Author: @BlazingKevin_ , the Researcher at BlockBooster
The narrative of RWA has been going on for many years. Everyone knows that it has a broad upper limit and a beautiful narrative, which may bring incremental funds that the Crypto industry has never seen. But "much ado about nothing" has been the intuitive feeling of the market for a long time. The high threshold and long cycle make RWA in Crypto an institutional game - the funds come in, but they just stay in. The reason is that if Crypto wants to enjoy the incremental funds of RWA, it must accept the corresponding rules of the game. The supervision and regulations under the shadow of "increment" have separated Crypto's RWA from the masses and put it on the shelf.
First of all, why do we need to build infrastructure in the RWA track? There are three reasons: 1. The subdivided tracks of RWA are too fragmented: real estate assets, art collections, securities assets, supply chain finance, cross-border trade, etc. The learning and transaction costs of moving between different platforms are too high; off-chain compliance endorsement is difficult, and for different physical mapping assets, users need to hold trust assumptions on them separately, and there is a shortage of endorsement platforms integrating professional institutions in the market; risks related to supervision and legal frameworks are the easiest to understand and difficult to overcome obstacles. Plume has corresponding solutions for the above pain points in the form of Infra, see below for details.
Secondly, what is the product moat that can only be achieved after the infrastructure is built? If Plume is only a coin issuance and compliance platform, then it has only completed its first step of imagining RWAFi. On the premise of doing a good job of the entire framework, Plume combines the advantages of the chain, combines RWA and DeFi, and breaks the dilemma of low transaction volume and low attention of traditional financial RWA projects. How to break it? Lower the entry threshold of RWA assets-users can start various income operations in the Plume wallet; improve security-Plume responds to regulatory requirements flexibly with modular thinking, high security and low threshold, making Plume attractive to existing crypto users, and has the potential to convert the above-mentioned low-liquidity stock dividends entering Crypto into high-liquidity assets on the chain that users can play. Plume's core appeal is to attract institutions to a prosperous ecosystem. Therefore, as to how to define this prosperity, Plume's answer is to provide real benefits and real use cases. After the Memecoin narrative ended, it was the consensus of all IQ100 players to find PMFs with real benefits in the industry. This is also the focus of investors when returning to long-termism that I mentioned in my previous article.
The last question before entering the Plume fundamentals review is, does RWAFi have any advantages over DeFi? What risks need to be taken to achieve these advantages? DeFi's income type is endogenous income. The logic of the three Ponzi disks can cover most DeFi protocols, that is, these incomes are generated and transmitted in a closed loop system. When facing DeFi protocols, Crypto players will subconsciously think about who will take over? Who to sell to? What kind of beautiful logic should be portrayed to the buyer? These subconscious ways of thinking are caused by the objective volatility of yields and the fact that the token model designed by Ponzi will always collapse at some point. The combination of RWA and DeFi breaks the limitations of endogenous income. On the premise of improving the liquidity of RWA assets themselves, additional income is obtained through operations such as lending and staking, allowing real assets to obtain DeFi support and also consolidating the value foundation for DeFi income.
There are a lot of introductions about Plume’s fundamentals, so I will simply sort them out for you along the context of “real assets and real returns”.
First, let's look at Plume's asset management classification. Plume is the RWA infrastructure and manages the RWA assets on the platform. The first batch of 180+ ecological projects has an asset management scale of 1.25 billion. From the perspective of asset management types, there are three categories. They are:
Collectibles: sneakers, Pokémon cards, watches, wine and art
Alternative assets: private credit, real estate or green energy projects
Financial instruments: stocks or corporate bonds
Secondly, let’s review the pain points of RWA assets: many RWA projects will impose excessive restrictions on assets when putting them on the chain to achieve compliance in a way that makes their liquidity worse, such as requiring KYC, setting a lock-up period of 3-5 years, or only providing a low return of 3-5%.
Plume’s solution to this problem is not just to bring physical or synthetic assets to the chain for tokenization, but to go a step further and make these assets useful. Bring real income through income assets and introduce real users through existing markets.
To serve this goal, Plume made changes when putting assets on the chain, determining the form of issuance: NFT, tokens, or a combination of assets. Through reasonable product shaping, the liquidity of assets can be improved, returns can be increased, and risks can be reduced. Buying these assets can obtain a 10-20% annual yield on stablecoins, and additionally obtain the protocol's native tokens and Plume incentives.
In order to make this architecture run, Plume's four main suites play an important role, namely:
The tokenized token issuance system is Arc;
Nexus, a dedicated oracle for the RWA track;
Passport, a smart wallet that aggregates asset management tools and integrates different token standards and other on-chain DeFi composability;
Through the mirrored YieldToken, SkyLink, a cross-chain bridge, allows users to obtain institutional-level RWA returns without permission.
Therefore, the premise of Plume to attract institutions is to build a prosperous RWA public chain. In order to achieve this goal, it is necessary to attract crypto native users. Plume provides two categories of preferred asset areas: the first is income-generating assets, such as green energy projects, which are safe and stable. However, from the ecological list on the official website, it is found that there are not many green energy projects to participate in. Some projects that open solar energy asset channels need to be locked for 5-10 years. The second category is trading and speculative users. Plume believes that speculation on sneakers or cards is a widespread demand. Therefore, for this type of assets, Plume provides trading methods such as sweeping, mortgage lending, and asset synthesis.
Regarding security and integrity, the discussion is divided into physical assets and income assets. The tokenization of physical assets stores the physical assets in a safe place and mints a tokenized version of the asset on the chain; income assets are directly integrated with the equipment, such as directly integrating with solar equipment.
Finally, there are regulatory and legal requirements. In order to cope with different regulatory requirements in different regions, Plume relies on corresponding partners and flexibly switches licenses to cope with them.
Now that we have discussed the fundamentals of Plume, we can see that its advantages and disadvantages are very obvious. Its advantages are complete and in line with regulatory legal requirements; it provides a full set of solutions from development to operation, making the path of physical asset issuance smooth; after Binance's investment, it occupies a leading position in RWA infrastructure. After the RWA hotspot comes back, $PLUME is likely to be hyped; RWAFi's narrative hype has come into view, and real assets with real returns have added new temperament and imagination to Crypto.
The ultimate pursuit of RWA in the Crypto industry is increment, increment of funds, and increment of users. Plume provides the RWAfi public chain platform with the lowest level of support in the form of infrastructure. As long as the market value of the RWA track increases steadily in the future, Plume has high expectations to be the first to complete value capture. Plume's core users are institutions and DeFi protocols, so it targets most of the incremental funds. Web2 institutions can use Plume's complete infrastructure to smoothly transform traditional assets into Crypto-operable RWA assets, and combine them with corresponding DeFi gameplay to reduce the friction caused by development and migration, and achieve accelerated iteration.
However, there are also corresponding shortcomings. Plume seems to have more than 180 ecological projects, but this number has not increased for nearly half a year. It seems that Plume has played all the cards in its first ecological launch, and the actual activity of the ecology is not optimistic. Plume seems to be a compliant and complete shell, which allows institutions to access smoothly and allows the existing DeFi protocol to migrate seamlessly. Plume is a project that needs to pay attention to fundamentals because it is infrastructure. However, in the past year, the market has changed its color when talking about infrastructure. A large number of empty infrastructures have become ghost towns after the issuance of coins. Putting aside the chip analysis, the infrastructure label is the feature of Plume, and it may also become the source of resistance from retail investors.
Is Plume the most reliable value capture in the RWA track? It may be currently, but it is very likely to be replaced in the future. The significance of RWA lies in the increment, the increment of funds, and the increment of users. Plume is currently convincing in the attractiveness of incremental funds, but it may not be the case for the increment of users. Back to the real use cases of income generation in the asset field preferred by Plume, such as power plants and oil wells, followed by trading speculation, sneakers, sports star cards, whether there is really a need for assets to be put on the chain in the past two weeks, this demand has not been proven. In fact, most of the protocols currently operated by Plume are based on US bonds. Plume's preferred asset field has not been proven, and the competitiveness of its products on the US bond chain may not be sufficient.
Secondly, with the explosive increase in users, the usage model of the product must be simple. For most retail investors, assets such as bonds, private credit, and real estate are relatively far away, and the time cost is not equal to the expected benefits. Secondly, the issuers of such assets are also relatively limited. It is very difficult for Plume to attract such assets to the platform, which involves resource cooperation, legal terms and other frictions. Therefore, from this point of view, the asset categories that Plume can actually use are very single: green energy projects, NFT-type card assets, and US bonds. None of the three types of assets seem to be able to attract large-scale retail investors to participate. Therefore, there must be someone else in the RWA track that attracts incremental users. The listing of US stocks on the chain is the core scenario of To C. As @Wuhuoqiu said, it is a process from 0 to 1 to connect an asset to users who did not have channels to purchase it before.
Summarize
RWA has a bright future, but there are only a few infrastructures that specifically correspond to traditional asset management and open up on-chain liquidity. Plume is an infrastructure for the RWA track, a vertical full-stack architecture. In summary, Plume provides security and integrity credentials for real assets on the chain. The RWA assets on the chain are no longer fragmented. Through the Plume wallet, you can participate in DeFi applications, such as yield farming. On this basis, the regulatory risks of different RWA assets in different regions are fully covered, and the ecological applications can enjoy the natural traffic of the platform's broad user base. This is the definition of Plume's vertical architecture. Its relative integrity is scarce in the market, because for ToB RWA assets, in order to truly integrate RWA assets with DeFi gameplay, a high-integrity network architecture, a rich and complete ecological structure, and a smooth development kit are indispensable. However, for retail investors, the types of RWA assets provided by Plume may not be attractive enough, but this is already the ceiling of RWA infra in the market. Therefore, Plume's ultimate target customer group is institutions. It builds RWA assetization services for the entire life cycle of traditional assets from the bottom up. The ecosystem attracted by the vertical architecture and the users attracted by incentives are stepping stones to attract more top institutions.
Before the emergence of on-chain US stocks or other innovative RWA products, Plume, backed by Binance investment, can become the Infra leader of the RWA track by leveraging the aggregation effect of RWAFi. Plume's value capture comes from the acceleration of the narrative process. Therefore, those who buy or participate in Plume should hold the above reasonable expectations.
