.S. stock account, you have to first convert the 100,000 U OTC into fiat currency, send the fiat currency to the broker’s account through the bank, and then start buying it from the brokerage, this set of processes basically takes 3-5 working days (17 years before I came into contact with Bitcoin, I bought U.S. stocks through FirstTrade in Australia, and the Swift transfer alone used to be 4,5 days, and a handling fee of dozens of dollars was charged), if one day your Telsta rises and you want to sell it and exchange it for BTC or U, The process had to be done all over again… Imagine if there are U.S. stocks on the chain, and the U-seconds earned by your meme are exchanged for Tesla, the reduction of this friction cost is really not a little bit, but a 10-fold and 100-fold improvement in experience

Then let’s talk about 2 - Which RWA assets are suitable for on-chain

Similarly, T-Bills, which have already proven themselves, are not up for discussion. Other RWA assets actually depend on the specific target audience.

For the To C end, stocks are undoubtedly the most suitable. Most retail investors have probably never been in contact with primary private equity, and even if you tokenize the equity of a non-listed company, there are probably very few people who can understand + buy + hold for the long term. Similarly, private credit collateral like those on Centrifuge, such as bridge loans in the real estate market, corporate receivables lending, etc., are also not suitable for To C. The vast majority of C-end users should be most familiar with stocks. More scenarios for To C should involve providing a channel for users who previously had no access to purchase an asset through the blockchain, which is a process from 0 to 1.

For the B side, there are many more things that can be tokenized, but compared to the C side’s journey from 0 to 1, the B side should focus more on reducing friction in the journey from 1 to 100. Just like private equity originally circulated among some institutions and high-net-worth investors, bridge loans collateralized on Centrifuge are likely to be able to secure loans from banks, but this circulation process is relatively cumbersome and frictional. Putting it on the blockchain can significantly enhance user experience and flow speed, just like Payfi does compared to Swift.

Speaking of this, I remember that we talked about an RWA project last year, and its parent company is one of the top asset management firms in the United States. They plan to issue tokens based on the primary equity of their clients on their asset management platform, such as Musk’s SpaceX, on their own trading platform. This way, the tokens can be easily circulated and traded, and ultimately settle in one go when SpaceX goes public. So, from a B2B perspective, besides the targeted trading users being limited to institutions and enterprises, the issuers are also relatively limited. Just like the above example, unless you already manage a large amount of SpaceX equity, if you are merely an STO or RWA platform, attracting SpaceX equity holders to issue tokens representing SpaceX equity involves a lot of friction in terms of resource collaboration, legal terms, and other aspects.

There are still many intermediate states, which can be To C or To B. For example, like the IP on-chain of Story Protocol, or the royalties of a certain novel, the box office of a certain movie, the sales of a certain game, all these things can be tokenized. It feels like we are still in the early exploration stage, needing to try one by one and to falsify. For instance, influence tokenization, FT failed while Kaito was relatively successful. Celebrity time tokenization, it was popular for only a few days before disappearing… These things have to be done slowly.

Next are 3 - What were the solutions in the past, and what are the current solutions?

Still taking U.S. stocks as an example - the past solutions were mainly based on synthetic assets, represented by SNX, Terra’s Mirror, and GNS.

This road has basically been debunked at present, and the three platforms mentioned above have long since delisted the synthetic US stock assets they previously listed. There are two reasons for this: first, people are not very interested in “fake assets” synthesized from stablecoins or local currencies (like SNX); just look at the comparison of the volumes of BTC, WBTC, and SBTC from SNX, and you can see a thing or two. To be honest, synthetic assets are not as reassuring as “mapped assets” like WBTC. Second, back in the day, the SEC would often conduct investigations without reason; although synthetic assets are fake, the SEC doesn’t need a reason to investigate you, so it’s better to avoid trouble, and these platforms have all delisted these synthetic US stocks.

Now that Trump is in office and the SEC chair has changed, the regulation in this area is clearly much better than it was in the past two years. Currently, two solutions for the new US stock chain have been seen.

One is to take the traditional compliant broker dealer route, the moment a user buys tokenized stocks on the chain, the corresponding operation of the off-chain compliant broker in the U.S. stock market is triggered, which is essentially the same as Robinhood’s orders and is “bought” by Citadel in the stock market. The advantage is that the stock you buy is a “real stock”, or at least a 1:1 real back by this broker, which is somewhat similar to WBTC to BTC. The disadvantage is that the trading time completely follows the stock market, and it can’t be 24x7 like Crypto, and you have to build trust in the broker or platform. In addition, when selling, a Taxation Event will be triggered, and U.S. citizens may need to submit tax-related forms, and non-U.S. citizens may have to do at least KYC and the like, which is more troublesome

Second is the approach of Ondo Global Market. I flipped through their documentation, and they originally intended to follow the aforementioned Broker Dealer route, but later changed to a model similar to stablecoins, allowing their partnered or authorized issuers to directly issue tokenized stocks (just like Tether issues USDT and Circle issues USDC). The advantage seems to be more flexibility, possibly freeing themselves from the restrictions of U.S. stock trading hours, ultimately settling through the issuer at a certain time. The downside is that it is likely only applicable to non-U.S. users, as U.S. users won’t be able to use it. Furthermore, will there be different CAs for the same stock issued by different issuers (similar to how USDC on different chains is not compatible with each other)? These specific details are not covered in the documentation, as the product is set to launch next year.

Finally, platforms like Plume that deal with RWA feel more like a framework, which includes KYC/AML, data storage/execution, consensus, ZKTLS verification, etc. In theory, it allows partner institutions to issue various tokenized RWA assets here. This brings us back to the previous topic of “which assets are suitable for blockchain,” which I will not elaborate on further.

Lastly, let’s talk about the trend of 4 - RWA in the past few months. Have you noticed it?

If you pay close attention, the wind of RWA has actually been blowing quite strongly in the past two months. Let me casually mention a few “news” items that I’ve observed.

1. The aforementioned Ondo plan will launch the Ondo Global Market, an on-chain stock market, by the end of this year or next year. Additionally, Ondo has been closely collaborating with Trump’s WLFI recently, and there will be a partnership.

2. Sui has also been clinging to WLFI recently.

3. Frax actively embraces Cedefi and recently launched frxUSD in collaboration with BlackRock+Superstate.

4. Ethena today launched a new product called Converge - focusing on one of the two scenarios they believe is the most important in blockchain - Storage and settlement for stablecoins and tokenized assets.

5. AAVE plans to issue a new coin, Horizen, which has caused a stir in the community. Stani personally came out to clarify - “The Horizen project aims to fill the current gap in Aave’s RWA business segment, and the plan is expected to surpass the revenue of Aave’s existing business line in 5 years.”

6. The Financial Services Commission of South Korea released a document in February 2025, planning to allow corporate entities to engage in virtual asset trading in phases.

I learned from friends in the circle in South Korea that there is a possibility of restarting the STO (the term used in the previous cycle for RWA) plan in South Korea. You think, allowing “corporate entities to trade virtual assets” is definitely not about letting your company speculate on cryptocurrencies; it must be to tokenize some real financial assets into “virtual assets” for circulation design between companies.

7. YZi Labs officially announced today that it has invested in the recently popular Plume Network RWA platform.

The momentum created by these messages cannot be ignored, so my current personal view on the next main track of the Circle is PayFI + RWA + Web2.5-like Consumer APPs. As for AI + Crypto, I can only say there is hope; it is still being discussed and observed. Once I finish writing the next piece on “Some Noteworthy Things on ETH and Solana,” I will write a separate article on my recent thoughts about AI + Crypto as the fourth part to conclude this grand collection.