I recently saw a bunch of RWA on-chain projects touting “on-chain liquidity.” To put it bluntly, a lot of it is just a liquidity mirage: being able to sell out ≠ the underlying assets can be redeemed anytime. The real choke point is the redemption terms—things like T+ a few days, credit limits, and that “gate” situation (door closes) when stress hits. Once on-chain liquidation starts in a chain reaction, the curve will suddenly get much steeper, and everyone will realize they didn’t buy cash—they bought “tradeable receipts.”

It also makes me think of that whole NFT royalty dispute. There’s nothing wrong with creators wanting to earn more, but once friction kicks in, the secondary market gets even drier... It’s the same on-chain: the harsher the terms, the more the liquidity looks like a bread crust—looks tasty at first glance, but when you break it open, you find out whether it’s wet inside or not.

Anyway, when I look at RWA now, I check the redemption details first before considering the APY.