Dialogue with Plume Network: How to bring real benefits to RWA tokenization?

Editor | Wu Talks about Blockchain

In this episode, we had an in-depth conversation with Chris Yin, co-founder and CEO of Plume Network, about how Plume tokenizes real-world assets (RWAs) through its unique RWAfi platform. Chris details the challenges and opportunities in tokenizing real-world assets and explains how Plume combines traditional finance with crypto-native principles to advance RWAfi. He also shares Plume's future prospects in the decentralized finance (DeFi) space.

The audio transcript was generated by GPT, so there may be some errors. Please listen to the full podcast:

Microcosm:

https://www.xiaoyuzhoufm.com/episodes/670fd9560d2f24f289a50db6

Youtube:

https://youtu.be/9wjEs9DNL_Y

Introduction to Plume Network and RWAfi

Ehan: Welcome to the Wu Blockchain Podcast. Today, we are very happy to invite Chris Yin, founder and CEO of Plume Network. Chris, welcome, please introduce yourself and Plume.

Chris: Thank you for the invitation. I'm Chris, one of the co-founders and CEO of Plume. We have built a blockchain, network, and ecosystem focused on real-world assets (RWAs), and proposed our new vision for RWAs, which we call RWAfi.

A quick background: We have been working in this space for over a year. We have three co-founders and we started this project together. Prior to this, I was a founder, sold my first company, successfully IPOed my second company, and raised $50 million in my third company, which is still operating. My co-founder and I have known each other for a long time, and we have explored multiple ideas together. In the end, we were very excited about the potential of RWAs and decided to focus on RWAfi to make these RWAs truly useful to crypto users, bringing real benefits and real use cases through on-chain.

Currently, we have more than 180 projects built on Plume, and more than $1 billion in assets deployed on Plume, with hundreds of millions of assets coming online soon.

Additionally, we recently concluded a two-month beta test campaign, in the first two months of which we had over 3.75 million active wallets and over 270 million on-chain transactions. Overall, it’s going very well, and there’s more to come. I’m excited to share more about our work on Plume with you today.

How Plume is leveraging key partnerships to advance RWA and data availability

Ehan: Who are some of Plume’s current notable partners?

Chris: Yes, we do a lot of different collaborations. We view Plume as an open and neutral ecosystem and like to work with a lot of different players. In some areas, we work closely with the Arbitrum team to support and run our chain within their ecosystem. Because we are an EVM chain, we work very closely with Arbitrum.

In addition, we have been working closely with Celestia on data availability. Our data availability layer is powered by Celestia, helping to reduce transaction fees and ensure a good user experience.

Of course, we've also been working with multiple RWA protocols, including protocols like Centrifuge. One of our investors is one of the founders of Centrifuge. We've also been working with the RWA.xyz team. So we've got a lot of partnerships in RWA projects and infrastructure projects, and there's a lot of progress on that front.

The challenges of traditional RWAs and Plume’s solutions

Ehan: Can you explain what Real World Asset Finance (RWAfi) is and how it aligns with DeFi principles?

Chris: Absolutely. In short, RWAs have historically been viewed by us as being very boring and static, and not very usable by most crypto users.

Our team comes from different backgrounds. For example, my co-founder Teddy worked at Coinbase and has worked on BNB Chain. Eugene has worked on crypto platforms such as Robinhood and dYdX, and I myself have been an entrepreneur and venture capitalist for many years. We approach this market from the perspective of crypto-native users, while many existing RWA projects are built on traditional financial principles.

One problem we see is that previous RWA projects did not generate much volume or attention because they were designed for a traditional finance (TradFi) audience. However, the on-chain audience is primarily crypto-native and they look for very different products and experiences than what TradFi products offer.

We approach this from the perspective of building something that crypto users really need, which means real benefits and real use cases. We design our products and business around making RWAs more useful to crypto users, which is what we call RWAfi.

The key principles of the crypto world — liquidity, composability, and a permissionless environment — are extremely important. In DeFi, you own your assets, can move them freely, and can even use them as collateral. You can engage in various strategies, such as re-collateralization or recycling, because these assets are programmable and open.

We are applying these principles to RWAs, meaning that users should be able to enter the ecosystem, hold tokens representing real-world assets, and start earning a stable, secure yield — perhaps in the 5%, 10%, 15%, or even 20% range. Additionally, these assets should remain liquid, so if you want to sell or exchange them, you can do so at any time, permissionless.

The second key point is to make these assets composable in the DeFi ecosystem. If you want to exchange RWA for something else, you can go to a decentralized exchange (Dex) to trade it. If you want to use it as collateral for a loan, you can do that. While earning yield, you can also engage in other DeFi strategies, such as leveraging or speculating on other assets.

So the idea of RWAfi is not just to put RWAs on-chain, it's also combining the traditional and crypto-native worlds, following what users are already doing. People are already using RWAs and crypto assets together, often without realizing it. The most common example of using real-world assets in the crypto world is stablecoins. Stablecoins already exist, and people use them for all kinds of things.

The problem is that many RWA projects don’t know how to create a stablecoin-like user experience that is simple to use and caters to crypto-native users. When you design products with these users in mind, you find huge growth potential. We aim to bring real products to users who are focused on earning stable returns while giving them market exposure to tokens.

If the market is going up, users can move to more speculative assets. If the market is not doing well, they can move to yield assets. They can even speculate using yield assets as collateral if they want. Our goal is to combine these two worlds and give users the flexibility to continue doing what they are already doing — mixing real-world assets with crypto assets.

Innovation in Tokenized Real World Assets (RWAfi)

Ehan: So, what unique opportunities does RWAfi offer that traditional DeFi platforms cannot?

Chris: There are two main areas of opportunity. The first is real yield . Most of today's DeFi products are focused on what we call "endogenous yield," which means that yield is generated and delivered in a closed loop system. This is why DeFi yields fluctuate on a daily basis — they depend on the state of the system at any given moment. The value of the token can also change significantly, so even if you see a 20% annual yield (APY), it may not be sustainable for the long term. A year later, that 20% may be just a short-term spike, and the value of the token may drop or fluctuate significantly.

This is how DeFi yields work. They are not bad, they are just different. RWAfi allows us to earn real yield on off-chain assets and bring this capital into the crypto ecosystem. Users can earn a competitive annual percentage yield (APY) on stablecoins such as USDC, USDT, or USD. It is important to note that a 2–3% yield is not enough — you need meaningful yields to make this model attractive. The beauty of RWAfi is that you can still participate in DeFi and earn real yield at the same time, which is a big advantage.

The second opportunity lies in bringing real assets, real capital, and real cash flows from the off-chain world into the crypto ecosystem. The crypto space is expanding every day by bringing in new capital. In addition, when you bring assets that are closer to reality, you attract a wider variety of users and increase user engagement.

We have seen this process unfold before with stablecoins. Initially, the use case for stablecoins was in the DeFi space, where it simplified transactions, provided a stable asset for exchange or holding, and reduced volatility. Then, stablecoins enabled global users to hold dollars, broadening their appeal. Finally, institutions began to participate, recognizing the advantages of stablecoins in cross-border payments, fast settlements, and other financial products.

RWAfi is following a similar path. We are starting with DeFi and crypto-native principles and expanding the ecosystem by introducing more yield opportunities. As the ecosystem expands, those familiar with these products will want access to them, which will drive greater institutional adoption. We are laying the foundation by catering to the DeFi and crypto-native audience first, and then further scaling with real users and real yields to attract more institutions to join.

Institutional adoption and tokenization of assets

Ehan: As DeFi and other financial systems continue to grow, do you think traditional financial institutions will play a role in the next phase of Plume's development?

Chris: I think there are two main aspects. We have been very fortunate to witness the rise and growth of institutional participation in this cycle, largely due to the development of BTC ETFs and institutions like BlackRock and Larry Fink deploying a lot of capital on-chain. They are starting to tokenize a wide range of products and put them on-chain. We are seeing a lot of excitement as institutions are finally starting to build actual products in this space. For example, Franklin Templeton launched their product, BlackRock has its Bitcoin ETF, and Winston Tree and VanEck are also working on similar projects. These big institutions are really starting to act on-chain.

It will take time, though. Everyone thinks that as soon as BlackRock or Larry Fink mentions tokenization and starts tokenizing some products on Ethereum, it will all happen overnight. But that’s not the case. It’s a process and it does take time.

Our perspective is simple: we want to show institutions how to use crypto in a way that is beneficial to them and the entire ecosystem. We are in regular contact with these institutions to discuss how to view crypto not only as a tool to save money, such as cost savings in fund management or business management - which is the common narrative of blockchain - but as a network. Crypto is a network of users, capital, and protocols that can together build entirely new products and services and, importantly, create new revenue opportunities.

Right now, institutions are in the exploratory phase. They have moved from focusing on private, permissioned chains to public chains. It’s very exciting to see Larry Fink and BlackRock deploy products on Ethereum, and we’re seeing more and more institutional participation. Over time, I expect we’ll see institutions pay more attention to composability, growth, and building networks around these tokenized assets.

As they often say, a day may seem long, but years are very short. We are still in the early stages of deployment, but once institutional users and on-chain assets reach critical mass, things will really accelerate and take off.

Asset Classes and Income Opportunities on Plume

Ehan: Plume recently mentioned having $1.25 billion in assets under management. Can you share the types of real-world assets that Plume has tokenized so far?

Chris: Yes, absolutely. We recently announced our first wave of assets, and as you mentioned, over $1 billion worth of assets are being deployed on Plume. As I said before, there are over 180 protocols currently building on Plume, and these assets cover a wide variety of categories. Since we are an open, permissionless chain that is not as restricted as many other RWA projects, there are many protocols working with us.

These protocols fall roughly into three categories. The first is collectibles, which include sneakers, Pokémon cards, watches, wine, and art. The second category is alternative assets, such as private credit, real estate, or green energy projects. The third category is financial instruments, such as stocks or corporate bonds. So we are tokenizing various categories of assets.

For us, the focus is not on the type of asset, but on the use case. In crypto, people care less about the asset itself and more about what they can do with it. We focus our efforts on the top three use cases that matter most to crypto users: yield generation, trading, and speculation.

Our first batch of $1.25 billion of tokenized assets are mainly in the yield-generating category. These assets are designed to be very secure, stable, and provide high yields. In order for yield farming to work, these assets need to be liquid, composable, and permissionless. For example, we have corporate bonds that offer 8–10% yields, sometimes as high as 15%.

We also have solar farms — real, operating facilities with long-term contracts (40-year agreements) with governments, schools, or hospitals, which generate stable returns of 10–15%. Then there are oil wells, which generate income through ongoing production, provide returns of 10–20%, and are very stable investments because they are energy-related and high-quality, investment-grade projects.

We are first focused on demonstrating use cases with real on-chain returns while minimizing risk. Over time, we will introduce assets with higher potential returns, but we believe it is critical to introduce stable and secure products first.

If you have spare funds, allocating them to these areas is an obvious choice, earning real yield while continuing to participate in DeFi and other activities in the entire crypto ecosystem.

Success stories and real-world asset deployments on Plume

Ehan: Plume has been very successful in tokenizing real-world assets as you continue to fine-tune the real-world uses of these assets. Can you share some success stories or examples of investors and companies tokenizing assets through your platform?

Chris: Absolutely, 100%. We work with many different types of protocols. Since Plume is built specifically for RWAs and RWAfi, we are able to customize the chain around asset on-chain and tools to create the easiest-to-use platform for two major goals: 1) bring physical or synthetic assets on-chain for tokenization, and 2) make these assets useful. Because of this, we have a strong user base and ecosystem of projects on the platform.

For example, you can look at the problem from the asset side and the project side. We developed a product called Plume Arc that allows us to go deeper than most protocols.

Most RWA projects typically ask, “Which chain should we use?” But the more important question is, “How do we bring this asset onto the chain?” Most general-purpose blockchains and ecosystems don’t have the tools needed to make this process seamless, so we developed those tools and integrated them into the chain. This provides a very consistent and smooth experience for projects.

For example, Mineral Vault is one of our protocols. They had not been on-chain before and had been in discussions with platforms like Securitize. But what they really needed was a full-stack solution for distribution and liquidity. They needed a platform to tokenize their assets, distribute them, and reach out to a community and ecosystem that could make these assets useful. When they came to us, their first round of funding was about $100 million, but they planned to tokenize over $1 billion in assets. If they had chosen other platforms, it would have cost more. We reduced the process that would have taken months to weeks.

Another example is a solar project. They have a large portfolio of green energy assets, mainly solar power plants. Before coming to us, they had tried to launch in another ecosystem and had full support from that chain, but the tokenization process was very difficult. After launching, they realized that although the ecosystem had ample liquidity, transactions, and users, they were not attracting any new users or capital.

In contrast, when they came to Plume, in just two weeks, they generated over 350,000 transactions through our community, acquired over 100,000 unique users, and raised funds through our ecosystem. They were able to build and trade efficiently.

This is what differentiates us from other platforms. We focus on RWAs and RWAfi, and we build a community that brings together protocols, users, and liquidity to make these assets truly useful. As a result, many projects may start out trying other platforms, but ultimately come to Plume. This approach has allowed us to grow our ecosystem to over 180 protocols and countless users because we keep everything in one place, focused on a unified use case and RWAfi narrative.

How Plume selects assets suitable for tokenization

Ehan: So, how does Plume decide which real-world assets are suitable for tokenization?

Chris: There are two main aspects. First, at the end of the day, we are an open and permissionless chain. We don't make choices for people, and anyone can build anything on Plume. We don't stop people from innovating. We want this to be an open platform where anyone can freely build and drive development without restrictions. This is our first principle.

Secondly, where do we invest more marketing efforts? Where do we invest more time and effort in bringing assets to the blockchain? This all comes back to the use case, not the asset itself. As I mentioned before, the three key areas we focus on are yield generation, trading, and speculation. We think about what types of assets fit into those categories and what our community, our audience might find more attractive.

For example, in the yield farming category, people want real returns that are safe and stable. They want assets that are liquid, composable, and scalable. That's why the types of assets we bring usually have these characteristics. Take a solar farm, for example, which is a simple asset. There is no construction risk, no operating risk, because it's already built. The only thing left is to collect the electricity bill. So, we like assets like this.

Likewise, assets like oil wells, once produced, they generate a steady stream of cash flow. While the price of oil can fluctuate, the wells themselves are a steady and secure source of income. Those are the types of assets we like.

On the other hand, in the Trading and Speculation category, we prefer assets that already have secondary markets. Sneakers, Pokémon cards, sports trading cards — these are multi-billion dollar markets today. About 80% of sneakers are purchased for resale, a speculative limited supply market similar to NFTs.

The problem with these assets is that they are slow to turn over. If you buy sneakers for speculation, you have to wait for them to arrive, store them, and then wait for the right time to resell them. This process can be tedious.

With Plume, we can simplify this process by bringing these assets together in one place. Users can sweep up, hold the assets, sell them later, or use them as collateral to take out a loan while they wait for the price to rise. Or they can speculate on the price using synthetic versions of the assets. This speeds up the process, brings in new liquidity, and makes the market more efficient.

As an example, one of our protocols is with a large secondary sneaker store, so every user who visits that store automatically becomes part of the protocol.

We are focused on two things: bringing real returns through yield-based assets, and expanding the crypto ecosystem and the use cases of RWAs by bringing in real users through existing markets. That's our strategy. But again, Plume is an open platform and we encourage everyone to bring their assets on-chain. You never know where the next innovation or great use case will come from, so we want to make it easy for anyone to get started.

Innovations to enhance returns on tokenized RWAs

Ehan: What innovations has Plume introduced to enhance or guarantee investment returns on tokenized RWAs?

Chris：Yes, there are definitely a few key points. For us, the key is to build a full-stack ecosystem around asset selection, bring assets on-chain, and structure them in a way that is easy to understand and use. Many projects may format assets on-chain in a way that makes them illiquid or overly restrictive, such as requiring KYC, setting a 3-5 year lock-up period, or only offering low returns of 3-5%.

But because we own the entire chain from beginning to end, we can shape the product early in the process. When we first talk to asset managers who want to go on-chain, we help them design the protocol and assets to ensure they are usable when they are listed on Plume. This means they are composable, liquid, permissionless, and formatted in a way that users want from day one. Sometimes it's better to use NFTs, sometimes tokens, or you may want to group assets with other assets to reduce risk and increase returns.

We built protocols like Plume Arc and Nest to make this easy. These innovations allow us to properly format assets and properly distribute these products through Nest. You can choose to manage individual assets or create an index that combines multiple assets together. This process increases returns, reduces risk, and improves liquidity. It also allows you to create new combinations of assets and mix them according to your needs, creating new asset pools or indices.

When you do that, two things happen: liquidity for assets increases, yields increase, and risk decreases. In addition, many of these assets are incentivized by the protocol itself and by Plume.

The infrastructure we built makes it easy for users to allocate capital to real-world assets, earn yield, and withdraw it whenever they need it. This is the innovation we bring to ensure that this process is simple and straightforward. We have also implemented tools and safeguards to help users choose the right assets to ensure they can maximize their returns.

Tools for users to engage and interact with tokenized RWAs

Ehan: What can users do on the Plume platform to participate in RWAs? Are there specific features or tools that enable users to interact with these tokenized assets?

Chris: Absolutely. Our view on RWAfi and RWAs is similar to our view on stablecoins. The success of stablecoins is largely due to the fact that users don’t need to learn anything new. It works the same way as any other crypto asset — it’s open, composable, and liquid. You can buy and convert to USDC or USDT at any time, and there is ample liquidity. These assets are fully compatible with a variety of ecosystems and projects.

We structured Plume, and the projects and assets on our network, to ensure the same seamless experience. Whether an asset is crypto-native or real-world, users should be able to use it in exactly the same way.

The operations that users can perform are very simple. You should be able to mint an asset and buy it, just like minting an NFT or a token in the crypto world. The only difference is that you are minting a real-world asset. You should also be able to exchange these assets at any time in a decentralized manner.

Additionally, you can use these assets for other common DeFi activities. For example, you should be able to put these assets into the lending market and apply for a loan. You can use the loan for other purposes, or engage in more complex DeFi strategies, such as recycling these yield assets. If you recycle yield assets, you can increase your yield from 10–20% in stablecoins to 40–50% in stablecoins by amplifying it through leverage.

Finally, you can also use these assets for speculation. You can enter the perpetual contract market, use assets as collateral, and apply for leveraged positions. These are the actions that users can take when interacting with RWAs on Plume, and the entire system is designed to be no different from using ordinary crypto assets.

Users don’t need to know whether the asset is crypto-native or real-world. They just need to ask some basic questions: What is the source of income? Is it real? Is the asset stable? These are the same questions as any other crypto project.

Chris: Historically, RWAs have been slow to advance, with low transaction volumes and low adoption due to UX barriers. They haven’t met the expectations of crypto-native users. By removing these barriers, we ensure that crypto users don’t have to learn anything new. The operations are the same, the use cases are the same — the only difference is that RWAs provide real benefits. But at the end of the day, the user experience should be as smooth as any other crypto project.

Meeting regulatory challenges and ensuring compliance

Ehan: How does Plume navigate the complex regulatory landscape when tokenizing real-world assets?

Chris: That’s a great question. Regulation is definitely an important factor, and our approach is designed to be flexible and modular. There are a lot of different regions — whether it’s in Asia, the Middle East, or the U.S. — and each region has its own regulatory framework and requirements.

First, we designed Plume to be modular, allowing us to adapt to the best practices of each region. For example, we partnered with a company called Texture, which allowed us to leverage their broker-dealer license. This allows us to trade regulated assets, which is one way to address these challenges.

Regulation is a complex and expensive process, but through partnerships we are able to simplify it and add value. We benefit from this, our partners benefit, and so do end users. In different regions – whether in Asia, the Middle East or elsewhere – we rely on strong partnerships to ensure that we can easily adapt to various regulatory regimes, whether by changing licenses or using different protocols.

On Plume, there are two ways to operate. If you want to operate in a fully regulated manner, we've built the tools and integrations needed to enable asset issuers to create permissioned agreements that only allow trading to specific types of users or on regulated exchanges. If you need to restrict access, it's easy to do. But on the other hand, we've also built an open, friendly, permissionless ecosystem. So if you prefer a crypto-native approach without onerous regulation, you can do that.

We balance both approaches in the same environment. Not all assets need to be regulated. For example, items like sneakers, trading cards, or watches generally don't need to be regulated. We don't want to exclude these assets, and we want to support multiple types of assets running on the same network. This creates network density and provides greater flexibility and utility.

To do this, we rely on modular partnerships, and we built a lot of the infrastructure ourselves. For example, we have a transfer agent license, but in order to move quickly and ensure broad regulatory coverage, we rely on an ecosystem of partners rather than doing everything in-house. In this way, we are able to navigate a complex regulatory environment efficiently while creating value for all participants.

Security measures for tokenization of physical and digital assets

Ehan: What security measures does Plume take to ensure the security and integrity of both the digital and physical aspects of tokenized assets?

Chris: That’s a good question. We focus on two key areas of securing tokenization and digital assets. Let me give you two examples.

The first use case involves the tokenization of physical assets — like sneakers or collectible cards, where we store the physical asset in a secure location and mint a tokenized version of that asset on-chain. In these cases, we make sure that the asset issuer works with highly trusted and established institutions. For example, we work with large warehouses and highly secure storage facilities. These places store the physical assets securely, and every time an asset is accessed — whether it’s opening a door or triggering a lock — a notification is sent on-chain to let everyone know the status of the asset. This ensures the security and transparency of the physical assets.

Another example is income-generating assets, such as solar farms. To ensure security and transparency, we can integrate directly with solar equipment. We are able to track and display the amount of sunlight collected, the amount of electricity generated, and map this data directly to the smart contract. This way, users can see exactly how much electricity is generated and how much income they earn, achieving full transparency and security in real time.

If you just store your sneakers at home and mint NFTs based on them, this is far less trustworthy than working with a secure institution like Brinks Warehouse — Brinks is a well-known brand in the warehousing and storage space. These trusted institutions are able to provide transparency into the proof of reserves of an asset, which greatly enhances credibility.

For digital assets, we work with top custodians to ensure security. Depending on the region, we work with companies such as Anchorage, Fireblocks, BitGo, etc. This ensures that digital assets and tokenized assets are stored in a highly secure and trusted environment, guaranteeing the physical and digital security of the assets.