Author: @BlazingKevin_, the Researcher at BlockBooster
The narrative of RWA has been ongoing for many years, and everyone knows it has a vast ceiling, a beautiful narrative that could bring incremental funds to the Crypto industry that have never been seen before. However, the intuitive feeling in the market for a long time has been "loud thunder but little rain." High thresholds and long cycles have made RWA in Crypto a game for institutions—funds have come in, but they merely remain stagnant. The reason is that for Crypto to enjoy the incremental funds of RWA, it must accept the corresponding game rules. The regulatory and legal shadows under "incremental" have detached Crypto's RWA from the masses, leaving it on the shelf.
First, let’s answer why we need to build infrastructure in the RWA track. There are three reasons: 1. The RWA sub-tracks are too fragmented: real estate assets, art collectibles, securities-type assets, supply chain finance, cross-border trade, etc., the learning and transaction costs of moving between different platforms are too high; the difficulty of off-chain compliance endorsement is high, and for different physically mapped assets, users need to hold separate trust assumptions, with a market shortage of integrated professional endorsement platforms; the relevant risks of regulatory and legal frameworks, which are the easiest to understand but hardest to overcome obstacles. Plume, in the form of Infra, has corresponding solutions for the above pain points, as detailed below.
Secondly, what is the product moat that can only be achieved after building infrastructure? If Plume only creates a token issuance and compliance platform, it would only have completed its first step vision for RWAFi. Under the premise of establishing a complete framework, Plume combines the advantages of the chain to integrate RWA and DeFi, breaking the dilemma of low trading volume and low attention in traditional financial RWA projects. How to break it? By lowering the entry threshold for RWA assets—users can start various yield-generating operations directly in the Plume wallet; enhancing security—Plume flexibly meets regulatory requirements with a modular mindset, high security combined with low thresholds makes Plume attractive to existing Crypto users, and has the potential to convert the aforementioned low liquidity stock dividends into high liquidity on-chain assets that users can engage with. Plume's core appeal is to attract institutions into a thriving ecosystem. Therefore, regarding how to define this prosperity, Plume's answer is to provide real yields and real use cases. After the Memecoin narrative fades, finding PMF with real yields in the industry is the consensus among all IQ100 players. This is also what I mentioned in my previous article about returning to long-termism, where investors' focus lies.
Before diving into the fundamentals of Plume, the last question is, does RWAFi have advantages compared to DeFi? To realize these advantages, what risks need to be undertaken? The yield types in DeFi are endogenous yields, and the logic of three Ponzi schemes can cover most DeFi protocols, meaning these yields are generated and transmitted within a closed-loop system. When Crypto players face DeFi protocols, they subconsciously think about who will take over? Who will they sell to? What kind of beautiful logic should be painted for buyers? These subconscious thought patterns are caused by the objective volatility of yields and the token models of Ponzi designs that will eventually collapse at some point. The combination of RWA and DeFi breaks the limitations of endogenous yields, obtaining additional yields through operations like lending and staking while enhancing the liquidity of RWA assets, allowing real assets to gain support from DeFi, and solidifying the value foundation of DeFi yields.
There is a lot of information about Plume's fundamentals, so I will briefly outline it along the thread of "real assets and real yields."
First, let's look at Plume's asset management classification. Plume is RWA infrastructure and manages RWA assets on its platform, with the first batch of over 180 ecosystem projects and an asset management scale of 1.25 billion. From the perspective of asset management types, there are three categories:
Collectibles: sneakers, Pokémon cards, watches, wine, and artworks
Alternative assets: private credit, real estate, or green energy projects
Financial instruments: stocks or corporate bonds
Next, let's review the pain points of RWA assets: many RWA projects overly restrict assets when bringing them on-chain in a way that worsens their liquidity to achieve compliance, such as requiring KYC, setting lock-up periods of 3-5 years, or only offering low yields of 3-5%.
In response, Plume's solution is not just to tokenize physical or synthetic assets on-chain but to take it a step further and make these assets useful. By bringing real yields through yield-generating assets and introducing real users from existing markets.
To serve this goal, Plume makes changes when bringing assets on-chain, determining the issuance form: whether as NFTs, tokens, or a combination of assets. By shaping products reasonably, it aims to enhance asset liquidity, increase yields, and reduce risks. Purchasing these assets can yield a stable annual return of 10-20% in stablecoins, along with additional native tokens from the protocol and Plume incentives.
To make this architecture operational, Plume's four main components play a crucial role:
Tokenization and issuance system Arc;
Dedicated oracle Nexus for the RWA track;
Aggregated asset management public tools that integrate different token standards and other on-chain DeFi composability smart wallets Passport;
Through the mirrored YieldToken, allowing users to access institutional-level RWA yields without permission via the cross-chain bridge SkyLink.
Thus, Plume's overarching premise to attract institutions is to build a thriving RWA public chain. To achieve this goal, it is essential to attract crypto-native users. Plume offers two major categories of preferred asset fields: first, yield-generating assets, such as green energy projects, which are safe and stable, but from the ecosystem list on the official website, there are not many green energy projects available for participation, and some projects that open solar asset channels require a lock-up of 5-10 years. The second category targets trading and speculative users; Plume believes that speculation on sneakers or cards is a widespread demand, so for these types of assets, Plume provides purchasing, collateral lending, and asset synthesis trading methods.
Regarding security and integrity, we can discuss physical assets and yield assets separately. The tokenization of physical assets involves storing physical assets in secure locations and minting tokenized versions of those assets on-chain; yield assets will be directly integrated with devices, such as direct integration with solar energy equipment.
Finally, regarding regulatory and legal requirements, to address different regional and regulatory demands, Plume relies on corresponding partners to flexibly switch licenses.
Having discussed Plume's fundamentals, it is evident that its advantages and disadvantages are very clear. The advantages include being comprehensive and compliant with regulatory legal requirements; providing a complete solution from development to operation, allowing a smooth path for physical assets to issue tokens; after Binance's investment, it occupies a leading position in RWA infrastructure, and when the RWA hotspot returns, the chances of $PLUME being speculated are high; the narrative of RWAFi has entered the spotlight, and real assets with real yields add new qualities and imaginative space to Crypto.
The ultimate pursuit of RWA in the Crypto industry is incrementality—incremental funds and incremental users. Plume provides the foundational support for the RWAfi public chain platform in the form of infrastructure. As long as the market value of the RWA track steadily increases in the future, Plume has high expectations to be the first to capture value. Plume's core users are institutions and DeFi protocols, thus targeting the vast majority of 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, reducing friction caused by development and migration, achieving accelerated iteration.
However, corresponding disadvantages also arise. Plume appears to have over 180 ecosystem projects, but this number has not grown in nearly six months. The initial ecosystem seems to have exhausted all its cards, and the actual activity within the ecosystem is not optimistic. Plume looks like a compliant and complete shell that allows institutions to connect smoothly and enables existing DeFi protocols to migrate seamlessly. Plume is a project that needs to be monitored for its fundamentals because it is infrastructure. However, in the past year, the market has become wary of infrastructure, with many hollow infrastructures becoming ghost towns after issuing tokens. Setting aside chip analysis, the infrastructure label is a characteristic of Plume, but it may also become a source of resistance for retail investors.
Is Plume the most reliable value capture in the RWA track? It may be currently, but it is likely to be replaced in the future. The significance of RWA lies in incrementality—incremental funds and incremental users. Plume currently has persuasive appeal in attracting incremental funds, but not necessarily for user increment. Returning to the real use cases of yield-generating assets preferred by Plume, such as power plants and oil wells, and secondly, trading and speculative types like sneakers and sports star cards, whether these assets truly need to be brought on-chain in the past two weeks has not been proven. In fact, most of the protocols currently operating in Plume are primarily based on U.S. Treasury bonds. The preferred asset fields of Plume have not been validated, and the competitiveness of products on the U.S. Treasury bond chain may not be sufficient.
Moreover, explosive user increments require that the product usage model be simple. For most retail investors, assets like bonds, private credit, and real estate are relatively distant, and the time cost does not equate to expected benefits. Additionally, the issuers of these types of assets are also relatively limited, making it challenging for Plume to attract such assets to the platform, involving friction in resource cooperation, legal terms, and other aspects. Therefore, looking at it this way, the actual usable asset categories for Plume become very singular: green energy projects, NFT-type card assets, and U.S. Treasury bonds. None of these three asset types seem capable of attracting large-scale retail participation. Thus, the RWA track that attracts user increments will inevitably have other players. U.S. stocks on-chain represent a core scenario for To C, as @Wuhuoqiu said, breaking through to users who previously had no channels to purchase an asset through on-chain is a process from 0 to 1.
Summary
The prospects for RWA are broad, but there are very few infrastructures specifically addressing traditional asset management and on-chain liquidity. Plume is an infrastructure for the RWA track, a vertical full-stack architecture. In summary, Plume provides security and integrity certificates for real assets on-chain, and the on-chain RWA assets are no longer fragmented. Through Plume's wallet, users can participate in DeFi applications, such as yield farming, while fully covering the regulatory risks of different RWA assets in different regions, allowing ecosystem applications to enjoy the natural traffic of a broad user base on the platform. This defines Plume's vertical architecture, and its relative completeness is rare in the market because for ToB RWA assets, to truly integrate RWA assets with DeFi gameplay, a highly complete network architecture, a rich and well-structured ecosystem, and smooth development kits are essential. However, for retail investors, the variety of RWA assets offered by Plume may not be attractive enough, but this is already the ceiling for RWA infra in the market. Therefore, Plume's ultimate target customer group is institutions, building a full lifecycle RWA assetization service for traditional assets from the bottom up, with the ecosystem attracted by the vertical architecture and the users incentivized to attract more top-tier institutions as a stepping stone.
Before on-chain U.S. stocks or other innovative RWA products emerge, Plume, backed by Binance's investment, can leverage the aggregation effect of RWAFi to become the leading Infra in the RWA track. Plume's value capture comes from the acceleration of the narrative process, so buying or participating in Plume should hold the above reasonable expectations.
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