The Current Status and Challenges of the RWA Market: A Comparative Analysis of USD RWA and Other RWAs

The cryptocurrency market has been sluggish recently, but RWA(, or real-world assets), has become a hot topic of discussion in the market. Some believe that RWA is a trillion-dollar market, as USDT and USDC, being the earliest and most successful dollar RWAs, have a market capitalization close to $300 billion. At the same time, a large number of off-chain assets such as real estate, stocks, and bonds can be tokenized on-chain, which is seen as a huge opportunity.

However, although this viewpoint seems reasonable on the surface, a deeper analysis reveals problems. RWA is not a monolith; there are significant differences between USD RWA and other RWAs, making them difficult to compare. For other RWAs to achieve rapid development, in addition to learning from the experiences of USD RWA, they must also find a development model that suits their own needs.

As an investor, to seek Alpha opportunities in the RWA sector, it is essential to clarify the differences between USD RWA and other RWAs. This article will analyze the differences between the two from four perspectives, revealing the current situation and challenges of non-monetary RWA, helping investors capture investment opportunities in the RWA sector.

1. Use Case: The demand for US Dollar RWA is clear, while most RWA demands remain ambiguous.

USDT and USDC are digital extensions of the US dollar, primarily serving the trading settlement, cross-border payments, and hedging needs of the cryptocurrency market. These scenarios are frequent and essential. For example, in countries with severe inflation, dollar stablecoins have become an important tool for wealth protection, with strong user demand.

In contrast, other RWAs such as real estate tokenization primarily aim to achieve global financing or enhance asset liquidity through blockchain. The frequency of this kind of demand is relatively low, and the user base is limited. Crypto market participants are more inclined to invest funds in native assets like BTC, ETH, or Meme coins. Assets with good off-chain yields already have established financing channels, while those with poor yields are the ones actively seeking to go on-chain, which further limits the market size.

Overall, USD RWA serves as the "supplier" providing liquidity to the crypto market, while other RWAs are the "demanders" seeking liquidity. Although the names are the same, their essence is quite different. In the future, attention should be paid to whether there are other non-monetary RWAs that can provide liquidity to the crypto market.

2. Compliance and Trust: USD RWA Maturity, Most Other RWAs Still Lacking

regulatory adaptability

USDC is issued by regulated institutions, with reserves regularly audited to comply with US monetary regulations. Although USDT has faced controversies, it has gained market trust through deep cooperation with exchanges. The regulation of other RWAs is much more complex. For example, tokenizing real estate involves legal ownership verification and cross-border judicial issues, and there is currently a lack of unified standards, making rapid scaling difficult.

Trust Foundation

The core of RWA is the tokenization of credit. Dollar RWA is anchored to the dollar, backed by national credit, which has a very high level of user trust. Other RWAs rely on the credit of off-chain asset issuers, such as real estate tokenization needing authoritative institutions to prove ownership; otherwise, users find it difficult to trust that on-chain tokens genuinely correspond to physical assets.

Overall, the trust foundation of dollar RWA is unparalleled, and other RWAs are difficult to match. In the short term, RWA categories with lower compliance thresholds and easier trust establishment are more worthy of attention.

3. Technical Implementation: USD RWA is relatively simple, while other RWAs are relatively complex.

The technical logic of USD stablecoins is clear: on-chain issuance and redemption, with a low threshold. The US dollar and US Treasury bonds are standardized assets, with low auditing and tracking costs. However, other RWA involves complex links such as asset valuation, dividend distribution, and settlement, and requires oracles to verify off-chain data in real-time. The on-chain process for different assets (, such as real estate ), varies greatly, with high compliance standards and technical implementation difficulties, resulting in naturally slow development.

Non-standardized RWAs require customized standards for each type of asset, making breakthroughs difficult in the short term. On the other hand, RWAs that are relatively easy to standardize, such as gold and bonds, can be achieved more easily.

4. Promotion Method: USD RWA bottom-up, other RWA top-down

The rise of USDT stems from user demand: fiat currency purchases are subject to regulatory restrictions, and exchanges launched USDT trading pairs to address this issue. As usage increased, it evolved into a digital dollar, integrating into DeFi and cross-border payments. This is a result of market demand from the bottom up.

Real estate, stocks, and other RWAs are mostly driven by large institutions, motivated by financing or liquidity needs, which belongs to a top-down model. Ordinary users and entrepreneurs have low participation.

The bottom-up development approach is more suited to the characteristics of the cryptocurrency industry. RWA projects that pay more attention to community development are also more likely to gain user favor.

Summary and Outlook

The success of dollar RWAs such as USDT and USDC is inseparable from clear demand, high liquidity, a solid trust foundation, low technical barriers, and market-driven efforts from the bottom up. Other RWAs are constrained by ownership mapping challenges, regulatory uncertainties, technical complexities, and resistance from traditional interests, making development difficult.

In the future, other RWAs must at least work towards the following directions to break through:

1. Regulatory collaboration: Promote cross-border legal recognition of on-chain asset ownership.

2. Compliance Framework: Develop segmentation standards by asset class to accelerate the compliance process.

3. Infrastructure: Improve RWA oracles, issuance platforms, and cross-chain liquidity protocols.

As investors, we should clarify the differences between USD RWA and other RWAs, and understand the current development of the RWA sector. First, we need to pay attention to the development of the US RWA compliance framework, while also focusing on easily standardizable and transparent RWA assets such as ( gold and bonds ). Currently, we should pay more attention to infrastructure-type projects in the RWA sector, such as RWA oracles, RWA issuance platforms, and RWA liquidity protocols.