How does the US RWA address the challenges in real estate and fixed income?

Abstract

This paper systematically examines four representative RWA projects in the United States: RealT (real estate RWA), Ondo Finance (fixed-income RWA), Centrifuge (supply-chain finance RWA), and Pre-IPO equity RWA. The research objective is to uncover the institutional logic and underlying technical foundations of RWA amid the 2025 global financial restructuring wave by breaking down case studies, analyzing compliance structures, and comparing yield models.

1. Asset structure: RealT breaks through real estate investor entry barriers through an SPV title/claim system and a Reg D/Reg S compliant token issuance model, enabling small-denomination, split investment opportunities. Ondo, by contrast, uses U.S. Treasury bonds as the underlying assets; with the custody mechanisms provided by BlackRock and Coinbase, it achieves on-chain, stablecoin-like money market fund functionality. Centrifuge brings supply-chain receivables on-chain through the Tinlake mechanism, while MakerDAO supplies collateralized DAI liquidity, forming a new paradigm for on-chain factoring.

2. Compliance and regulatory aspects: The study finds that the primary regulatory pathways the U.S. SEC uses in RWA structure design are Reg D, Reg S, Reg CF, and Reg A+, with core principles centered on investor eligibility, disclosure obligations, and liquidity constraints.

3. Technology support: Technically, Aave modules provide funding bridges for institutions and ensure the effectiveness of fund flows, while the Chainlink oracle guarantees the credibility of asset valuations, collateralization ratios, and yield settlement.

4. Risks and outlook: In the future, RWA development will be constrained by three key bottlenecks: the cost of compliant disclosures, cross-border custody compliance, and stablecoin peg risks. However, judging from the trend of institutional participation and the match between yield and risk, RWA is viewed as one of the most sustainable asset categories in on-chain finance.

Keywords: RWA, Tokenization, digital securities, on-chain assets, supply-chain finance

Real Estate RWA (RealT): Asset title/claim, fractionalization, and breaking through investor barriers

1.1 The development logic of U.S. real estate RWA

Real estate is one of the earliest asset classes to be tokenized, and it is also the segment with the highest integration level with the real-world financial system among the RWA track. Its core logic is: through on-chain title/claim, tokenized governance by shares, and smart-contract-based allocation mechanisms, the traditional structure of high barriers and low liquidity in real estate is thoroughly reshaped. As the most representative U.S. practice platform, RealT has, since 2019, built a compliant tokenized real estate system based on Ethereum and the Gnosis chain, becoming a sample case of on-chain asset tokenization integrated with regulation.

Compared with traditional REITs (real estate investment trusts), RealT’s innovation lies in:

1. An SPV (Special Purpose Vehicle) token issuance architecture based on specific properties, enabling independent governance for each asset;

2. Rent allocation based on stablecoins (USDC/DAI), improving the traceability and immediacy of returns;

3. Investors can participate in overseas property yield distribution with very low capital thresholds after KYC/AML verification (typically starting at 50 U.S. dollars).

1.2 Asset title/claim and SPV structure design

In the RealT system, the title/claim step is the most critical compliance/regulatory step. Before each property is brought on-chain, it must complete ownership review, valuation certification, and SPV registration. The SPV is typically established in Michigan or Delaware, U.S., and exists in the form of an LLC (limited liability company). RealT is responsible for property management and distributing returns. The table below shows RealT’s standardized asset title/claim process.

Note: RealT uses a dual-layer structure of SPV + Token. In essence, it does not avoid the fact that Tokens are securities (Security). On the contrary: RealT’s Tokens are explicitly treated as securities; it only chooses to be issued through the Reg D / Reg S exemption route, so it does not require public registration (Non-Public Offering).

1.3 Fractionalization and breaking through investor thresholds

RealT’s success lies in lowering barriers and increasing participation. Traditional real estate investments often require million-level capital, while RealT uses tokenization to enable share-based participation. Investors can freely choose to invest in a single property, and returns are automatically allocated according to the Token proportion.

Note: RealT’s token circulation primarily relies on its own-built Marketplace, and in some cases integrates with DEXs such as Uniswap. Its advantages include immediate liquidity and globalized participation, but constrained by regulatory thresholds, its investor base remains concentrated among qualified investors with KYC certification.

1.4 Economic efficiency model and on-chain yield allocation

The returns of the RealT platform mainly come from rent allocations and the secondary market price spread. [4] Based on public data (2025), the average net rent yield of RealT properties is 10%; even after deducting property management and maintenance fees, it still maintains relatively high returns.

Note: RealT’s value lies not only in cash-flow stability, but also in converting real estate into quasi-cash-like tokenized assets. During the Federal Reserve’s high interest-rate cycle, its stable returns and asset-preservation characteristics make it a safe source of yield in stablecoin ecosystems such as USDC. Some DeFi protocols have also integrated RealT tokens as collateral assets.

1.5 Regulatory challenges and future outlook

The advantages of the RealT model come with risks as well: first, regulatory gray-area issues. Although the project follows the Reg D/Reg S framework, whether trading of its token in the secondary market constitutes the circulation of unregistered securities remains subject to legal controversy. Second, there is a bottleneck in compliance expansion: legal differences across different states regarding property transactions and SPV formation increase the difficulty of standardizing assets. Third, oracle and on-chain valuation issues: currently RealT uses fixed valuation methods and lacks a mechanism for dynamic market pricing.

However, from a macro trend perspective, real estate RWA is gradually integrating with the traditional financial system. Institutions such as BlackRock and Franklin Templeton are exploring structured combinations of on-chain funds + real-world assets. Meanwhile, more open regulatory environments in markets such as Hong Kong and the United Arab Emirates provide policy ground for international replication of the RealT model.

1.6 Case study

1.6.1 Detroit rental housing project (2024)

Detroit is a key target city for RealT. With low house prices and stable rentals, it is an ideal asset for high yield and low volatility. Taking an example of a residential project tokenized on-chain in 2024:

• Property value: USD 72500

• Token issuance: 1450 tokens (each token priced at 50 U.S. dollars)

• Annual net rental income: USD 7400

• Investor return rate: 10.2%

• Payment method: USDC automatically distributed every week

• Investor source: mainly KYC-certified investors from the European Union, Canada, and Singapore

Success points: The success of this project lies in the combination of real-world assets and on-chain contracts. Rental income is distributed in stablecoins in real time; investors can directly verify that yields have been received through a blockchain explorer. Property management data and lease contracts are uploaded in hash form, enabling tamper-resistant auditability.

Risk points: Operations (property management, taxes, tenant disputes) still remain the decisive factor off-chain; tokenization cannot replace on-site management. In RealT’s expansion, there have been reports indicating weak operational integration, suggesting that on-site KPIs should be made a normalized practice for on-chain disclosure. During due diligence, it is essential to obtain on-site due diligence reports, custody/insurance terms, and the property management contracts.

1.6.2 St. Regis Aspen or Aspen Coin

In 2018, Elevated Returns tokenized part of the equity of the Colorado St. Regis Aspen resort (Aspen Coin) [6], issuing it in the form of security tokens to qualified investors, raising approximately $18M. This case is often regarded as a representative template of legal-first, technology-later.

Property value: approximately $18M raised, representing nearly 18% equity of the hotel, from which it can be inferred that the hotel’s total valuation at the time was about $95M - $100M+ [6].

Token issuance: sold at a $1/coin price at issuance, implying 18,000,000 Aspen Coins.

Annual net rental income: the product distributes dividends based on hotel revenue; the annualized return depends on hotel operating data, and the public disclosure returns to shareholders in the form of dividends.

Investor return rate: as an equity-type product, returns come from hotel operating profits and capital gains; the project does not promise a fixed return.

Payment method: purchased using publicly available U.S. dollars, BTC, ETH, etc.; dividend distribution is executed under legal and custody frameworks through traditional payments or custody procedures, with on-chain Tokens serving the role of registration and transfer.

Investor source: primarily qualified, institutional, and restricted investors, with a minimum purchase amount limit (10000 Tokens), targeting compliant investors [7].

Success points: prioritize solving legal and custody issues (SPV, trustee, securities registration), treat the token as electronic securities, provide a compliant pathway for institutions and qualified investors, and reduce regulatory friction.

Risk points: high compliance costs and limited secondary-market liquidity; suitable for high-value, low-frequency traded assets. For issuance targeting institutions or family offices, compliance priority is typically more important.

1.6.3 Roofstock onChain (single-property NFT or LLC architecture)

Roofstock onChain tokenizes a single property (often from the rental market) by establishing a single-member LLC and minting an NFT representing the LLC’s equity, bringing it on-chain to create a closed-loop that coordinates on-chain trading with off-chain title transfer. The platform also supports on-chain financing integrations and compliant KYC.

•Property value: publicly shown transaction examples include $175,000 (a South Carolina property in 2022, settled with USDC)

•Token issuance: Roofstock On Chain often uses a single NFT (ERC-721) to represent the entire property

•Annual net rental income: taking a $175k–$180k property as an example, the typical rental yield rate varies with market fluctuations and generally falls in the 4–8% net rental return range [8].

•Investor return rate: if investing as the buyer of the entire property, returns come from net rent + capital appreciation; if Fractional Holder (if split), returns are allocated by share

•Payment method: can pay with USDC (stablecoin) and combine it with on-chain lending (Teller or USDC Homes), and it also supports fiat pathways (the platform supports multi-channel settlement)

•Investor source: aimed at retail investors + real estate investors + the blockchain community; the counterparties are often property buyers or investors, and the platform typically supports KYC or compliance processes alongside them

Success points: standardize the business process of title transfer (LLC and NFT), solve the connection points between on-chain transactions and traditional land registry, improve transaction efficiency, and support on-chain financing.

Risk points: if the original mortgage or liens are not clearly handled, or if the lender does not agree to an on-chain transfer, legal effectiveness may be affected; the mortgage/priority interests must be cleared or written consent obtained before the assets are brought on-chain.

1.6.4 Harbor (a failed case for a student housing project)

Harbor attempted in 2019 to tokenize real estate projects such as student housing (e.g., The Hub at Co lumbia), but due to conflicts with existing lender terms and issues around collateral/priority, the corresponding tokenized plan was forced to be canceled or restructured, becoming a lesson case in the implementation process of tokenization.

•Property value: $20M

•Token issuance: since the plan was canceled, there is no final issuance quantity or data showing actual token circulation

•Annual net rental income: the project was not completed, with no publicly available actual allocation data

•Investor return rate: no issuance occurred, so there is no historical return data

•Payment method: planned as a tokenized REIT, expected to combine a mixed approach of fiat settlement or on-chain settlement, but the plan was withdrawn before execution and the details were not fully disclosed

•Investor source: originally planned for qualified or institutional investors and platform users, but since issuance was not completed, there is no actual investor composition data

Failure experience summary: before推进ing real estate tokenization, it is necessary to first resolve and obtain all existing creditors’ consent, restructure the debt, or legally create a clear order of priority; otherwise, even the best technical方案 may be rejected due to creditor-debtor law or secured priority rights.

Fixed-Income RWA (Ondo Finance): Product design, risk control, and institutional investor participation logic

2.1 Background and industry positioning

Within the RWA (real-world assets) track, compared with real estate, private equity, or supply-chain finance, fixed-income assets—especially U.S. Treasuries and short-term government securities—are considered an on-chain safe haven because of their high credit ratings and low yield volatility. Ondo Finance is one of the pioneers in this area. Its flagship products include USDY and OUSG, corresponding respectively to a broader investor entry route and a more strictly qualified investor channel. In June 2025, the media disclosed that OUSG had achieved roughly $693 million in scale on the ONDO platform, demonstrating the scalability potential of fixed-income RWAs.

The core value of this model is: by tokenizing off-chain, highly standardized government bond assets with extremely high credit quality through an SPV and smart-contract structure, and then connecting them to on-chain funding pools, it realizes three benefits—enhanced liquidity, lowered investment thresholds, and compliant asset onboarding.

2.2 Product design structure

2.2.1 Product categories and target audiences

•USDY: for non-qualified investors and global users, backed by U.S. short-term Treasuries and bank deposits, with yield types of floating annualized returns.

•OUSG: for U.S. qualified investors (Qualified Purchasers), focused on U.S. short-term government bonds, emphasizing extremely high credit quality and low risk [10].

2.2.2 Structure diagram

The following structure is used:

•Underlying assets → U.S. Treasuries or short-term government securities (e.g., T-Bills)

•Custody and audit institutions (traditional asset managers such as BlackRock’s BUIDL fund take charge of the underlying)

•SPV / trust structure set up to hold underlying assets

•On-chain issuance of Tokens (USDY or OUSG)—token holders own the right to underlying asset yields but have no direct ownership

•Smart contract configuration of minting/redemption mechanisms + yield distribution mechanisms (e.g., accruing interest daily or weekly)

•Secondary market or platform market-making mechanism to improve liquidity

2.2.3 Institutional participation logic

The drivers for institutions participating in fixed-income RWAs include: first, traditional capital wants to maintain on-chain allocation while not giving up low-risk yield; second, it enables asset managers to obtain an on-chain issuance channel that is transparent, traceable, and low-friction. For Ondo specifically, its compliance background, custody arrangements, and collaboration with well-known asset managers (e.g., BlackRock, Franklin Templeton) enhance institutional trust [2]. At the same time, tokenized government bonds can also serve as collateral assets within the DeFi ecosystem, improving capital efficiency.

2.3 Risk management and compliance mechanisms

In fixed-income RWA products, risk control and compliance mechanisms are fundamentally the core prerequisites for them to be accepted by institutional investors. Based on current U.S. practice, these products typically use U.S. government short-term securities as underlying assets, keeping credit risk at an extremely low level—this is the key advantage that differentiates them from on-chain native assets. Meanwhile, the yield settlement mechanism is automatically executed through smart contracts, reducing the risk of manual operations while significantly improving transparency and auditability. In combination with custody banks and third-party audit mechanisms, the system ensures a one-to-one correspondence between underlying assets and Tokens, thereby constructing a dual layer of assurance at the institutional level: assets truly exist + the on-chain mapping is credible.

More deeply, from a structured risk-control perspective, its core is not a single measure, but a dual-track system consisting of on-chain trigger mechanisms and traditional financial regulation. Specifically, in terms of asset support rate, there is a rigid constraint that the underlying assets and Tokens maintain a ratio of no less than 1:1, combined with a Proof-of-Reserve mechanism to enable on-chain verification, while audit endorsement is provided by the custodian bank. In liquidity management, it relies on 24/7 minting and redemption mechanisms and the commitment of market makers, with on-chain event recording ensuring full traceability. In investor eligibility control, KYC/AML and the qualified investor制度 are layered with a whitelist mechanism to enable on-chain permission management and alignment with U.S. securities regulatory requirements (e.g., the SEC framework). Technically, it relies on smart contract audits, multisig governance, and on-chain audit reports to reduce protocol-level risks. Additionally, in collateral and liquidity usage scenarios, all collateral actions are made transparent through on-chain records and platform disclosures, avoiding the accumulation of implicit leverage risk.

From the compliance-path perspective, such Token issuances typically rely on the Reg D and Reg S frameworks under U.S. securities law, using private placement exemptions to bypass public offering registration requirements, while strictly limiting the investor universe and disclosure obligations. Custody of underlying assets must comply with the banking regulatory system and, through periodic audits, confirm asset authenticity and independence. In the design of trading and exit mechanisms, on-chain transfers are not completely free; instead, they are embedded with investor eligibility verification and compliance restrictions, achieving dynamic balance between liquidity and regulation.

From a comprehensive view, the essence of the current RWA risk-control framework is to transform traditional financial credit intermediation and audit trust mechanisms into a combination structure that is verifiable on-chain and rule-executed automatically. This model does not weaken regulation; rather, it strengthens regulatory execution at the technical level. But it is important to note that risks have not disappeared—they have shifted from primarily credit risk to primarily structural risk and compliance execution risk, such as custodian failure, inconsistency between on-chain data and real-world assets, or uncertainty arising from changes in regulatory policy. Therefore, whether RWA can be deployed at large scale in a highly institutionalized way depends not on technical maturity alone, but on the long-term stability and regulatability of this integrated on-chain + off-chain risk-control system.

2.4 Yield model and quantitative analysis

In fixed-income RWA systems, the core logic of the yield model does not deviate from the essence of traditional finance. Instead, it achieves more efficient yield redistribution and liquidity enhancement within an on-chain structure. Taking Ondo Finance’s representative U.S. Treasury RWA products as an example, their returns mainly come from interest on the underlying U.S. Treasury bonds, supplemented by structural premium generated by the operational efficiency of the funding pool and liquidity premium conferred by the on-chain secondary market. Based on actual data, the annualized yield of USDY and OUSG products in 2024 is roughly in the 4.6%–5.4% range [3]. This level is not only meaningfully higher than most traditional money market funds under the current interest-rate environment, but also reflects advantages of on-chain assets in expense compression and distribution efficiency. More importantly, by packaging yields into token form, these products repackage yield assets that were originally confined within institutional systems, enabling them to serve both retail and qualified investors. Beyond the yield structure, this further creates market-expansion value.

From a cost and structure perspective, on-chain notes (On-chain Notes) show clear lightweight characteristics compared with traditional MMFs (money market funds) or bond funds. On one hand, management fees drop significantly, reflecting compression of intermediary layers. On the other hand, the on-chain minting—redemption—trading mechanisms improve capital turnover efficiency substantially. Investors do not need to rely entirely on fund redemption windows; instead, they can release liquidity through the secondary market. This near-real-time liquidity is essentially a structural transformation of traditional assets by DeFi mechanisms. Its significance is not merely increasing yields themselves, but improving capital usage efficiency and enhancing asset composability. In other words, RWA competitiveness is shifting from simply offering higher yield to being more efficient under the same risk level.

According to data from the RWA.xyz platform, as of April 1, 2026, Ondo has locked assets of approximately $2.3 billion in the U.S. Treasury RWA market, with a market share of about 18.11%, making it one of the leading players in this niche track.

Figure 7: Market value and market share of the top 10 RWA issuing protocols globally (as of April 1, 2026)

Source: rwa.xyz/treasuries, Pharos Research

2.5 Institutional participation and secondary-market mechanisms

As fixed-income RWA systems gradually mature, the participation paths for institutional investors and the construction of secondary-market mechanisms become critical variables determining product scale and liquidity. From Ondo Finance’s practice, its core strategy is not simply bringing in institutional capital, but using a structure that designs offline asset management and on-chain liquidity expression to effectively connect traditional asset management institutions (such as asset managers and custodians) with on-chain investors. This enables two-way expansion of funding sources and asset supply. In this process, institutions more often take responsibility for selecting underlying assets, managing portfolios, and compliant custody, while the on-chain side handles fractionalization, liquidity release, and investor distribution. Together, they form a new cooperative relationship with functional decoupling but risk linkage. This structure allows RWA products to both meet institutions’ requirements for safety and compliance, and accommodate on-chain users’ needs for flexibility and tradability.

Looking further, secondary-market mechanisms are the core driving force for shifting RWA from “fund-like” products toward tradable asset categories. Secondary trading activates Token circulation and improves the effectiveness of asset fundraising. The Nexus platform introduced by Ondo states that it enables an “instant mint, instant redeem” mechanism, enhancing liquidity [2]. This mechanism essentially reshapes the traditional fund subscription/redemption-driven liquidity model. Investors no longer need to fully rely on the issuer to provide a liquidity exit; instead, they can transfer shares through on-chain matched trading, substantially shortening the capital exit cycle. Meanwhile, introducing market-making mechanisms and liquidity pools also, to some extent, reduces liquidity discounts caused by price volatility, giving RWA assets trading characteristics similar to bond ETFs.

At a deeper level, there is a clear positive feedback relationship between institutional participation and secondary mechanisms: the entry of institutions improves the quality of underlying assets and the stability of their scale, which enhances market confidence; meanwhile, more efficient secondary liquidity, in turn, increases institutions’ willingness to allocate capital and improves capital turnover efficiency. Once this cycle forms, it will push the RWA market into a stage of scaled growth. However, it is important to note that this model still relies on strict compliance boundaries and investor admission mechanisms. In particular under the U.S. regulatory framework, secondary trading is often constrained by transfer restrictions and qualified investor rules, limiting the realization of fully free circulation to some extent.

The secondary mechanisms currently built by Ondo are essentially an attempt to create on-chain fixed-income market infrastructure. Its significance is not only improving liquidity of a single product, but also providing a unified trading and pricing framework for future multi-type RWA assets. If this mechanism can continue evolving and gradually introduce more market makers, structured products, and interest-rate derivative tools, the RWA market could potentially evolve from today’s passive yield-asset pool into an on-chain bond market with a complete yield curve and risk tranching. At that point, institutional participation would no longer be an incremental variable—it would become a core component of how the market operates.

2.6 Challenges, trends, and implications for the Hong Kong market

From a more macro perspective, although the U.S. has validated the feasible path of bringing assets on-chain through early exploration, the RWA track still faces multiple structural constraints. These include the fact that regulatory frameworks are not yet fully unified, on-chain/off-chain legal title interconnections are complex, liquidity depends on a limited number of platforms, and underlying asset transparency varies widely. At the same time, the market is gradually forming clear trends: first, asset types expanding from standardized assets such as short-term Treasuries toward more complex categories like credit and private fund shares; second, compliance infrastructure (e.g., KYC/AML, custody, audits) being continuously strengthened; third, leading institutions accelerating entry to drive scaled development. Against this backdrop, if China and Hong Kong wish to capture RWA development opportunities, they can focus on both “institutional supply” and “scenario implementation.” For example, leveraging Hong Kong’s advantages in international finance and regulatory coordination, they can first explore compliant tokenized issuances and cross-border circulation mechanisms. Meanwhile, they should establish higher standards in asset screening, information disclosure, and investor protection, thereby achieving innovation breakthroughs under controllable risk premises.

Supply-chain finance RWA (Centrifuge): Core enterprise title/claim, improved financing efficiency for SMEs, and risk mitigation

3.1 Overview: Structural innovation of RWA in supply-chain finance

In existing RWA practices, supply-chain finance is a scenario with even more real-world complexity. Its transformation difficulty is clearly higher than that of real estate or Treasury-type assets, but precisely for that reason it also carries greater structural innovation significance. Based on the author’s observations, the core problems in traditional supply-chain finance have always revolved around three keywords: information asymmetry, broken credit transmission, and low financing efficiency. Even if small and medium-sized enterprises hold real accounts receivable, they still struggle to obtain low-cost funding. The introduction of RWA is not simply about putting accounts receivable on-chain; rather, it reconstructs the entire structure so that the credit intermediation system originally dominated by banks is decomposed into an on-chain combination of asset title/claim—risk tranching—liquidity matching. In this process, the Centrifuge-based model provides a relatively clear path: on one hand, by using SPVs or legal agreements to standardize and package receivables so they become verifiable and transferable base asset attributes; on the other hand, by introducing a layered financing structure similar to Tinlake, splitting an asset pool into different risk grades (e.g., Senior/Junior Tranche) to attract funding with different risk appetites. This design fundamentally replicates and optimizes the logic of traditional ABS (asset-backed securities) on-chain. However, its key difference is that blockchains provide higher-frequency and transparent asset-state update capabilities, enabling capital providers to evaluate risk more dynamically rather than relying entirely on periodic disclosures. Additionally, the injection of DeFi liquidity (e.g., MakerDAO’s stablecoin financing) further changes the funding-source structure: supply-chain financing is no longer limited to banks’ balance sheets, but begins connecting with global on-chain capital pools. In this field, one could say the true innovation of RWA is not just improving financing efficiency, but attempting to reshape the underlying mechanism of how credit is split, priced, and circulated—this is also the reason it is more worthy of attention than other RWA tracks.

3.2 Centrifuge platform design logic: Tinlake model and SPV mechanism

Centrifuge’s Tinlake model uses an off-chain SPV holding real-world assets, with on-chain Tokens representing beneficial rights as the core structure. Its key innovation is enabling risk tranching via a dual-Token structure: the TIN Token bears the junior risk, while the DROP Token provides stable returns for senior-priority investors.

This model forms credit tranching similar to traditional asset securitization, but with greater on-chain transparency in liquidity and audit mechanisms.

Chart explanation: This structure ensures end-to-end compliant flow of RWA assets from off-chain title/claim to on-chain liquidity. The SPV legally isolates risk; the NFT title/claim mechanism prevents double pledging; and the layered Token design enables investment entry paths for investors with different risk preferences.

3.3 Cooperation mechanism with MakerDAO: Stablecoin liquidity injection

Within the entire supply-chain RWA ecosystem, if Centrifuge solves the problem of how assets are brought on-chain and risk is layered, then combining with MakerDAO further answers a more critical question—how these assets truly obtain sustained, scalable funding sources. In real operations, this cooperation is not merely a protocol integration, but more like a systematic attempt to migrate traditional factoring financing logic onto the chain.

Specifically, Centrifuge introduces the DROP tokens generated in Tinlake into MakerDAO’s collateralization system. This allows assets that originally represent low-risk priority yield rights to directly serve as collateral in stablecoin minting mechanisms. The core significance of this design is that it connects real-world assets with the conversion path to on-chain credit money (DAI). Supply-chain finance no longer relies on bank or private credit capital; instead, it begins to tap a more open on-chain liquidity pool. In other words, the asset parties do not only gain supplementary financing channels; they experience a fundamental change in the structure of their funding sources.

From a structural perspective, this mechanism can be understood as a stepwise abstraction and liquidity-enhancement path: real assets → DROP → DAI → secondary market. Each conversion layer comes with increased standardization of asset forms and improved liquidity: receivables are first packaged into NFTs to enable title/claim, then transformed through a layered structure into tradable ERC-20 tokens (DROP/TIN), and then released as stablecoin DAI through the MakerDAO system, eventually entering a broader DeFi market for circulation and reconfiguration. It is precisely through this process that credit assets that were relatively closed in traditional finance gain, for the first time, composability and can be embedded into more complex on-chain financial structures.

Of course, this mechanism can only work with the combined effect of multiple risk-mitigation methods. On one hand, Centrifuge allocates risk priority to TIN holders through the layered structure, providing a credit buffer for DROP. On the other hand, MakerDAO sets a higher over-collateralization ratio for DROP and controls systemic risk in conjunction with liquidation mechanisms. In addition, the underlying assets still rely on SPV structure, auditing, and legal constraints to ensure real repayments. This means on-chain credit has not detached from the real-world legal system; instead, it forms a hybrid model of joint constraints both on-chain and off-chain.

From the author’s perspective, the true innovation of this cooperation is not merely introducing stablecoin liquidity into RWA, but—more deeply—attempting to build a new credit transmission path. Credit no longer depends entirely on bank balance sheets; instead, it is gradually split and re-priced on-chain via asset tranching, protocol collateralization, and market pricing. Once this mechanism matures, its impact may not be limited to supply-chain finance; it could expand into a broader set of real-world asset categories.

3.4 Case studies: New Silver and HarborTrade

(1) New Silver case: RWA of real estate renovation loans
New Silver is a U.S. short-term real estate financing institution. It tokenizes house renovation loan NFTs via the Centrifuge platform, with each loan averaging $100k–$250k. After assets enter the Tinlake pool, DROP investors can obtain stable annualized returns of 6–9%. Project data shows [11] that as of the end of 2024, cumulative lending exceeded $50M, with extremely low default rates (historically shown in the 0–2% range; if precise numbers are required, one should cite the issuer’s loan-grade default table or a third-party audit report).

(2) HarborTrade case: RWA of international trade receivables
HarborTrade introduces an RWA structure in trade finance, with its core assets being export receivables. [12] After generating NFT vouchers through the Centrifuge system, DROP investors’ funds flow back directly to exporting companies via the SPV; the funding arrival cycle is reduced from several weeks to one week or even shorter (the project can be reduced to 1–2 weeks specifically; proof of project cashflow from the project party is required).

3.5 Asset title/claim, risk control, and on-chain monitoring logic

Centrifuge adopts a dual-track risk-control system: on-chain real-time monitoring + off-chain legal title/claim. The foundational documents for each asset (contracts, invoices, payment records) are verified by third-party audit institutions and then generate hashes that are uploaded on-chain. The system includes an Oracle monitoring module; when an asset defaults, payments are delayed, or collateral values depreciate, it automatically triggers liquidation procedures.

3.6 Comparison of efficiency and cost with traditional supply-chain finance

By comparing traditional factoring models with the Centrifuge model, RWA demonstrates clear advantages across financing cycles, information transparency, capital costs, and default control.

Pre-IPO equity RWA: Asset compliance, transfer restrictions, and valuation-pricing mechanisms

4.1 Market background and institutional logic of Pre-IPO equity RWA

From the analyses above on real estate, fixed-income, and supply-chain finance RWAs, we can see a shared underlying logic: through asset title/claim, structural packaging, and on-chain circulation pathways, low-liquidity real-world assets are transformed into financial products with splitable, tradable, and programmable characteristics. Pre-IPO equity RWA essentially continues this logic, but with significantly higher complexity and regulatory constraints. Its core is no longer only about bringing assets on-chain; it is about how—within strict U.S. securities regulatory frameworks—realize a compliant digital representation of private equity and limited liquidity release.

From a market background perspective, with the rise of compliant tokenization platforms such as Securitize, Arca Labs, and Republic, illiquid equity assets held by traditional VC/PEs have begun to have technical paths to become fractionalized + tokenized securities via blockchain. In essence, it structurally splits primary-market equity rights and introduces mechanisms akin to a secondary market within a regulated environment. But unlike assets such as RealT or Ondo, Pre-IPO equity has stricter risk pricing, information disclosure, and transfer restrictions. Therefore, its institutional design relies much more on U.S. securities law exemption systems. In terms of specific implementation paths, the market has gradually formed a compliant triangle centered on Reg D, Reg A+, and Reg CF. Reg D (Rule 506©) corresponds to high-net-worth qualified investors and is the main channel for large financings and institutional participation. Its features include high issuance efficiency but limited liquidity (typically requiring a 1-year lock-up period). Reg A+ (Tier 2) opens participation space for retail investors to some extent, balancing financing scale and compliant disclosure requirements, enabling assets to have limited tradability on ATS (Alternative Trading Systems). Reg CF, meanwhile, emphasizes diversified participation and risk control. Its institutional design is not simply lowering thresholds; instead, it uses dynamic constraints on investors’ annual investment额度 to position it as a user-participation layer or community equity pool. This logic has some similarity to the risk absorption by junior capital in supply-chain finance RWA. From case experiences, mainstream Pre-IPO RWA projects typically adopt a dual-layer structure: Reg D/Reg S fundraising at the top layer + Reg CF user participation at the bottom layer, balancing financing efficiency and community expansion. This is highly consistent with the trend of structural layering mentioned earlier. Therefore, Pre-IPO equity RWA is not simply copying the on-chain path of real estate or bond-type assets; under stronger regulatory constraints, it is a kind of institutional correction to address the liquidity issues of traditional private equity. Its core value is: without crossing securities-law red lines, introducing on-chain technology to improve asset accessibility and liquidity efficiency, while its development boundaries are always determined by the compliance framework.

4.2 Case analysis of representative platforms: Securitize, Arca Labs, and Republic

In terms of practical paths, the three types of platforms represented by Securitize, Arca Labs, and Republic correspond to three typical paradigms: infrastructure-driven, fund-structure reconstruction, and crowd-benefit/persuption-driven. First, Securitize is more like a foundational operating system for the digital securities era. By integrating issuance, registration, compliance, and trading (ATS) into a unified system, it modularizes and brings on-chain the previously fragmented private equity workflow. This makes Pre-IPO equity capable of programmable transfer. Its launched Pre-IPO Equity Token Program essentially helps companies release part of liquidity before the IPO. Meanwhile, by strictly limiting investor eligibility through paths such as Reg D, it strikes a balance between efficiency and compliance. Second, Arca Labs reconstructs at the asset-structure level. It incorporates Pre-IPO equity into a fund container and uses an NAV (net asset value) mechanism for a quasi-public offering-style representation. The key of this model is not single-project liquidity, but risk diversification and valuation smoothing at the portfolio level; to some extent it resembles the on-chain mapping of traditional asset management logic. Finally, Republic represents another path: by lowering participation thresholds under the Reg CF framework, it extends Pre-IPO investment from high-net-worth individuals to retail investors. It uses blockchain to complete equity registration and dividend automation, enabling small-ticket, diverse, diversified investment structures to be executed. However, it naturally faces stronger liquidity constraints and information disclosure pressure.

From the author’s perspective, these three models are not competitive relationships; they jointly form the layered market structure of Pre-IPO equity RWA. Securitize addresses the question of whether compliant circulation is possible; Arca Labs optimizes how to price and hold the assets; and Republic explores the boundary of who can participate. Together, they point to a core proposition: under the premise of not breaking through securities regulatory bottom lines, how to gently restructure traditional equity liquidity through technical means. This restructuring does not completely eliminate illiquidity. Instead, it achieves controlled liquidity through lock-up designs, investor tiering, and secondary-market admission mechanisms. This is also the key characteristic that differentiates Pre-IPO RWA from other asset categories.

4.3 Valuation pricing and holding-period mechanisms

The biggest challenge for Pre-IPO equity valuation comes from its inherent illiquidity and information asymmetry. To effectively address these challenges, RWA tokenization projects introduce dynamic net asset value (NAV) models and verifiable reporting mechanisms for valuation and risk mitigation. In this area, mainstream platforms commonly adopt three valuation paths to fit different market needs and valuation scenarios.

First, milestone valuation is a common method. It dynamically adjusts valuation based on the company’s growth stage, such as funding rounds and revenue growth. This method is particularly suitable for early-stage growth companies because it can accurately reflect valuation changes as time progresses. Second, comparable company analysis determines a relatively reasonable market valuation for Pre-IPO companies by comparing valuation multiples of publicly listed peers in the same industry. This approach emphasizes market-driven signals and can flexibly reflect impacts of changes in market conditions. Finally, the on-chain NAV oracle method periodically uploads company net asset data on-chain via independent audit institutions, ensuring valuation transparency and traceability. This method is suitable for valuation updates across the entire lifecycle and can reflect asset changes in real time, though it has higher audit costs.

These valuation paths are not operated in isolation; they are combined based on project characteristics and market demands. For example, milestone valuation and comparable company analysis are often used for financing early and mid-stage projects, providing flexible, market-oriented valuation. On-chain NAV syncing provides transparent and credible valuation support for mature assets with lower liquidity.

By using these valuation methods in combination, RWA platforms can not only improve valuation accuracy, but also increase investor trust in projects and thereby promote healthy market development. In addition, these valuation models provide investors with multi-dimensional risk assessment bases, allowing investors to better understand the risk-yield matching of projects in relatively complex investment environments.

4.4 Liquidity mechanisms and transfer restrictions

In the analysis above, we discussed the core structures and compliance paths of different asset types such as real estate RWA (RealT), fixed-income RWA (Ondo Finance), and supply-chain finance RWA (Centrifuge). By comparison, the liquidity mechanisms and transfer restrictions of Pre-IPO equity RWA are more complex and mainly constrained by factors such as lock-up periods, investor eligibility requirements, and regulatory exemption conditions. For example, in the case of Securitize, after token issuance, there is a requirement to comply with at least a 12-month lock-up period; only after that can tokens be transferred on the corresponding regulated ATS. This process reflects the strict rules that Pre-IPO equity RWA must follow during liquidity release.

To enhance liquidity, the key of Pre-IPO equity RWA is to build a compliant and efficient transfer mechanism. First, regulated token registration systems enable compliant circulation of assets and facilitate asset transfers between different platforms. Second, cross-platform identity verification (KYC Passporting) can verify investor identity across platforms, ensuring investor compliance. Finally, the on-chain compliance routing mechanism (Compliance Layer Smart Contract) further ensures that compliance requirements during transfer are automatically executed, reducing the risk of manual operations.

Based on the above mechanisms, the process from private issuance to compliant circulation for Pre-IPO equity RWA typically follows these paths:

(1) During the lock-up period, tokens cannot be transferred. Investors need to complete KYC, but they cannot trade on any market, so liquidity is completely frozen.

(2) After the lock-up period, tokens may be traded on regulated ATS markets (such as Securitize Markets, tZERO), still requiring KYC and AML re-verification to ensure buyer compliance. However, due to insufficient market depth and restricted buyer groups, liquidity is still affected to some extent.

(3) Public offering conversion phase: after meeting SEC path publicity requirements and Reg A+ approval, the tokenized assets can be converted into publicly traded market assets and opened to a broader investor audience. However, this process often results in delayed liquidity release due to approval delays.

Through these layered compliance measures, Pre-IPO equity RWA can gradually release liquidity while ensuring compliance. However, this process also highlights the complexity and periodicity of liquidity release for assets under a regulatory framework.

With the design of this liquidity mechanism and transfer restrictions, the market development of Pre-IPO equity RWA will gradually achieve improved asset liquidity on the basis of meeting regulatory requirements, thereby promoting its path toward marketization.

4.5 Analysis of investment returns and holding-period cycles

In Pre-IPO equity RWA, the investment cycle is typically between 3 and 7 years. According to historical data from Securitize and Republic [14], investors’ internal rate of return (IRR) ranges from 12% to 25%, despite a broad volatility range. With the appearance of on-chain structured products, yield tranching designs have begun to be widely adopted:

(1) Senior layer (priority tokens): this layer typically offers stable dividend payments, suitable for institutional investors with low risk appetite. The typical holding period is 2 to 3 years [15], with annualized returns of 8% to 12%.

(2) Mezzanine layer (mezzanine tokens): bears a certain level of risk, suitable for investors with medium risk tolerance. Annualized returns are 15% to 20% [16], and the holding period is generally 3 to 5 years.

(3) Equity layer (equity tokens): this layer has higher investment risk, mainly targeting venture-capital-like investors with high risk appetite. Annualized returns can exceed 25% [17], and the typical holding period is 5 to 7 years.

This tiered design not only attracts institutional investors with different risk preferences, but also provides more flexible product structures for tokenized secondary markets, better meeting diverse market needs.

This structured design not only optimizes risk-and-return matching across different types of investors, but also effectively improves asset liquidity, paving the way for more diversified development of capital markets.

Conclusion

Based on research into U.S. early RWA case studies, RWA, as an on-chain asset category, is continually pushing past the boundaries between traditional finance and blockchain, and has shown deep innovative potential across multiple domains. Real Estate RWA (RealT) achieves fractionalized management of traditional real-estate assets through SPV structure design and tokenization, substantially lowering investment barriers, and ensures market legitimacy through compliant frameworks. Ondo Finance uses U.S. government Treasuries as underlying assets and implements the on-chain transformation of fixed-income products via smart contracts and SPV architecture, enabling investors to participate in fixed-income markets in a low-risk, high-liquidity way. Centrifuge, through supply-chain finance RWA projects, transforms the traditional credit system that previously relied on banks into a blockchain-based decentralized structure, improving financing efficiency and reducing costs.

However, although these projects provide valuable experience and innovative pathways for the development of the RWA market, they also face numerous challenges. For example, high costs of compliant disclosures, cross-border custody compliance issues, and stablecoin peg risks are key bottlenecks for sustained RWA development. Especially in regulation, even though major platforms design compliance paths, strict requirements under the U.S. securities law framework still limit liquidity release for some products. For instance, the liquidity mechanisms and transfer restrictions of Pre-IPO equity RWA need to find a balance between compliance and market demand. Particularly under constraints such as lock-up periods and secondary-market limitations, liquidity cannot be fully liberalized.

Compared with the China and Hong Kong markets, although the U.S. has made some progress in technology frameworks and compliance design for RWA, China and Hong Kong—being international financial centers—also have different advantages. China’s flexibility in financial technology and innovative regulation could explore RWA paths more suitable for the local market by strengthening the integration of blockchain with traditional finance. Hong Kong, as an international financial center, can leverage its mature financial markets and globally oriented investor structure to promote compliant cross-border circulation of RWAs, providing an important bridge for global RWA market expansion. Especially in terms of cross-border liquidity for RWA and access for international investors, Hong Kong is well positioned to become an important testing ground and development driver for this emerging asset class.

Overall, while the U.S. has already achieved a leading position in RWA development, large-scale expansion in the future will still face major challenges in compliance and liquidity. Meanwhile, the openness and innovation capabilities of China and Hong Kong may provide new opportunities and perspectives for the further expansion of the global RWA market.