Analyze the differences between USD RWA and other RWA from four perspectives: What Alpha opportunities can be captured from them?

Author: ABC Alpha Researcher

Recently, the cryptocurrency market has continued to be sluggish, but the market has begun to hotly discuss RWA (Real World Assets).

Some people believe that RWA is a trillion-dollar market because: "USDT and USDC are the earliest and most successful US dollar RWAs, with a market value of nearly 300 billion US dollars. A large number of off-chain assets such as real estate, stocks, bonds, etc. can be put on the chain, which is a huge opportunity."

This statement makes sense at first, but it is problematic if you think about it carefully. RWA is not a monolithic entity. The difference between USD RWA and other RWAs is huge, and they are not even comparable. If other RWAs want to develop rapidly, they still need to find their own development paradigm while learning from USD RWA.

As an investor, if you want to find Alpha opportunities in the RWA track, you first need to clarify the difference between USD RWA and other RAW.

Below, ABC Alpha will analyze the differences between the two from four perspectives, helping you to see the current situation and challenges of non-monetary RWA, so as to find opportunities to capture Alpha in the RWA track.

1. Usage scenario: The demand for USD RWA is clear, but the demand for most RWA is still vague

USDT and USDC are digital extensions of the US dollar, serving the transaction settlement, cross-border payment and risk aversion needs of the cryptocurrency market. These scenarios are high-frequency and rigidly needed. For example, in countries with severe inflation (such as Argentina and Türkiye), the US dollar stablecoin has become a powerful tool for protecting wealth, and user demand is strong.

In contrast, other RWAs, such as real estate tokenization, are mainly aimed at achieving global financing or improving asset liquidity through blockchain. This type of demand is low-frequency and has a limited user base. Players in the crypto market are more willing to invest their funds in native assets such as BTC, ETH or Meme coins. Off-chain assets with good returns already have mature financing channels, while assets with poor returns are actively seeking to be on-chain, which further limits the market size.

Summary: USD RWA is the "supply side" that provides liquidity to the crypto market, while other RWAs are the "demand side" that seeks liquidity. Although the names are the same, the essence is different. So, are there other non-monetary RWAs that can provide liquidity to the crypto market?

2. Compliance and trust: USD RWA is mature, but most other RWAs are still lacking

Regulatory adaptability

USDC is issued by the regulated Circle, and its reserves are regularly audited and in compliance with US currency regulations; although USDT has been embroiled in controversy, it has won market trust through in-depth cooperation with exchanges. The supervision of other RWAs is much more complicated. For example, real estate on-chain involves legal ownership confirmation and cross-border judicial issues, which currently lack unified standards and are difficult to expand rapidly.

Trust Foundation

The core of RWA is the tokenization of credit. The US dollar RWA is anchored to the US dollar, backed by the US national credit, and users have a very high degree of trust. Other RWAs rely on the credit of the issuer of the off-chain assets. For example, the tokenization of real estate requires an authoritative institution to prove ownership, otherwise users dare not believe that the on-chain tokens really correspond to the physical objects.

Summary: The trust foundation of USD RWA is unparalleled and difficult for other RWAs to reach. RWA categories with low compliance thresholds and easy trust building are worth paying attention to in the short term.

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

The technical logic of the US dollar stablecoin is clear: on-chain issuance and redemption, low threshold. The US dollar and US bonds are standardized assets with low audit and tracking costs. Other RWAs involve complex links such as asset valuation, dividend distribution, and liquidation, and require oracles to verify off-chain data in real time. The on-chain processes of different assets (such as real estate) vary greatly, and compliance standards and technical implementation are difficult, so development is naturally slow.

Summary: Non-standard RWA requires customized standards for each type of asset, and it is difficult to make a breakthrough in the short term. However, it is relatively easy to standardize RWA such as gold and bonds.

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

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

However, RWAs such as real estate and stocks are mostly driven by large institutions due to financing or liquidity needs, which is a top-down model. Ordinary users and entrepreneurs have low participation.

Summary: The bottom-up development approach is more suitable for the characteristics of the Crypto industry. RWA projects that focus more on community development are more likely to gain users.

Summary and Outlook

The success of USD RWAs such as USDT and USDC is inseparable from clear demand, high liquidity, a solid trust foundation, low technical barriers and bottom-up market drive. Other RWAs are trapped by ownership mapping problems, regulatory uncertainty, technical complexity and traditional interest resistance, and their development is difficult.

In the future, if other RWAs want to break through, they need to work hard in the following directions:

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

2. Compliance framework: Establish segmentation standards by asset category to accelerate the compliance process.

3. Infrastructure: Improve RWA oracle, issuance platform and cross-chain liquidity protocol.

As investors, we should clarify the difference between USD RWA and other RWA and see clearly the current development status of the RWA track.

First of all, we need to pay attention to the development of the RWA compliance framework in the United States. At the same time, we should pay attention to RWA assets (gold, bonds) that are easy to standardize and transparent. At the same time, we should pay more attention to infrastructure-type projects in the RWA track, such as RWA oracles, RWA issuance platforms, RWA liquidity protocols, etc.