The Market is Volatile, What are the Highlights of the Relatively Strong RWA Sector?

[TL；DR]:

The RWA sector has held up well in the recent crypto market correction and is one of the few sectors resilient to declines.

RWA projects such as Ondo Finance promote the tokenization of real-world assets through technological innovation, solve compliance issues and achieve efficient circulation of assets.

With the support of real returns and institutional endorsement, RWA has demonstrated long-term vitality in surviving bull and bear markets, becoming a core hub connecting traditional finance and the on-chain eco.

Introduction

When the market was sold off and various sectors were pulled back, the RWA sector led the market with its unique resilience and stability, and once again became the market hotspot after Meme and AI. This article will discuss in depth the rise of the RWA sector, how projects represented by Ondo Finance promote the development of RWA tokenization, and analyze the broad prospects of the RWA sector in the future financial market.

The Market is Relatively Cold, and the RWA Sector is Relatively Strong

Since entering February, the crypto market has experienced a deep correction. According to data, on February 3, when the market was at its worst, BTC once fell below $90,000, while ETH, which had been sluggish, dropped to $2,100. DeFi, Meme, AI, and other sectors also plummeted.

However, the RWA sector rose slightly against the trend and became one of the few tracks that resisted the decline. Among them, Mantra (OM), which focuses on RWA Layer1, and Ondo Finance (ONDO), the leader in RWA infrastructure, rebounded quickly amid the recovery of market sentiment, showing strong resilience.

Source: CoinMarketCap

The recent performance of the crypto market is closely related to the macro market environment. With the Trump administration’s imposition of tariffs and the suspension of interest rate cuts, although the news was within market expectations, it still pushed up the US dollar index, and the price of gold hit a record high during the same period.

Meanwhile, although the crypto market has rebounded due to the rebound of US technology stocks, investors’ interest in such high-volatility assets has weakened, and they have turned their attention to areas with more stable return expectations. In this context, RWA has become an important choice for some existing funds to hedge risks due to its strong correlation with traditional finance, compliance characteristics, and real return attributes.

Source: BCG

Behind the differentiation of market sentiment is the quiet layout of institutional funds. Since 2024, the total market value of on-chain tokenized assets has exceeded $16 billion, of which high-credit-rated assets such as US Treasury bonds account for more than 30%. McKinsey predicts that the scale of tokenized assets may reach $16 trillion by 2030, while Boston Consulting Group even gives an optimistic forecast of $30 trillion.

Source: rwa.xyz

From Concept to Practice, RWA Opens Up the Boundaries of Crypto Imagination

Last year, we introduced the past and present of the RWA sector in “RWA Track Dominates Screen Again, Everything You Need to Know about New Opportunities.” We will briefly explain it again to make it easier for readers to understand the context.

RWA, or Real World Assets, refers to the process of converting traditional financial assets (such as stocks, bonds, and real estate) into on-chain digital tokens through blockchain technology. Its core value lies in breaking geographical and liquidity restrictions and achieving efficient circulation and combination of assets.

According to asset types, RWA can be divided into fixed income, equity, physical assets, alternative assets, etc. Among them, fixed income products mainly based on US Treasury bonds and corporate bonds account for more than 70% of the current RWA market.

Source: Yash Agarwal

Take Ondo Finance as an example. The project launched innovative products such as Ondo Chain and Ondo Global Markets in February, actively promoting the development of RWA tokenization.

Ondo Chain: Ondo Chain is an institutional-grade RWA L1 blockchain that combines the openness of public blockchains with the compliance and security features of permissioned networks to drive mass adoption of RWA.

Ondo Global Markets: The Ondo Global Markets (OGM) platform allows users to tokenize US stocks (such as Apple, Uber, etc.) 1:1 and supports 24/7 trading. Through smart contracts, these tokenized assets can be seamlessly connected to the DeFi protocol for lending, staking, or derivatives trading, forming a compound income scenario of “RWA+DeFi” and solving the compliance issues of such products in the past.

Source: Ondo Finance

Of course, the on-chainization of RWA requires not only technological breakthroughs, but also compliance issues. Taking Ondo Chain as an example, the L1 blockchain adopts a hybrid architecture: verification nodes must be licensed (operated by Franklin Templeton, Google Cloud, and other institutions) to ensure compliance with anti-money laundering (AML) and securities regulations; and the on-chain application layer is completely open, allowing developers to freely issue assets or deploy smart contracts. This design not only meets the stringent compliance requirements of institutions, but also retains the openness of the blockchain.

With the Entry of Institutions, RWA Surpasses Meme to Become a Long-term Narrative

The current bottleneck of the RWA eco is that “it is easy to put on the chain, but difficult to empower.” In other words, tokenization is only the first step. Making assets generate compound value on the chain still requires breakthroughs in underlying technologies.

Take Plume, the recently popular RWA Layer1 network, as an example. The public chain has attracted traditional institutions such as UBS and Blackstone through its modular design. For example, UBS connects tokenized gold to the Compound protocol through Plume’s API interface, and users can pledge GLD tokens to obtain stablecoin loans with an annualized return of 8%.

Source: Plume

Of course, RWA still faces multiple long-term challenges:

Regulatory fragmentation: Different jurisdictions have different standards for identifying tokenized assets. The US SEC considers some RWAs securities, while the EU MiCA Act requires strict custody compliance;

Liquidity trap: After non-standard assets (such as real estate) are tokenized, the trading depth is insufficient, which can easily lead to price decoupling;

Technical vulnerabilities: In August 2024, Centrifuge’s $20 million collateral was liquidated due to a smart contract vulnerability, exposing the weakness of its security mechanism.

Compared with the excessive speculation of Meme coins and the high bubble of AI concepts, the core advantage of RWA lies in real income support and institutional endorsement. Its development logic is relatively clear. With the advantages of stable income, compliance premium, and eco expansion, especially in the current impetuous atmosphere of pure speculation on the “market dream rate,” the dominant on-chain treasury bonds can still provide stable cash flow. This difference determines the long-term vitality of RWA through bull and bear markets.

Source: DefiLlama

In general, this round of bull market is different from the characteristics of the previous general rise of cottage industries, which shows that the trend of funds migrating from high-volatility assets to the field is irreversible. The RWA sector, represented by Ondo Finance, Plume, Mantra, etc., has become the core hub connecting traditional finance and the chain eco with its compliance, low bubble, real income, and institutional characteristics. For investors, building this bridge is not only a choice to avoid risk s, but also a historic opportunity to participate in global financial reforms.