Can RWA Become the Next Watershed in the Market

With the launch of Bitcoin spot ETFs, the crypto space is ushering in a new developmental turning point. The policy trends during the Trump administration laid the groundwork for this field, and now the entry of traditional financial giants has further propelled the development of RWA (Real World Assets) sector. An increasing number of financial institutions are exploring how to enable on-chain trading and management of traditional assets such as stocks and bonds through blockchain technology, and this trend is reshaping the landscape of financial markets.

Recently, a series of measures launched by a certain platform signifies that the RWA sector is gradually moving towards the mainstream. This transformation has also triggered a new round of competition on Wall Street, quietly changing the rules of the game between the cryptocurrency market and traditional finance.

Differentiation and Commonality of RWA Track Projects

Representative projects relying on large asset management companies

A certain platform has frequently taken action, launching a global market platform that primarily provides blockchain integration services for stocks, bonds, and ETFs. Shortly thereafter, it announced a new Layer 1 public chain project aimed at creating a more robust financial infrastructure to promote the tokenization of RWA.

This new public chain is the infrastructure for the global market platform, focusing on the integration of RWA tokenization and blockchain. It supports global investors to gain on-chain access to US-listed securities through the blockchain platform, breaking geographical barriers and providing 24/7 uninterrupted trading services.

The public chain has introduced a solution that embeds institutional-level compliance into the public chain architecture. Through innovative methods such as a permissioned verification node mechanism and a native cross-chain protocol, it aims to overcome the existing pain points of RWA on-chain from both technical and institutional perspectives. By using traditional financial assets as collateral, it ensures network security and achieves interoperability with traditional clearing systems, further bridging on-chain and off-chain liquidity.

The competitiveness and limitations of ### in the same track project.

This point is related to its unique architectural design and strong institutional resources, and it also reflects the power and interest game between blockchain and traditional finance.

Competitiveness:

1. Tokenization and Free Transfer of RWA: By pairing assets such as stocks, bonds, and ETFs 1:1 with tokens, investors can freely transfer these tokenized assets outside of the United States and integrate with DeFi to participate in financial activities such as lending and yield.

2. Combination of Openness and Compliance: It integrates the openness of public blockchains with the compliance of permissioned chains. Validators are subject to permissioned audits to ensure compliance, while any developer and user can issue tokens and develop applications on this chain, ensuring innovative vitality.

3. Institutional Participation and Ecosystem Construction: The design consulting team includes several financial institutions, promoting their institutional-level applications in both traditional finance and the DeFi sector.

4. Oracle Mechanism and Data Security: The built-in oracle system ensures the accuracy and real-time nature of on-chain data, reducing the risk of data manipulation. This design enhances the credibility of key data such as asset prices, interest rates, and market indices.

5. Cross-chain functionality and security guarantees: Achieve cross-chain asset transfers through bridging, provide security guarantees for decentralized verification networks, and support institutional asset and liquidity management to accommodate large transactions.

Limitations:

1. Highly reliant on institutions, lacking community drive. Its architecture heavily depends on the participation of traditional financial institutions, and the credibility and liquidity of tokenized assets mainly come from the endorsement of these institutions. The ecosystem is primarily designed for institutions, and the participation of ordinary users is relatively low.

2. The issue of power distribution under centralized control. Although some openness is retained, its validators are permissioned, and core power is concentrated in the hands of a few institutions. This concentration of power may lead to conflicts in future governance and resource allocation.

3. The speed of innovation may be limited by compliance and traditional institutions. Since the core pillars are compliance and institutional participation, this may also limit its speed of innovation. When introducing new financial products or technologies, complex compliance processes and institutional approvals may be required.

The Real Obstacles Faced by RWA Projects

Although blockchain technology provides the technical foundation for on-chain RWA, current public chains still struggle to meet the demands of traditional finance in areas such as high-frequency trading and real-time settlement. Meanwhile, the fragmentation of cross-chain ecosystems and security issues further complicate the deployment of RWA by institutions. The application of RWA in decentralized finance (DeFi) faces multiple real obstacles:

First, the trust and consistency issues between assets and on-chain data have become the core challenge of RWA (Real World Assets) on-chain. The key to RWA on-chain lies in ensuring the consistency between assets in the real world and on-chain data. This involves two key issues: the authenticity of on-chain data and the synchronization of data updates. Solving these problems often requires the introduction of trusted third parties or authoritative institutions, which conflicts with the decentralized nature of blockchain.

Insufficient cybersecurity is also an important issue. The security of blockchain networks typically relies on the economic incentive mechanisms of local tokens, but the volatility of RWA is usually lower than that of cryptocurrencies, especially during market downturns, which may lead to a decrease in network security.

The compatibility issues between RWA and the DeFi architecture have yet to be resolved. The original intention of DeFi design is to serve crypto-native assets rather than traditional securities. Bringing RWA on-chain involves complex financial behaviors, which are difficult to manage effectively through existing DeFi systems. The oracle systems also show significant shortcomings in real-time processing and security when handling large-scale traditional financial data.

The challenges of decentralization and security in cross-chain liquidity further increase the difficulty of bringing RWA on-chain. The cross-chain issuance of RWA leads to fragmented liquidity, complicating asset management. Although cross-chain bridging mechanisms provide solutions, they also introduce new security risks.

Regulatory oversight and compliance issues are the biggest non-technical barriers to RWA on-chain, as many regulated financial institutions are unable to conduct transactions on public blockchains. Compliance requirements such as KYC and anti-money laundering further complicate the on-chain integration of RWA.

The liquidity on the market side and the restrictions on institutional participation have also constrained the development of RWA. Currently, the overall market value of RWA is mainly concentrated in low-risk assets, while the on-chain progress of major asset classes such as stocks and real estate is slow. The liquidity of RWA still relies on crypto-native protocols, and the overall market is still in the early stages of development.

The conflict between DeFi and the traditional financial trust mechanism is also a problem that must be solved for RWA on the blockchain. DeFi relies on code and cryptography to build trust, while traditional finance depends on legal contracts and centralized institutions. This difference in trust mechanisms leads traditional financial institutions to adopt a cautious attitude towards blockchain technology.

If RWA succeeds, the new public chain may become a redistribution of power between the old and new financial systems in the "Wall Street game".

The core difficulty of RWA at a non-technical level lies in how to achieve compliance, which relies on the recognition of a powerful centralized authority organization.

The world's largest asset management company, after advancing the Bitcoin ETF, has participated in the investment construction of RWA. This essentially aims to be the first to vie for a redistribution of power between the traditional financial system and the emerging decentralized technology relying on blockchain. This struggle is not merely a competition of technological transformation or financial innovation, but a contest for the global financial rule-making authority, capital control, and the future wealth distribution mechanism.

Despite the hope for decentralization brought by blockchain technology, Wall Street is attempting to bring this technological revolution under its control in the face of a reality where capital and power are highly concentrated, through new forms of market manipulation and asset securitization, in order to maintain its dominant position in the global financial system.

Rebalancing the Power of the Global Financial System

Wall Street has always dominated the global financial system, controlling key nodes of capital flow, asset management, and financial services. Traditional financial institutions achieve control over global capital through monopolizing financial infrastructure. However, the rise of blockchain technology has disrupted this situation:

Decentralized Finance (DeFi) has weakened the traditional financial infrastructure that Wall Street has long controlled through disintermediation. DeFi allows key functions such as capital movement and asset management to operate on decentralized platforms, enabling users to manage assets, borrow, and trade directly on the blockchain without intermediaries like banks or investment banks. However, this represents a significant threat to Wall Street, as this shift in power suggests that Wall Street may lose its dominance over the global financial system.

Asset Tokenization: Who Can Control the New Financial Infrastructure

The tokenization of RWAs promoted by new public chains and other platforms aims to enhance asset liquidity, but it hides a power struggle over control of the new financial infrastructure. Blockchain networks are candidate platforms for the next generation of global financial infrastructure; whoever can dominate this infrastructure will have a dominant position in the future blockchain linking real-world assets.

The interests of Wall Street are reflected in the intention to control these decentralized networks. They may not directly deny blockchain, but instead, through investments, mergers, or partnerships, control these emerging blockchain platforms, leading to a re-emergence of capital centralization. Although blockchain aims to be decentralized, a large amount of capital and liquidity can still easily be concentrated in the hands of a few large financial institutions or hedge funds. Ultimately, this leads to key resources on blockchain platforms returning to a few players, making the decentralized asset market entirely reliant on the driving force of centralized massive powers.

Regulatory arbitrage and extrajudicial power

According to reports, a recent electronic trading survey of institutional traders by a major bank shows that 29% of institutional traders are about to or are currently trading cryptocurrencies this year, an increase of 7 percentage points compared to last year.

Arbitrage has always been a trading strategy that Wall Street elites are adept at utilizing. In the face of the uncertain regulatory environment posed by the decentralized nature of blockchain, future Wall Street institutions may exploit regulatory differences across various countries and regions by establishing operational entities in jurisdictions with more relaxed regulations to circumvent stricter oversight.

In new public chain projects, the tokenization of certain RWAs may bypass traditional securities regulations or financial market regulations. Manipulating asset flows and capital structures in different regulatory environments further strengthens control over emerging markets. It cannot be ruled out that the operation of this "gray area" is one of the means by which Wall Street seeks higher returns through blockchain.

Market Liquidity and Price Manipulation: The Struggle for Implicit Dominance

Liquidity is the core of market manipulation, achieving implicit price manipulation in seemingly "decentralized" markets. The new public chain provides new investment opportunities for global investors through the tokenization of RWA, but its liquidity and trading depth still heavily rely on the injection of large capital. Liquidity control will continue to be a core weapon for Wall Street players. Even in a decentralized blockchain environment, institutions with more capital, trading technology, and market insights can still dominate market trends.

RWA Hedge Fund: Restructuring the Asset Securitization Game

Wall Street has historically achieved significant profits through asset securitization. The tokenization of RWA on the blockchain provides an opportunity for a new generation of asset securitization. For example, Wall Street can issue new financial products by tokenizing a combination of assets, attracting global investors. These products can be generated based on RWA, such as real estate investment trust tokens and corporate bond tokens, providing more options for the market.

At the same time, the derivatives market may also be expanded through blockchain. Wall Street can design complex financial derivative instruments to repackage and sell risks to global investors. The game of risk transfer and profit acquisition will continue to unfold in the era of RWA tokenization.

The Advanced Path of the Crypto World, the Industry's Development is Forced to Accelerate

Taking the ETF trading of cryptocurrencies led by Bitcoin, events related to Trump, and future RWA as examples, all three are accelerating the development process of the industry to varying degrees, which directly increases the difficulty of profitability in the industry. These factors influence the crypto industry through complex market dynamics, regulatory pressures, and the gradual penetration of traditional financial ecosystems.

The market maturity brought by the introduction of the ### ETF

The launch of the ETF marks