From Bitcoin spot ETFs to the tokenization wave, institutional power represented by Wall Street is profoundly affecting and changing the direction of the crypto market, and we believe that this power will become stronger in 2025. OKG Research has launched a series of research on "On-chain Wall Street" to this end, and continues to pay attention to the innovation and practice of traditional institutions in the Web3 field. Let's see how top institutions such as BlackRock and JPMorgan embrace innovation? How will tokenized assets, on-chain payments and decentralized finance shape the future financial landscape?

This article is the fifth chapter of the series of research on "On-chain Wall Street". To understand past information, click to view:

1. Wall Street accelerates "on-chain"

2. How long does RWA tokenization have left for Hong Kong?

3. The game of thrust behind Wall Street's "on-chain" route

4. BTC fell sharply, SEC released YLDS and opened the era of stablecoin returns

Lily, chairman of the Solana Foundation Liu recently said when talking about RWA, "Most RWAs are valuable but have no price because they are not traded." This sentence accurately hits the core issue of the current RWA development: Although RWA itself is an asset with actual value, due to the lack of on-chain usage scenarios and continuous liquidity, the asset value after being opened is actually separated from the price, making it more difficult to achieve true free circulation. OKG Research believes that the significance of RWA has never lies in simply "moving" assets to the chain, but also in activate their liquidity through going up the chain, so that the asset value will be from "visible on the chain" to "available on the chain". Among these, the integration of RWA and DeFi is the most critical.

When talking about RWA, you will always think of those exaggerated predictions: Manhattan apartments are divided into NFT shares, and Tesla stocks are turned into on-chain tokens. These are now becoming a reality, and more and more real assets are beginning to migrate to the on-chain. According to incomplete statistics from OKG Research, as of March 26, the total market value of the RWA sector (except stablecoins) has reached US$20 billion, an increase of 25.4% year-on-year, achieving an increase of 109.27% ​​compared with the same period in 2024, significantly better than otherCrypto Assets sector.

Behind the dazzling numbers is the market's recognition of the concept of RWA. We see that traditional financial institutions often take months to complete private bond issuance, and gold delivery on the London Gold Exchange also requires 72 hours of liquidation. But on the chain, we can shorten the time for asset chaining to seconds, and Gas fees only require single digits. This huge gap in efficiency has driven the attention and participation of more and more traditional financial institutions. Larry Fink, CEO of the world's largest asset management company, once pointed out that ETFs are the first step in the technological revolution in the financial market, and the next step is tokenization.

Although RWA is expected to become the next trillion-dollar market, if it only stays at the level of "asset chaining", it will only put a shell of blockchain technology on traditional financial products, and its potential will not be fully released. Taking traditional bonds as an example, although T+0 settlement can be achieved after tokenization, if there is a lack of liquidity pools, lending agreements or derivatives markets, these tokens are still just "electronic certificates" controlled by centralized institutions. As Reid Simon, head of credit at Securitize, said: "RWA is inadequate in practicality, limiting the on-chain flow of high-quality assets." More importantly, in the process of promoting assets to be chained, traditional financial institutions usually need to go through cumbersome liquidation, custody and compliance processes. These processes ensure asset security, but also greatly restrict the popularity and development of tokenized applications. Tokenization platforms led by large institutions such as Goldman Sachs and Morgan Stanley often rebuild financial privileges through strict KYC and entry thresholds. BlackRock's BUIDL fund is only open to million-dollar institutions, and this "democratization" is often just under the slogan of the elite, which makes ordinary investors unable to truly benefit from it.

At the moment when RWA became popular, OKG Research wants to reiterate that the development of RWA must be integrated with DeFi.

Although traditional financial institutions are compliant and stable in the process of asset tokenization, their geographical limitations, efficiency problems and regulatory obstacles make it difficult for tokenized assets to circulate globally. If you rely entirely on traditional financial institutions, RWA can only flow in closed circles, and global capital cannot participate widely. Without DeFi support, RWA cannot form a truly open and free market system. The transaction efficiency is inefficient and the price discovery mechanism is imperfect, which may eventually evolve into a brand new "asset island".

The openness and global advantages of DeFi will inject new vitality into the tokenization of RWA. Taking real estate as an example, how can ordinary investors participate in a office building worth hundreds of millions of dollars? DeFi's answer is that by packaging the mortgage loan of the office building into NFT and dividing it into tokens of different risk levels, it can be connected to liquidity pools such as Aave. In this way, ordinary investors can buy "low-risk" tokens for $50 to share the fixed income of office rentals; while professional investors can use "high-risk" tokens for leverage arbitrage.

This "fragmentation + composability" model allows the value of a single asset to be a multi-dimensional return combination for global investors. Through the liquidity pool of DeFi, RWA tokens can not only provide investors with more diversified choices, but also improve the liquidity of the overall market and promote efficient allocation of capital.

More importantly, the integration of RWA and DeFi will also provide a more stable return channel for the market. The current yield of US bonds is about 5%, and with the help of lending and lending protocols in DeFi, investors can often get more attractive returns. DeFi's efficient matchmaking and clearing mechanism can also bring more efficient market-oriented services to RWA, which will attract more investors to enter the tokenized market and further expand the market demand and application scope of RWA.

On the other hand, the development of DeFi is also inseparable from RWA. In the past, the returns of DeFi mainly relied on pledge, borrowing and trading activities of high-volatility crypto assets, but often exposed practical problems such as insufficient liquidity and decline in yields. The introduction of RWA assets can not only bring more stable assets with real value support to the DeFi ecosystem, but also provide users with stable risk-free returns when the market is sluggish. Compared with traditional high-volatility assets, this stability is exactly what the DeFi platform urgently needs when attracting institutional funds and long-term investors. With the support of RWA's stability and compliance, DeFi's unique high efficiency and openness are expected to be more fully released in the future.

The integration of RWA and DeFi is essentially an injecting Wall Street financial logic into the programmable gene that injects Wall Street's financial logic into blockchain. When an office building can automatically convert rental income into tokenized interest, and when a digital artwork can be fragmented into the collateral of hundreds of DeFi lending pools, finance will no longer be a game for a few people, but an open source agreement for global liquidity.

This revolution does not pursue the subverting of the value of gold, but allows everyone to become a "market maker" of their own assets. Just like Satoshi NakamotoThe newspaper title engraved in the Genesis block: "The Chancellor of the Exchequer stands on the brink of the second round of bank bailouts" - Fifteen years later, RWA and DeFi are working together to write the next chapter: "Tokenization is touching the edge of reconstructing traditional finance."