Written by: Iris, Mankiw LLP
As a key topic at home and abroad, RWA (real asset tokenization) and cross-border RWA naturally became an indispensable theme during the event. At the same time, RWA (real asset tokenization) is increasingly becoming an important innovation area in asset management and capital markets around the world. According to a paper by the global consulting firm Boston Consulting Group (BCG), it is expected that by 2030, the assets under management in the RWA field will exceed US$600 billion .
However, do you really know what RWA is? Do you really know the implementation logic of RWA?
In the past two months, Mankiw has found that since Ant Chain and Longxin Group launched the first new energy charging pile RWA project and successfully entered the Hong Kong Ensemble sandbox, RWA has been highly praised in and out of the circle, but there is little clear discussion about the specific implementation methods. Some projects even use the name of RWA to issue coins and continue the old model. Previously, Mankiw has written many articles, " Web3 Lawyers: Compliant Low-profile Version of RWA, Beware of Illegal Fundraising Risks " and " Web3 Lawyers: Which Projects Are More Suitable for RWA Financing? ", analyzing the direction of RWA and legal risk warnings, which you can refer to.
But in the final analysis, everyone still needs to understand the RWA model and underlying value logic. Coincidentally, at this Hong Kong Fintech Week, Ant Chain unveiled its "Two Chains and One Bridge" platform, dedicated to implementing cross-border RWA for domestic new energy assets. Based on the logic of the Ant Chain RWA platform, Lawyer Mankiw will talk about "How to play RWA in China, and can everything be RWA?"
AntDigital RWA
Based on the news related to Ant Chain, the “Two Chains and One Bridge” platform launched by Ant Chain includes:
Asset Chain
The asset chain is responsible for tokenizing physical assets and converting them into tradable assets on the chain. This process first collects and verifies the core information of the asset , such as the actual value of the asset, market conditions, and ownership, to ensure its authenticity. After verification, the asset information is uploaded to the blockchain and a corresponding token is generated. At this stage, the asset chain ensures that all tokenized assets meet the requirements of standardization and structuring so that they can be safely and efficiently circulated in the market in the future. In this way, the asset chain realizes the standardized conversion from assets to tokens, making it easier for traditional assets to integrate into the digital cross-border market.
Transaction Chain
The design of the trading chain can not only effectively support the market-oriented circulation of tokenized assets, but also greatly improve the efficiency of fund raising . The tokenization on the trading chain allows global investors to join the financing process of assets at any time, thus providing a new source of liquidity outside of traditional financing channels. In addition, the trading chain is open and supports real-time transactions and circulation between users, which increases the activity of the secondary market and makes the market-oriented pricing of assets more transparent and reasonable.
Ant Chain Trusted Cross-Chain Bridge
Bridging the asset chain and the transaction chain , ensuring compliance and security of data and asset circulation between the two chains. In the application of cross-border RWA, compliance is the focus of attention of all parties, and Ant Chain's trusted cross-chain bridge provides important support here. The bridge not only ensures seamless connection between the mainland asset chain and the Hong Kong transaction chain, but also ensures cross-border compliance of assets and funds through multiple identity authentication and data encryption technology. Through the trusted record of data by blockchain technology, the cross-chain bridge realizes the safe and compliant flow of funds and assets, providing strong regulatory protection for cross-border RWA.
*Source: Ant Chain official website information
Now that the infrastructure is clear, how can the asset or financing party be put on the chain and how can it be tokenized? Lawyer Mankiw studied the official examples of Ant Chain and the RWA project of Longxin New Energy Electric Pile.
In summary, the conventional financing model can be divided into several links:
Asset appraisal , where the financier submits information about a specific asset for appraisal to ensure that the financial status and market value of the asset are certified by a third party or qualified assessment body;
Tokenization : After the asset evaluation is completed, the relevant financing information and valuation certificates are uploaded to the chain in a digital form, and compliant tokens are created according to the financing needs. These tokens are generated on the asset chain, and the financing goals and usage rules are set through smart contracts to ensure that the rights and interests of subsequent investors are clear;
Cross-border financing : global users can purchase tokens on the trading chain and become investors in the asset. The trading chain supports the circulation and trading of tokens between users, allowing investors to gain returns in the secondary market.
At the same time, the RWA reference case displayed by Ant Chain on its official website also provides another new RWA model - financing in cross-border commerce . Assume that when Hong Kong buyer A purchases goods from mainland seller B but lacks working capital in the short term and cannot obtain a loan from a bank, A can obtain rapid financing through the RWA model. The specific process is as follows:
Invoice valuation : Buyer A makes a financing request to Hong Kong third-party authoritative financial institution C, and seller B assists A in providing the corresponding electronic delivery voucher to ensure the authenticity of the voucher. Financial institution C conducts valuation based on the voucher information, laying the foundation for the subsequent tokenization and financing process.
Tokenization : After the valuation is completed, C will upload the voucher information and valuation results to the chain and create a compliant token. C uses smart contracts to set usage rules for the token, including the principal and interest structure, repayment period and settlement conditions, to ensure the compliance and transparency of the financing transaction.
Financing payment : global users can purchase the token on the transaction chain to finance the order. The financing funds will be directly transferred to the seller B's account without the need for transfer by buyer A, while C holds the delivery receipt to ensure the smooth transaction.
Repayment of principal and interest and delivery : According to the repayment period specified in the smart contract, buyer A needs to pay the principal and interest to C on schedule. After A completes the payment of principal and interest, C will hand over the delivery certificate to A, and A can complete the delivery of the goods with the certificate. At the same time, C will distribute the financing income to the users participating in the financing according to the contract.
Through the "Two Chains and One Bridge" platform, Ant Chain provides an efficient and secure solution for the RWA field, enabling the standardization and digital circulation of traditional assets in cross-border scenarios. This model has created new possibilities for cross-border financing of domestic assets and provided investors with a digital investment channel for physical assets. As the demand for RWA continues to grow, this platform will undoubtedly promote the further implementation of RWA and provide technical support and feasibility demonstration for the next stage of practical application.
However, although the RWA concept is highly praised, we can't help but ask: Are all assets suitable for RWA? In the context of various projects under the banner of RWA, we need to explore the applicable boundaries of RWA, identify which assets are truly valuable and feasible for tokenization, and clarify the actual implementation logic of RWA. This is also a key issue that RWA needs to face and answer as an innovative tool.
Can everything be RWA?
Taking the Ant Chain’s “Two Chains and One Bridge” platform case as a reference, Attorney Mankiw extracted several key features of compliant RWA in the market, hoping to provide effective judgment and reference for the actual implementation of RWA.
Value Foundation
Literally, the source of RWA's value is real-world assets. Therefore, the premise of compliant RWA is that the assets have real physical or financial basis , rather than fictitious or intangible value. The new energy charging pile project in the Ant Chain platform is a typical case. The project has a clear asset entity as an anchor, which provides a realistic basis for subsequent value assessment and tokenization. For RWA, all tokenized values must be based on real assets, whether it is real estate, equipment or debt, and must be supported by clear assets to ensure the authenticity and reliability of the token.
Value Creation
Judging from the introduction and reference cases of Ant Chain, the value of assets needs to be evaluated during the implementation of RWA, and it is generally conducted by a third-party authoritative organization to ensure market trust and compliance. The evaluation requires a comprehensive analysis of the current market value, future profit potential and risk status of the asset. For example, in the case of Ant Chain, the evaluation data of new energy charging piles is certified, which allows investors to clearly understand their potential benefits and risks. This also means that in RWA, the authenticity and verifiability of data are crucial to ensure that investors can make decisions based on transparent information.
Market demand and liquidity
Compliant RWAs need to have certain market demand to support liquidity after tokenization. Imagine an asset without market demand. Even if the valuation is high, users will not buy it after tokenization, and it will not be able to achieve financing, let alone market circulation. Only assets that meet market demand can ensure that they can be widely recognized by the market after tokenization, thereby ensuring the realization of their value.
Legal compliance and cross-border applicability
Compliance RWA assets must comply with regulatory requirements, especially in cross-border scenarios. Ant Chain has mentioned ensuring the compliance of assets between the mainland and Hong Kong in its underlying architecture, whether it is tokenization or cross-chain bridge design. In addition, since RWA often involves cross-border, it not only means the compliance of assets domestically and internationally, but also involves compliance requirements such as data transparency and information disclosure to ensure the legitimate rights and interests of investors in different regions.
Long-term income stability
In the RWA process, the expected long-term return of assets is an important factor in investors' decision-making . Taking new energy charging piles as an example, their rental or usage fee income is stable, providing investors with clear return expectations. For other types of RWA assets, they also need to have stable and sustainable income characteristics to increase their attractiveness to investors, thereby promoting the market development of RWA assets. Assets with high volatility or no long-term returns may affect their market performance after tokenization.
Back to the original question, can everything be RWA? Based on the above characteristics, the obvious answer is: NO .
Attorney Mankiw's Summary
Through the analysis of Ant Chain's "Two Chains and One Bridge" platform, we can see the huge potential of RWA as an innovative financial tool, and also realize the actual limitations of its applicable boundaries. RWA is not applicable to all assets. A successful RWA project must have the anchoring of real assets, transparent and authoritative value assessment, support from market demand, legal compliance guarantees, and stable long-term returns. These elements are not only the basis for RWA, but also an important prerequisite for protecting the rights and interests of investors and the long-term value of the project.
With the rapid development of RWA, we must maintain a clear understanding, distinguish the assets that truly meet the conditions, and prevent projects from abusing the RWA concept for non-compliant financing. In the future, RWA will play a more important role in cross-border finance and asset management, and the maturity of the market and the improvement of supervision will be the key to RWA truly empowering the real economy.
