Original | Odaily Planet Daily (@OdailyChina)
In the context of an unclear direction in the crypto market and a lack of new narratives, the real-world asset (RWA) sector is attracting the attention of global investors and institutions with its unique potential. As a bridge connecting traditional finance and Web3, RWA injects new vitality and possibilities into the market by tokenizing assets such as government bonds and real estate.
In this issue, Odaily Planet Daily invites three industry pioneers: Rania from Ondo Finance, Laura from Pharos, and Jeffrey from R2 Protocol, to discuss how RWA ensures asset authenticity, addresses pain points in traditional finance, enhances trading efficiency, and shares experiences of collaboration with top institutions. They also engage in a fascinating dialogue around regulatory challenges, industry vision, and the explosive opportunities for RWA, revealing the prospects and future of this sector.
Guest Introductions
Rania (Ondo Finance)
Hello everyone, I am Rania, responsible for sales and business development for Ondo Finance in the Asia-Pacific region. I have four years of experience in the Web3 industry, having previously worked at Bakkt for four years. A brief introduction to Ondo Finance: we are a U.S. blockchain technology company known for being the first to launch tokenized U.S. government bond products. We have two core products: USDY for the retail market and OUSG for institutional investors, with a total locked value (TVL) exceeding $1 billion, second only to BlackRock.
Laura (Pharos)
Hello everyone, I am Laura, and I joined Pharos two months ago, responsible for the market and strategy segment. Previously, I was in charge of marketing and sales for the first Solana phone at Solana Labs, and I have worked for many years in fintech at Visa and PayPal. Pharos is a high-performance Layer 1 public chain compatible with EVM, and our team has a strong background from Ant Group. The CEO is the former CTO of Ant Chain, and the core technical team has been deeply involved in blockchain technology for many years at Ant. We believe Pharos is the fastest public chain among EVM-compatible chains, capable of achieving 50,000 TPS and 2 Gbps throughput. In February-March of this year, we launched a public development network, and we will launch a test network next month. From a business perspective, we focus on the RWA sector because it is a blue ocean in Web3 with a huge existing market. The team's professional background and deep collaboration with Ant are our core advantages, and we expect to deploy hundreds of millions of dollars in assets on Pharos in the early stages.
Jeffrey (R2 Protocol)
Hello everyone, I am Jeffrey. I entered the crypto industry in 2017 and have nearly eight years of experience, having participated in multiple Web3 projects including Layer 1, Layer 2, DeFi, DEX, and lending. I am a serial entrepreneur. The R2 Protocol I lead is a stablecoin yield project based on real-world assets (RWA). We collaborate with compliant third-party asset management institutions, such as Ondo Finance, to integrate their financial products, providing underlying asset allocation and yield generation for our stablecoin R2USD. Our team consists of 13 members with an average industry experience of 4-5 years, covering both traditional finance and Web3. After six months of refinement, we are launching the testnet today, and we welcome everyone to experience it!
Question 1: How does RWA ensure the authenticity and credibility of on-chain assets? What technologies or processes are used?
Rania (Ondo Finance)
Ondo Finance is the only company in the industry that provides a comprehensive RWA solution, covering asset selection, platform construction, infrastructure, and partnerships to promote the on-chain of financial assets. We place great emphasis on compliance and collaborate with top institutions such as BlackRock and Franklin Templeton. Regarding the authenticity and credibility of assets, we adopt a "bankruptcy isolation" framework to ensure that investors have priority repayment rights. For example, our USUY and OUSG products are backed 1:1 by U.S. government bonds and bank deposits, with a collateralization ratio of at least 103%. These assets are regularly verified by an independent institution, ANKURA Trust, ensuring legal protection and asset security for holders.
Laura (Pharos)
As a public chain, we collaborate with multiple asset issuers, such as Ant Group. We find that different assets have varying needs for rights confirmation; some assets are easier to confirm due to their characteristics, while others are more challenging. For instance, the new energy assets (such as photovoltaics, energy storage, and battery swapping) in China and the Middle East that we collaborate with Ant on have outputs and credibility that are difficult to measure. They use AIoT devices, such as sensors installed on solar panels or energy storage devices, to collect real-time data, such as power generation. This data is packaged and put on-chain to support asset pricing and credibility. Since these assets can generate electricity, the data is naturally suitable for on-chain. We work with issuers to customize the rights confirmation process based on asset characteristics to ensure authenticity and credibility.
Jeffrey (R2 Protocol)
Our approach is somewhat different from the previous two guests. R2 Protocol has many years of experience in the crypto field, and our advantage lies in the Web3 ecosystem. Our strategy is to collaborate with compliant RWA asset issuers, such as Superstate, Securitize, and Centrifuge. We operate on a "leveraging strengths and avoiding weaknesses" model; they are responsible for asset compliance and tokenization, while we reach their products through KYB, KYC, and asset verification, using them as one of the underlying asset packages for R2 USD, providing them to users while considering liquidity, risk, and yield. This collaborative approach relies on the professionalism of the issuers to ensure that the assets are authentic and credible.
Question 2: What concerns does traditional finance have regarding RWA? How does the project address these concerns?
Jeffrey (R2 Protocol)
The main concerns traditional finance has regarding RWA include unclear asset ownership, lack of transparency in the use of funds, and differences in regulatory terms across regions. For example, the MiCA regulations in Europe have caused headaches for many tokenization institutions. DeFi has already solved most of these issues; for instance, asset transfer records can be publicly queried on-chain, providing high transparency. At R2, we add a layer of more reliable endorsement. User funds flow into compliant products, such as Ondo Finance's OUSG, but we do not place these assets in our own wallets or foundation accounts; instead, we transfer them directly to compliant custodians, such as Copper or Fireblocks, through smart contracts. R2's smart contracts are only responsible for dividend and interest calculations, without touching the underlying assets themselves. This design makes the flow of funds transparent and reliable, addressing the issues of unclear ownership and lack of transparency in funds. Additionally, we publish audit reports of the underlying assets monthly in collaboration with third-party auditing firms and custodians.
Question 3: What are the difficulties and thresholds for trading RWA assets? How does the project simplify trading and enhance market activity?
Rania (Ondo Finance)
At Ondo, we mainly address three issues in traditional finance: accessibility, transparency, and market operational efficiency, which we refer to as "Wall Street 2.0." In terms of accessibility, global investors find it difficult to access U.S. financial products due to high thresholds, minimum balances, and fees. Tokenization allows U.S. bonds and stocks to be put on-chain like stablecoins, making it easier for users to purchase. Regarding market efficiency, purchasing U.S. stocks in traditional markets incurs high costs and requires waiting 2-5 days for bank postings, which is very inconvenient. We improve efficiency through on-chain processes and support more DeFi scenarios, such as allowing users to use these assets as collateral in lending protocols to enhance capital efficiency. Currently, our retail market product USUY has reached $600 million in TVL, and our institutional product OUSG has reached $400 million in TVL, supporting nine chains, including Solana's Drift Protocol, Sui's Aave, and Arbitrum's Camelot, allowing users to trade or lend at any time. In the RWA T-Bill market, Ondo holds an 85% market share.
Jeffrey (R2 Protocol)
Traditional RWA assets, such as government bonds and money market funds (MMF), generally lack trading liquidity, and ordinary investors do not know where to invest in U.S. stocks or bonds, or they face complex KYC processes, making high-quality investment products nearly inaccessible to them. R2 Protocol provides a simple and fast channel for small and medium investors through the R2 USD stablecoin, allowing them to access high-quality financial products with low or even no thresholds and obtain safe and stable returns. We are a crypto-native team that simplifies the user experience through DeFi, with Web2 providing real returns and Web3 offering simplification and transparency, complementing each other. However, we also find a problem: some RWA issuers support fewer chains, such as only supporting Ethereum, while fewer like Ondo support multiple chains, indicating a need for more cross-chain collaboration in the future. Currently, issuers mainly issue on Ethereum, with Solana and Arbitrum as preferred choices, and Move chains also have potential.
Question 4: Can you share successful cases of collaboration with RWA projects? How effective is the collaboration with traditional banks or institutions?
Rania (Ondo Finance)
Ondo collaborates with several top global institutions, including BlackRock, Franklin Templeton, WisdomTree, and Wellington asset management companies. We support the OUSG product with their assets while providing them with 24/7 cash liquidity, allowing assets to be exchanged for USDC at any time, which is rare in traditional finance. Many large companies want to participate in RWA tokenization but lack an understanding of crypto user needs, which is Ondo's strength. We help them design products and processes, and currently, the scale of OUSG has reached $400 million. Another example is our collaboration with Mastercard and Morgan Stanley two months ago, establishing a tripartite relationship. Users can instantly put bank dollars on-chain or convert on-chain stablecoins back to their bank accounts, eliminating the 2-5 day posting time. This seamless model greatly enhances the user experience.
Laura (Pharos)
We are currently in the testnet preparation phase, and I can share an incubating case combined with Ant Group's experience. We believe that RWA assets have geopolitical imprints; not all Asian assets want to be tokenized on NASDAQ or the NYSE. Therefore, we are building a Layer 1 public chain that focuses on Asia. Ant has completed multiple RWA business operations in the Hong Kong Monetary Authority's Assemble sandbox, such as photovoltaic projects in Hunan and Hubei (hundreds of millions of RMB), battery swapping assets (tens of millions of HKD), and charging pile assets in collaboration with Longxing. These assets are put on-chain through AIoT technology, anchoring the rights to income. Our collaboration will go further, as Ant will issue assets on Pharos, with income rights distributed in the form of stablecoins, combined with Pharos token incentives, achieving an annual yield of 15-18%. We also plan to launch an RWAFi layer, allowing LPs to borrow stablecoins with RWA tokens and circulate them in the DeFi ecosystem. This not only enhances capital efficiency but also provides financing channels for enterprises through "Mini IPOs," increasing GDP.
Jeffrey (R2 Protocol)
We are still in the early stages of the testnet and currently do not have our own case, but I can share a friend's project, which is similar to the model Laura mentioned. They are tokenizing rental income from prime real estate rather than tokenizing the properties themselves. Users invest in rental income rights, while the project team attracts both Web3 and traditional funds to expand the company's scale and reinvest the raised funds into quality real estate to generate more income. This model is applicable to any asset that generates real income, such as real estate or other fields. By attracting both on-chain and off-chain funds through tokenization, it resembles an IPO, expanding the business scale. I know many companies are already doing similar things, and this is definitely a trend for the future.
Question 5: What strategies does the project have in response to regulatory uncertainties?
Jeffrey (R2 Protocol)
In my view, RWA is the intersection of traditional finance (TradFi) and DeFi, and compliance is the moat for every project. We do not issue tokenized assets but collaborate with third-party issuers, which requires passing their KYB and asset verification processes, involving a lot of legal and compliance documentation. The calculation and distribution of income must consider whether it is defined as a security and the different legal terms in various countries. Our team includes part-time lawyers, and we collaborate with a law firm to advance compliance matters. Since we are not the issuers, we do not need to apply for licenses, but issuers like Ondo may need to, as there are different licensing requirements for asset issuance in places like Hong Kong and Singapore.
Rania (Ondo Finance)
Ondo operates under the exemption provisions of the U.S. SEC and does not directly hold licenses. Our assets are managed by licensed brokers, such as purchasing U.S. government bonds through Morgan Stanley and StoneX. Ondo positions itself as a technology company responsible for the on-chain process. When selling products in other countries, we collaborate with local licensed companies to ensure compliance. We adopt a proactive communication model, closely collaborating with regulatory agencies to ensure that our products meet legal standards. Currently, we rely on exemptions in the U.S., and in the future, we will communicate with more regulatory agencies in other countries to launch new products.
Laura (Pharos)
Regulation is the biggest challenge for RWA, and all practitioners would agree. We respond from three dimensions: first, we choose regions with clear regulatory frameworks, such as the U.S., Dubai, Singapore, Hong Kong, and the Cayman Islands. From our communications with lawyers, we see a trend toward global compliance convergence, hoping that in the future, assets issued in one region can be used in others without significant adjustments. Second, we select compliant asset issuers, such as Ant issuing assets in the Cayman Islands, ensuring compliance from the source. Third, we adopt a conservative strategy in the early stages, such as blocking U.S. individual users and only opening on-chain assets to qualified investors. We position ourselves as infrastructure, not issuing assets, but using DeFi and the RWAFi layer to prosper the RWA ecosystem.
Question 6: How does RWA improve traditional finance? What are the long-term goals of the project?
Rania (Ondo Finance)
Ondo is committed to addressing the issues of accessibility, transparency, and market efficiency in traditional finance. The rise of RWA in the past two years can be attributed to three reasons: the maturity of blockchain technology supporting large-scale financial applications; a surge in market demand for traditional assets; and the gradual improvement of regulatory frameworks for tokenization and RWA in various countries. Looking ahead to 2025, RWA will transition from concept to more products accelerating on-chain, with stablecoin issuers and large companies joining in, not limited to U.S. government bonds, as U.S. stocks and other assets will also go on-chain. Ondo plans to launch tokenized U.S. stock products within the year, creating a permissionless ecosystem that allows anyone to easily purchase. We hope that traditional finance and the on-chain ecosystem will increasingly integrate, promoting "Wall Street 2.0," enhancing efficiency, transparency, and accessibility based on RWA.
Laura (Pharos)
I completely agree with Rania's perspective. RWA is a blue ocean for Web3 and traditional finance. From the perspective of asset issuers, high-quality assets are difficult to finance efficiently in traditional markets for various reasons, and Web3 can achieve "mini-IPOs" through tokenization, genuinely creating GDP. From the perspective of buyers, RWA's permissionless nature and high accessibility allow more people to access quality assets, building a new internet capital market. From the angles of Web3 and TradFi, the DeFi and RWAFi infrastructure of Web3 significantly enhances capital efficiency, while the asset stock of TradFi, such as real estate worth tens of trillions of dollars, could double the Web3 market if even 0.1% goes on-chain. Pharos's long-term goal is to become the underlying infrastructure for global exchanges, supporting securities, commodities, or other spontaneous exchanges, combining RWAFi and DeFi layers to allow RWA assets to serve as collateral while generating income, revitalizing DeFi scenarios, and enhancing liquidity and capital efficiency.
Jeffrey (R2 Protocol)
The previous two have already comprehensively discussed the advantages of RWA. Whether RWA can improve traditional finance depends on whether it can provide value, whether in the long term or short term. From the data, the RWA market is expected to grow by 85% from 2024 to 2025, reaching $15.2 billion in 2025, and doubling year by year, indicating strong market demand. In the past, Web3 projects relied heavily on narrative-driven approaches, but now everyone is focused on providing real value, such as Uniswap providing trading scenarios. RWA meets users' demand for stable returns by putting real income on-chain, especially in unstable market conditions. Our long-term goal is to collaborate with compliant third-party RWA issuers to put real income on-chain, forming products through strategic thinking to provide users with stable returns. In the future, we will launch diverse products targeting different users, such as high-risk, high-return options, which are difficult to provide in traditional finance. The core is to provide users with real returns.
Question 7 (Additional): When might the RWA sector explode? What opportunities or expectations are there?
Rania (Ondo Finance)
The definition of an explosion is very important. Stablecoins are a successful case of RWA, bringing the dollar on-chain. However, it will take time for ordinary users to widely purchase assets like U.S. stocks. I wish I had a crystal ball to predict the specific timing, but we have seen the market demand for traditional assets grow several times from last year to this year, and there may be breakthroughs this year or next. There should be hope before 2025; we need to patiently build.
Laura (Pharos)
I agree with Rania's perspective, and I also wish I had a crystal ball to tell me the timing. The explosion of RWA may be the most challenging task facing Web3 practitioners. Purely on-chain ecosystems like DeFi can loop within Web3, but RWA requires TradFi and Web3 to connect, and the financial language and on-chain contract language currently cannot communicate directly. Many visionary projects, such as Ondo, Pharos, and R2, are promoting RWA from different angles, which gives us confidence in the future. An explosion requires the integration of technology, finance, and regulatory aspects, and the participation of more institutions and governments is a key opportunity. Although the timing is uncertain, more and more smart people are willing to try.
Jeffrey (R2 Protocol)
I strongly agree with Laura's perspective. The explosion of RWA is limited by compliance policies in various countries and will be a gradual process. Compared to two or three years ago, RWA has made significant progress, with an increase in asset categories and stronger regulatory support, already slowly exploding. As regulations clarify and market demand grows, RWA will gradually become a mainstream sector.
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