jakiro
Author: HTX Ventures Source: medium
Since DeFi Summer in 2020, AMMs (automated market makers), lending protocols, derivative trading, and stablecoins have become the core infrastructure in the crypto trading field.Over the past four years, many entrepreneurs have been continuously iteratively innovating these tracks, pushing projects such as Trader Joe and GMX to new heights.However, as these products gradually mature, the growth of the crypto trading track begins to hit the ceiling, and the birth of a new batch of top projects has become increasingly difficult.
After the 2024 US election, the legalization and compliance process of the crypto industry is expected to bring new development opportunities to the industry.The integration of traditional finance and DeFi is accelerating: physical assets (RWA) such as private credit, US Treasury bonds and commodities have gradually evolved from early simple tokenized certificates to yield-based stablecoins with capital efficiency, in order to pursue stable returns.Users provide new options to become a new growth engine for DeFi lending and trading.At the same time, stablecoins have an increasingly significant strategic position in international trade, and the upstream and downstream infrastructure of the payment track continues to flourish.Traditional financial giants, including the Trump family, Stripe, PayPal and BlackRock, have accelerated their layout and injected more possibilities into the industry.
After “old DeFi” such as Uniswap, Curve, dYdX and Aave, a new batch of unicorns in the crypto trading field are brewing.They will adapt to changes in the regulatory environment, use the integration of traditional finance and technological innovation to open up new markets, and push the industry into the “new DeFi” era.For new entrants, this means no longer need to focus on microinnovation in traditional DeFi, but instead focus on building breakthrough products that meet new environments and needs.
This article is written by HTX Ventures. It will conduct in-depth analysis around this trend, explore the potential opportunities and development directions in the new round of changes in the crypto trading track, and provide inspiration and reference for industry participants.
Changes in this cycle trading environment
Stablecoin compliance is passed, and the adoption rate in cross-border payments continues to increase
Maxine Waters of the U.S. House Financial Services Committee and Patrick McHenry plan to launch a stablecoin bill in the near term, marking a rare consensus between the two parties in stablecoin legislation.Both sides agreed that stablecoins can not only consolidate the US dollar’s status as a global reserve currency, but also become an important buyer of US Treasury bonds, with huge economic potential.Tether, for example, made a full display of its profitability last year with just 125 employees.
This bill may become the first U.S. to pass a comprehensive cryptocurrency legislation in Congress, promoting widespread access to crypto wallets, stablecoins and blockchain-based payment channels in traditional banks, businesses and individuals.In the next few years, stablecoin payments are expected to become another “step-by-step development” in the crypto market after Bitcoin ETFs.
Although compliant institutional investors cannot directly benefit from the appreciation of stablecoins, they can profit from investing in infrastructure related to stablecoins.For example, mainstream blockchains that support a large supply of stablecoins (such as Ethereum, Solana, etc.) and various DeFi applications that interact with stablecoins will benefit from the growth of stablecoins.Currently, the proportion of stablecoins in blockchain transactions has increased from 3% in 2020 to more than 50%.Its core value lies in seamless cross-border payments, a feature that has grown particularly rapidly in emerging markets.Take Türkiye as an example, stablecoin transactions account for 3.7% of its GDP; while in Argentina, stablecoin premiums are as high as 30.5%.Innovative payment platforms such as Zarpay and MentoLabs use local proxy and payment systems to attract users into the blockchain ecosystem with grassroots market strategies, further promoting the popularization of stablecoins.
Currently, the cross-border B2B payment market processed by traditional payment channels is as large as about $40 trillion, while the global consumer remittance market generates hundreds of billions of dollars in revenue each year.Stablecoins provide this market with new means to achieve efficient cross-border payments through crypto channels. Adoption rates are rapidly increasing, and they are expected to enter and subvert this part of the market and become an important force in the global payment landscape.
https://mirror.xyz/sevenxventures.eth/_ovqj0x0R_fVAKAKCVtYSePtKYv8YNLrDzAEwjXVRoU
Ripple’s RLUSD stablecoin is designed for corporate payments and aims to improve the efficiency, stability and transparency of cross-border payments to meet transaction needs denominated in USD.Meanwhile, Stripe acquired stablecoin platform Bridge for $1.1 billion, a deal that became the largest acquisition in the history of the cryptocurrency industry.Bridge provides businesses with seamless conversion between fiat and stablecoins, further promoting the application of stablecoins in global payments.Bridge’s cross-border payment platform processes more than $5 billion in annualized payment volume and has provided global fund settlement for high-end customers, including SpaceX, demonstrating the convenience and effectiveness of stablecoins in international transactions.
In addition, PEXX, as an innovative stablecoin cross-border payment platform, supports the exchange of USDT and USDC into 16 fiat currencies and can be remitted directly to a bank account.Through simplified inbound processes and instant conversions, PEXX enables users and enterprises to make cross-border payments efficiently and at low cost, breaking the barriers between traditional finance and cryptocurrencies.This innovation not only provides faster and more cost-effective cross-border payment solutions, but also promotes the decentralization and seamless connection of global capital flows.Stablecoins are gradually becoming an important part of global payments, improving the efficiency and popularity of payment systems.
Regulation on perpetual contract trading is expected to be relaxed
Because the high leverage nature of perpetual contract trading is prone to cause customer losses, regulators in various countries have always been quite strict with their compliance requirements.In many jurisdictions, including the United States, not only are centralized exchanges (CEXs) prohibited from providing perpetual contract services, but decentralized perpetual contract exchanges (PerpDEXs) cannot escape the same fate.This directly compresses PerpDEX’s market space and user scale.
However, with Trump winning the election, the compliance process in the crypto industry is expected to accelerate, and PerpDEX is very likely to usher in a spring of development.There are two iconic events worth paying attention to recently: First, Trump-appointed crypto and AI consultant David Sacks has invested in the veteran player dYdX on the track; second, the US Commodity Futures Trading Commission (CFTC) is expected to replace the US Securities and Exchange Commission(SEC), becoming the main regulator of the crypto industry.CFTC has accumulated extensive experience in the launch of CME’s Bitcoin futures trading, and has a more friendly regulatory attitude towards PerpDEX than SEC.These positive signals may open up new market opportunities for PerpDEX and create more favorable conditions for its growth under the future compliance framework.
RWA’s stable revenue value is being discovered by crypto users
Once upon a time, the high-risk and high-return crypto market environment left the stable returns of RWA (real-world assets) unattended.However, in the past bear market cycle, the RWA market has grown against the trend, and its locked-in value (TVL) has jumped from less than one million US dollars to the current 100 billion US dollars level.Unlike other crypto assets, RWA’s value fluctuations are not affected by crypto market sentiment.This feature is crucial to shaping a robust DeFi ecosystem: RWA can not only effectively improve the diversification of investment portfolios, but also provide a solid foundation for various financial derivatives, thereby helping investors hedge against severe market turmoil.risk.
According to RWA.xyz, as of December 14, RWA already had 67,187 holders, with 115 asset issuers and a total market capitalization of $139.9 billion.Web3 giants, including Binance, expect the RWA market size to expand to $16 trillion by 2030.This huge market structure and the investment attractiveness brought by its stable returns are gradually becoming an indispensable and important part of the DeFi ecosystem.
https://app.rwa.xyz/
After the storm of Sanjian Capital, the crypto industry exposed a key problem: the assets lack sustainable returns scenarios.As the Federal Reserve starts the process of hikes in interest rates, global market liquidity has tightened, and cryptocurrencies defined as high-risk assets have been particularly impacted.In contrast, the yields of real-world assets (such as US bonds) have steadily increased since the end of 2021, attracting market attention.From 2022 to 2023, the median DeFi earnings dropped from 6% to 2%, lower than 5% of U.S. Treasury risk-free returns over the same period, causing high-net-worth investors to lose interest in on-chain earnings.With the on-chain revenue drying up, the industry began to turn to RWA, hoping to re-stimulate market vitality by introducing stable returns off-chain.
https://www.theblockbeats.info/news/54086
In August 2023, MakerDAO raised the DAI deposit rate DSR (DAI Savings Rate) to 8% in its lending agreement Spark Protocol, triggering a long-silent DeFi market recovery.In just one week, the agreement’s DSR deposits surged by nearly $1 billion, and the DAI circulating supply increased by $800 million, a three-month high.The key factor driving this growth is RWA (Real World Asset).Data shows that over 80% of MakerDAO’s expense revenue in 2023 comes from RWA.Since May 2023, MakerDAO has increased its investment in RWA, buying U.S. Treasury bonds in bulk through entities such as Monetalis, Clydesdale and BlockTower, and deploying funds to RWA lending agreements such as Coinbase Prime and Centrifuge.As of July 2023, MakerDAO has had nearly $2.5 billion in RWA portfolio, with more than $1 billion coming from U.S. Treasury bonds.
MakerDAO’s successful exploration has triggered a new round of RWA craze.Driven by high returns on blue-chip stablecoins, the DeFi ecosystem responded quickly.For example, the Aave community proposed to list sDAI as collateral, further expanding the application of RWA in DeFi.Similarly, in June 2023, the new company Superstate, launched by the founder of Compound, focuses on introducing real-world assets such as bonds into blockchain, providing users with stable returns similar to real-world.
RWA has become an important bridge connecting real assets with on-chain finance.As more and more innovators explore the potential of RWA, the DeFi ecosystem has gradually found a new path to stable returns and diversified development.
Licensed institutions are listed on the chain to expand market size
In March this year, BlackRock launched the first US bond tokenized fund BUIDL issued on public blockchain, attracting market attention.The fund provides qualified investors with the opportunity to earn money from U.S. bonds and is the first to deploy on the Ethereum blockchain, which has subsequently expanded to multiple blockchains including Aptos, Optimism, Avalanche, Polygon and Arbitrum.At present, $BUIDL, as a token income certificate, does not have actual utility, but its iconic release has taken an important step in tokenized finance.
https://app.rwa.xyz/assets/BUIDL
Meanwhile, Wyoming Governor Mark Gordon announced that the state government plans to issue stablecoins pegged to the dollar in 2025 and support it through a U.S. Treasury bill and repurchase agreement.The stablecoin is expected to be launched in cooperation with trading platforms in the first quarter of 2025, which marks that the government-level stablecoin experiment will become a new highlight in the market.
In the field of traditional finance, State Street, as one of the world’s top asset management companies, is actively exploring various ways to integrate into the blockchain payment and settlement system.In addition to considering issuing its own stablecoins, State Street also plans to launch deposit tokens to represent customer deposits on the blockchain.As the world’s second largest fund custodial bank, State Street Bank, which manages more than $4 trillion in assets, seeks to improve service efficiency through blockchain technology, marking the positive progress of traditional financial institutions in digital transformation.
JPMorgan Chase is also accelerating its blockchain business expansion, planning to launch on-chain foreign exchange functions in the first quarter of 2025 to achieve all-weather automated multi-currency settlement.Since launching the blockchain payment platform in 2020, JPMorgan Chase has completed more than US$1.5 trillion in transactions, involving intraday repurchase and cross-border payments. The platform users include large global companies such as Siemens, BlackRock, and Ant International.JPMorgan plans to expand its platform, first supporting automated settlements in the US dollar and euro, and will expand to more currencies in the future.
JPMorgan’s JPM Coin is an important part of the bank’s blockchain strategy, and as a digital dollar designed for institutional clients, JPM Coin provides instant payments and settlements worldwide.Its launch has accelerated the process of digital assets on financial institutions and gained the lead in cross-border payments and capital flows.
In addition, Tether’s recently launched Hadron platform has also promoted the process of asset tokenization, aiming to simplify the conversion of digital tokens for a variety of assets such as stocks, bonds, commodities, funds, etc.The platform provides tokenization, issuance, destruction and other services to institutions, funds, governments and private companies, and supports KYC compliance, capital market management and supervision functions, further promoting the digital transformation of the asset management industry.
RWA token issuance compliance tools emerge
Securities is an innovative platform focusing on fund issuance and investment on blockchain.Its cooperation with BlackRock began with deep cultivation in the RWA (real world asset) field and provided professional services to many large asset securitization companies, including the issuance, management and trading of tokenized securities.Through Securitize, companies can issue bonds, stocks and other types of securities directly on the blockchain, and use the full set of compliance tools provided by the platform to ensure that the issuance of tokenized securities strictly complies with the legal and regulatory requirements of various countries.
Since receiving the Securities and Exchange Commission (SEC) transfer agent registration in 2019, Securitize has rapidly expanded its business.In 2021, the company received a $48 million financing led by Blockchain Capital and Morgan Stanley.In September 2022, Securitize helped KKR, one of the largest investment management companies in the United States, tokenize some of its private equity funds and successfully deployed it on the Avalanche blockchain.The following year, also on Avalanche, Securities issued equity tokens for Spanish real estate investment trust Mancipi Partners, becoming the first company to issue and trade tokenized securities under the EU’s new digital asset pilot system.
Recently, the leading stablecoin issuer Ethena announced a partnership with Securities to launch a new stablecoin product USDtb.The stablecoin’s reserve funds are invested in BlackRock’s USD Institution Digital Liquidity Fund (BUIDL), further consolidating Securitize’s position in the blockchain financial ecosystem.
In May 2023, Securities again received a $47 million strategic financing led by BlackRock, which will be used to accelerate the expansion of partnerships with the financial services ecosystem.As part of the financing, Joseph Chalom, head of global strategic ecosystem cooperation at BlackRock, was appointed to the Board of Directors of Securities.This cooperation marks a further deepening of Securities’ integration of traditional finance and blockchain technology.
Opportunities and challenges
Private Credit RWA Enters Payfi Age, How to Resolve Default Issues
Private credit currently totals approximately $13.5 billion, of which active loans are worth $8.66 billion, and the current average annual interest rate is 9.46%.In the RWA (real world asset) market, private credit remains the second largest asset class, with approximately 66% of the issuance share provided by Figure Markets.
Figure Markets is a trading platform built on the Provenance blockchain, covering a variety of asset types such as stocks, bonds and real estate.In March this year, the platform received more than US$60 million in Series A investment from Jump Crypto, Pantera Capital and other institutions. Currently, TVL (total locked position value) has reached US$13 billion, becoming the highest platform for TVL in the RWA market.Unlike traditional non-standard private credit RWA, Figure Markets mainly focuses on the standardized market of real estate loans (HomeLoan), which gives it a large market size and growth potential, and there will be more opportunities in the future.
https://app.rwa.xyz/?ref=ournetwork.ghost.io
In addition, private credit also includes corporate and institutional loans, and the projects that emerged in the last cycle were Centrifuge, Maple Finance and Goldfinch.
TVL rebounded this year https://app.rwa.xyz/?ref=ournetwork.ghost.io
Centrifuge is a decentralized asset financing protocol that tokenize real-world assets (such as real estate, bills, invoices, etc.) into NFTs through its Tinlake protocol to use as collateral for borrowers.Borrowers can obtain liquidity in decentralized fund pools through these NFTs, and investors provide funds through these fund pools and obtain fixed income.Centrifuge’s core innovation lies in combining blockchain with traditional financial markets to help businesses and startups obtain financing at lower costs and reduce credit risk and intermediary costs through the transparency and decentralization provided by blockchain.
However, Centrifuge also faces risks from market volatility.Although its asset tokenization model is favored by many traditional financial institutions, borrowers may not be able to repay on time in case of large market volatility, resulting in default events.For example, some assets with high market volatility may not be able to perform loan contracts, especially in bear markets, when liquidity is insufficient, the borrower’s debt repayment ability is subject to a greater test.
Maple Finance focuses on providing high-yield secured loans to corporate and institutional borrowers.The loan pool on the platform is usually over-collateralized by crypto assets such as BTC, ETH, SOL, etc.Maple adopts an on-chain credit scoring mechanism that allows institutional borrowers to provide lenders with stable returns by creating and managing loan pools.This model is particularly suitable for institutions in the crypto industry, which reduces risks and increases returns on capital by providing over-mortgage loans to these institutions.
However, the Maple platform also faces severe tests in a bear market.Several major default incidents have occurred one after another, especially as the crypto market overall declines.Take Orthogonal Trading as an example, its failure to repay the $36 million loan on Maple Finance has put obvious default pressure on the platform.
Goldfinch is a platform focused on on-chain credit lending, aiming to provide loans to startups and small and micro businesses that cannot obtain financing through traditional channels.Unlike other RWA lending platforms, Goldfinch adopts an unsecured loan model, relies on borrower credit history and third-party assessment agencies to determine its repayment ability.Through the fund pool, Goldfinch lends funds to borrowers in need and provides fixed returns to fund providers.
Goldfinch’s problems are mainly reflected in the choice of borrowers.Many borrowers face higher risk of default, especially start-ups and small and micro enterprises from high-risk markets.For example, in April 2022, Goldfinch suffered a $10 million loan default, mainly from risky small and micro enterprises and startups.Despite Goldfinch’s investment in a16z, these defaults reveal their shortcomings in risk control and market demand.
https://dune.com/huma-finance/huma-overview
Solana recently proposed the concept of “Payfi” has certain similarities with the private credit field in business logic, and further expands its application scenarios to diversified scenarios such as cross-border financing, lending and cross-border payment swaps.Take Huma Finance as an example, the platform focuses on providing financial services to investors and borrowers, where investors obtain income by providing funds, and borrowers can borrow and repay.At the same time, Huma’s subsidiary Arf focuses on cross-border payment advance services, greatly optimizing the traditional cross-border remittance process.
For example, when sending money from Singapore or Hong Kong to South Africa, traditional Swift remittance methods are often time-consuming and costly.Although many people choose companies such as Western Union, these remittance companies need to work with local South African partners and rely on huge local advances to complete the same-day settlement.This model puts a huge burden on remittance companies because they need to handle advances from different fiat currencies in multiple countries around the world, and the efficiency is difficult to guarantee.Arf abstracts advance funding services by introducing stablecoin to provide payment companies with rapid capital flow support.
For example, when a user sends $1 million to South Africa, Arf ensures that funds enter a regulated account and completes cross-border settlement through stablecoins.Huma conducts due diligence on payment companies before settlement to ensure security.During the entire process, Huma lent and recovered stablecoins without intervening in fiat currency deposit and withdrawal operations, thus achieving fast, safe and efficient capital flow.
Huma’s main customers come from developed countries such as the United Kingdom, the United States, France and Singapore. These regions have extremely low bad debt rates, and the account period is usually 1 to 3 days, with a daily fee, and the capital chain is transparent and efficient.Currently, Huma has achieved a capital turnover of US$2 billion, and the bad debt rate remains at 0%.Through its collaboration with Arf, Huma achieved considerable double-digit returns and was not related to the token.
In addition, Huma plans to further access DeFi projects, such as Pendle, to explore token points reward mechanisms and broader decentralized financial gameplay to further enhance user income and market attractiveness.Huma’s model could be an innovative way to address private credit defaults.
How will the income stablecoin leader belong to
This cycle is likely to have stablecoins that are as safe as USDT/USDC and can provide at least 5% sustainable returns.This market undoubtedly contains huge potential.Currently, USDT publisher Tether has an annual profit of nearly 10 billion US dollars, while its team has only about 100 people.If this part of the profit can be given back to users, can the vision of a profit-based stablecoin be realized?
The bottom-level way to play the government debt
At present, stablecoins built with treasury bonds as the underlying assets are becoming a new trend in the crypto market.These stablecoins introduce traditional financial assets into blockchain through tokenization, which not only retains the stability and low-risk characteristics of treasury bonds, but also provides high liquidity and composability of DeFi.They use a variety of strategies to increase risk premiums, including fixed budget incentives, user expenses, volatility arbitrage, and the use of reserve varieties such as pledge or re-pled.
USDY launched by Ondo Finance is a typical example of this trend.USDY is a tokenized note secured by short-term U.S. Treasury bonds and bank demand deposits. It is designed to comply with U.S. laws and regulations and can be used as collateral in the DeFi agreement or as a medium of transactions for Web3 payments.USDY is divided into two types: cumulative type (USDY) and re-base type (rUSDY).The former is suitable for long-term holding, while the latter achieves profits by increasing the number of tokens and is suitable for use as a settlement tool.Meanwhile, Ondo Finance’s OUSG tokens launched by Ondo Finance focus on providing high-liquidity investment opportunities linked to U.S. short-term Treasury bonds. Its underlying assets are deposited in BlackRock USD institutional funds and support instant minting and redemption.
Additionally, OpenTrade offers a variety of Vault products based on Treasury bonds, including US Treasury Vault with fixed income and USDC Vault with flexible income to meet the asset management needs of different users.OpenTrade deeply integrates its tokenized products with DeFi to provide holders with a seamless deposit and income experience.
Comparison of USDT Issuer Income Distribution and Usual Income Distribution https://docs.usual.money/
The Usual Protocol’s stablecoin USD0 provides two minting methods by tokenizing traditional financial assets such as US Treasury bonds: users can indirectly mint USD0 by depositing RWA assets or depositing USDC/USDT, and can also mint USD0 by depositing them directly.USD0 is upgraded to the more profitable USD0++ and provides users with additional loyalty rewards through cooperation with DeFi platforms such as Pendle.
Solayer’s sUSD stablecoin launched on the Solana blockchain uses U.S. Treasury bonds as collateral to provide holders with 4.33% on-chain earnings and supports enhanced stability and security of the Solana network as a pledged asset.Through these mechanisms, the two not only improve the profitability of stablecoins, but also enhance the stability and efficiency of the DeFi ecosystem, demonstrating the huge potential of the integration of traditional finance and blockchain technology.
Low-risk on-chain arbitrage gameplay
In addition to the design with treasury bonds as the underlying layer, another income stablecoin uses the volatility and MEV characteristics of the crypto market to arbitrage to obtain low-risk returns.
Ethena is the fastest growing illegal currency staking stablecoin project since the Terra Luna collapse. Its native stablecoin USDe surpasses Dai to temporarily rank third in the market with a size of US$5.5 billion.Ethena’s core design is based on the Delta Hedging strategy of Ethereum and Bitcoin collateral. By opening short positions on CEX with the same value as the collateral value, it hedges the impact of collateral price fluctuations on USDe value.This hedging mechanism relies on over-the-counter settlement service providers to implement the agreement assets are entrusted to multiple external entities, aiming to maintain the stability of USDe through the complementary rise and fall between collateral value and short positions.
Project revenue mainly comes from three aspects: Ethereum pledge income generated by user staking LST; capital rate or basis income generated by hedging transactions; and Liquid Stables fixed rewards, that is, USDC or other stablecoins are deposited in Coinbase or other exchanges.The deposit interest obtained.Essentially, USDe is a packaged CEX low-risk quantitative hedging strategy financial product that can provide up to 27% floating annualized yields when the market is good and liquidity is sufficient.
The risks of Ethena mainly come from the potential storm between CEX and the custodian, as well as the price decoupling and systemic risks that may result from insufficient opponents during the run. The risks have further intensified when capital interest rates may continue to be sluggish during the bear market, which was once this year.The mid-year market volatility period agreement yield became negative -3.3%, but no systemic risks occurred.
Nevertheless, Ethena provides an innovative on-chain convergence design logic that provides exchanges with scarce short liquidity by introducing large amounts of LST assets brought by the main network merger, while also bringing them fee income and marketvitality.In the future, with the rise of order book DEX and the maturity of chain abstraction technology, there may be an opportunity to achieve a fully decentralized stablecoin based on this idea.
At the same time, other projects are also exploring different income stablecoin strategies. For example, CapLabs realizes returns by introducing MEV and arbitrage profit models, while Reservoir uses a diversified high-yield asset basket strategy to optimize asset allocation. DWF Labs will also be launched soon.Falcon Finance, a profit-based synthetic stablecoin, includes two versions: USDf and USDwf.
These innovations have brought diverse options to the stablecoin market and have driven the further development of DeFi.
RWA assets and DEFI applications help each other
RWA Asset Improvement DEFI Application Stability
The reserve funds of Ethena’s recently issued stablecoin USDtb are mainly invested in BlackRock’s US Treasury tokenized fund BUIDL, of which BUIDL accounts for 90% of the total reserves, making it the highest BUIDL allocation of all stablecoins.This design allows USDtb to effectively support USDe’s stability in difficult market environments, especially during periods where capital interest rates are negative.Ethena’s Risk Committee approved a proposal last week to use USDtb as a support asset for USDe, so that in the event of uncertainty, Ethena can close USDe’s base hedging positions and redistribute the support assets to USDtb, further mitigating market risks.
In addition, CDP stablecoins (such as collateralized debt positions) have also improved collateral and liquidation mechanisms by introducing RWA assets to improve peg stability.In the past, CDP stablecoins mainly used cryptocurrencies as collateral, but faced scalability and volatility issues.By 2024, CDP stablecoins have enhanced their risk resistance by accepting more liquid and stable collateral, such as Curve’s crvUSD, which recently added USDM (physical assets).Some liquidation mechanisms have also been improved, especially the soft liquidation mechanism of crvUSD, which provides a buffer for further bad debts and effectively reduces risks.
DEFI mechanism improves RWA token asset utilization efficiency
Pendle’s new “RWA” partition has currently reached US$150 million in TVL, covering a variety of income assets, including USDS, sUSDS, SyrupUSDC and USD0++.
Among them, USDS is similar to DAI, and users can receive SKY token rewards after depositing it into the SKY protocol; sUSDS is similar to sDAI, and part of its income comes from MakerDAO’s treasury bond investment; SyrupUSDC is a revenue asset supported by the Maple digital asset loan platform.Revenues are generated by providing fixed interest rates and excess mortgages to institutional borrowers; while USD0++’s returns come entirely from 1:1-backed Treasury bonds, ensuring a stable rate of return.
Currently, the annualized yield provided by Pendle is quite attractive, with sUSDS LP as high as 432.4%, SyrupUSDC LP being 98.88%, USD0++ LP being 43.25%, and USDS LP being 22.96%, which attracts users to buy RWA stablecoins.
Syrup, the project launched by Maple in May this year, also relies on DeFi gameplay to achieve rapid growth, helping Maple regain its life after experiencing a bearish loan default.
https://dune.com/maple-finance/maple-finance
In addition, purchasing USD0++ YT assets on Pendle can also obtain automatic airdrops, giving more potential profit space to the on-chain US bonds through token play.
Can RWAFI public chain empower institutional finance
Plume is a Layer2 ecosystem focused on RWA, committed to integrating traditional finance (TradFi) with decentralized finance (DeFi) to build a financial eco-network covering more than 180 projects and through the Enterprise Ethereum Alliance (EEA) andThe Tokenized Assets Alliance (TAC) establishes strategic alliances with organizations such as WisdomTree, Arbitrum, JPMorgan Chase, a16z, Galaxy Digital and Centrifuge to promote the implementation of industry-standard and institutional-level RWAfi solutions.
Plume adopts a modular, licenseless compliance architecture that enables KYC and AML to be independently configured at the application level, embedded anti-money laundering (AML) protocols and cooperates with blockchain analytics vendors to ensure global security compliance while also being regulatedBrokerage/dealer and transfer agent cooperate to ensure compliance issuance and trading of securities in markets such as the United States.The platform introduces Zero Knowledge Proof of Reserves (ZK PoR) technology to verify asset reserves while protecting privacy, support global securities exemptions such as Regulation A, D and S, and serve retail and institutional investors in multiple jurisdictions.
https://www.plumenetwork.xyz/
Functionally, Plume supports users:
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Use tokenized RWA (such as real estate, private credit) as collateral to borrow stablecoins or crypto assets to provide low-volatility collateral to ensure security;
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Introduce liquid pledges, users can pledge assets to obtain liquidity tokens to participate in other DeFi protocols to increase compound returns; the platform provides compound income assets, such as private credit and infrastructure investment, to generate stable returns and help reinvest income;
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Support RWA to list and trade on perpetual DEX, users can go long/short assets such as real estate or commodities to achieve a combination of TradFi and DeFi;
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In addition, Plume provides annualized stable income assets of 7-15%, covering areas such as private credit, solar energy and minerals, attracting long-term investors; in terms of speculative assets, Cultured provides on-chain speculation opportunities based on data such as sports events and economic indicators., meet users’ needs for short-term high-yield transactions.
Avalanche is the first L1 public chain to fully embrace RWA. It has begun to explore enterprise-level applications at the end of 2022. With its unique subnet architecture, it helps organizations deploy custom blockchains optimized for specific use cases and implement them with Avalanche.The seamless interoperability of the network is unrestricted.From the end of 2022 to the beginning of 2023, entertainment giants from South Korea, Japan and India have successively built subnets on Avalanche.Avalanche also keenly observed Hong Kong’s trends in asset tokenization, launching the Evergreen subnet at the Hong Kong Web3.0 Summit in April 2023, providing financial institutions with dedicated blockchain deployment tools and services to support private chains.Blockchain settlement with licensed counterparties and maintain interoperability through Avalanche Local Communications Protocol (AWM), attracting WisdomTree, Cumberland and other institutions to join the test network Spruce.
https://www.avax.network/evergreen
In November of the same year, Avalanche cooperated with JPMorgan’s Onyx platform to connect Onyx and Evergreen using LayerZero to promote the subscription and redemption of tokenized assets by WisdomTree Prime. The cooperation was included in the “Guardians Program” of the Monetary Authority of Singapore (MAS)..Subsequently, Avalanche continued to expand institutional cooperation, and in November helped financial services company Republic launch the tokenized investment fund Republic Note. In February 2024, it conducted tokenization experiments on private equity funds with Citibank, WisdomTree and other institutions on Spruce test network. 3In the month, it cooperated with ANZ Bank and Chainlink to connect Avalanche to Ethereum’s asset settlement through CCIP, and in April it completed integration with payment giant Stripe.
In addition, the Eco-Internal Foundation has also actively promoted the development of RWA, launched the Avalanche Vista program, invested US$50 million to purchase tokenized assets such as bonds and real estate, and invested in RWA projects such as Balcony and Re through the Blizzard Fund.John Wu, CEO of Ava Labs, said that Avalanche’s mission is to “present the world’s assets on the chain”. Through blockchain advantages such as instant settlement, it will bring strong regulatory entities of traditional finance into the on-chain space, empowering RWA to rise and becomeThe best choice for institutions to achieve the chain.
New directions worth looking forward to
On-chain forex
Traditional foreign exchange systems are inefficient and face many challenges, including counterparty settlement risks (although CLS improves security, the process is still cumbersome), high coordination costs for multi-bank systems (for example, Australian banks need to coordinate with six banks when purchasing yen), globalSettlement time zone differences (such as the Canadian dollar and Japanese yen overlap for less than 5 hours a day), and restrictions on access to the forex market (retail users pay 100 times the fees that large institutions have.On-chain FX provides instant price quotes through real-time oracles such as Redstone and Chainlink, and achieves cost-effectiveness and transparency with decentralized exchanges (DEXs), such as Uniswap’s CLMM to reduce transaction costs to 0.15%-0.25%, about 90% lower than traditional foreign exchange.Instant on-chain settlement (replaces traditional T+2 settlement) also provides arbitrageurs with more opportunities to correct market pricing mistakes.In addition, on-chain Forex simplifies corporate financial management, allowing it to access multiple products without multiple currency-specific bank accounts; retail users can obtain the optimal exchange rate through a wallet embedded in the DEX API.In addition, on-chain foreign exchange has achieved the separation of currency and jurisdiction, freed from its dependence on domestic banks. Although this approach has pros and cons, it effectively utilizes digital efficiency and maintains monetary sovereignty.
However, on-chain foreign exchange still faces challenges such as scarcity of non-USD-denominated digital assets, security of oracle, long-tail currency support, regulatory issues, and unified interfaces for in and out of the chain.Nevertheless, its potential is huge, and Citibank is developing blockchain-based forex solutions under the guidance of the Monetary Authority of Singapore (MAS).The daily trading volume of the forex market exceeds $7.5 trillion, especially in the global south, where individuals often exchange dollars through the black market for more favorable exchange rates.Although Binance P2P offers options, due to insufficient flexibility in the order book model, projects such as ViFi are developing on-chain automated market making (AMM) forex solutions, bringing new possibilities to the on-chain forex market.
Cross-border payment stack
Cryptocurrencies have long been seen as a key tool to address the trillion-dollar cross-border payment market, especially in the global remittance market, generating hundreds of billions of dollars in revenue each year.Stablecoins now provide new paths for cross-border payments, mainly including three levels: merchant layer, stablecoin integration and foreign exchange liquidity.At the merchant level, through applications and interfaces for initiating retail or commercial transactions, merchants can establish stablecoin streams, form moats, and then upsell other services, control user experience and achieve end-to-end customer coverage, similar to Robinhood in the stablecoin field.The stablecoin integration layer provides access to and from, virtual accounts, cross-border stablecoin transfers, and stablecoin and fiat currency exchange. The license will become the core competitiveness, ensuring minimum cost and maximum global coverage. For example, Stripe’s acquisition of Bridge demonstrates this moatHow to build.Forex and liquidity layer is responsible for efficient exchange of stablecoins with US dollar, fiat currency or regional stablecoins.In addition, as crypto exchanges continue to emerge to cater to participants everywhere, cross-border stablecoin payment applications and processors for specific markets will also gradually emerge.
Similar to traditional finance and payment systems, building a defensible and scalable moat is the key to maximizing business opportunities at all levels.Over time, the layers of the stack will gradually be integrated, and the merchant layer has the most aggregation potential, and can package other levels to users, further increase value, increase profit sources, and control foreign exchange transactions, entry and exit channel selection and stablecoin issuance.cooperation between merchants can build a comprehensive and efficient cross-border payment solution.
Stablecoin aggregation platform for multi-pool models
In a world where most companies issue their own stablecoins, the problem of fragmentation of stablecoins’ funds is becoming increasingly serious.While traditional in-and-out chain solutions can provide short-term mitigation, they have failed to achieve the efficiency promised by cryptocurrencies.To address this problem, Numéraire on Solana introduced USD*, providing the Solana ecosystem with an efficient and flexible multi-asset stablecoin exchange platform dedicated to the challenge of stablecoin fragmentation.
The platform realizes seamless creation and exchange between different stablecoins through the AMM mechanism. All stablecoins share the same liquidity pool, avoiding the dispersion of funds, thereby significantly improving capital efficiency and liquidity management.As the core element of the system, USD acts as an intermediate unit, simplifies the exchange process between stablecoins, promotes more accurate price discovery, and reflects the market’s valuation of various stablecoins in real time.Users can not only mint stablecoins through protocols, but also use the tiered mortgage debt position system to customize risk-return configurations to further improve capital utilization.At the same time, the lending function allows the excess stablecoins to be reused efficiently within the system, optimizing capital operations.
Although Numéraire still has a gap with platforms such as Raydium in terms of liquidity, its innovative design has proposed more forward-looking solutions to the fragmentation of the stablecoin ecosystem, which can more effectively meet institutional needs and the real-world liquidity of stablecoin.actual needs of sex.
Looking back at the last market cycle, stablecoin products using multi-pool models have only been successfully implemented in Curve on Ethereum, which has been widely praised for its efficiency in stablecoin exchange.Looking ahead, with the continuous expansion of the issuance scale of stablecoins on other public chains, similar multi-pool model products are expected to gradually appear in more blockchain ecosystems, thereby further promoting the scale and mature development of the stablecoin market.
