Author: HTX Ventures Source: medium

Since the DeFi Summer of 2020, AMM (Automated Market Making) providers), lending protocols, derivatives trading, and stablecoins have become core infrastructure in the crypto trading space. Over the past four years, many entrepreneurs have continued to iterate and innovate on these tracks, pushing projects such as Trader Joe and GMX to new heights. However, as these products gradually mature, the growth of the encryption trading track begins to hit the ceiling, and the birth of a new batch of top projects becomes increasingly difficult.

After the 2024 US election, the legalization and compliance process of the encryption industry is expected to bring new development opportunities to the industry. The integration of traditional finance and DeFi is accelerating: real assets (RWA) such as private credit, U.S. Treasury bonds, and commodities have gradually evolved from simple tokenized certificates in the early days into capital-efficient income-based stablecoins. It provides users with new choices and becomes a new growth engine for DeFi lending and trading. At the same time, stablecoins are playing an increasingly important strategic role in international trade, and the upstream and downstream infrastructure of the payment circuit continues to prosper. Traditional financial giants, including the Trump family, Stripe, PayPal and BlackRock, have accelerated their deployment to inject more possibilities into the industry.

After "old DeFi" such as Uniswap, Curve, dYdX and Aave, a new batch of unicorns in the crypto trading field are brewing. They will adapt to changes in the regulatory environment, leverage the integration of traditional finance and technological innovation to open up new markets and push the industry into the "new DeFi" era. For new entrants, this means that they no longer need to focus on micro-innovations in traditional DeFi, but instead focus on building breakthrough products that meet new environments and needs.

This article is written by HTX Ventures. It will conduct an in-depth analysis around this trend, explore the potential opportunities and development directions in the new round of changes in the encryption trading track, and provide Industry participants provide inspiration and reference.

Changes in the trading environment of this cycle, stablecoin compliance has passed, and the adoption rate in cross-border payments continues to increase

Maxine Waters and Chairman Patrick of the U.S. House of Representatives Financial Services Committee McHenry plans to introduce a stablecoin bill in the near term, marking a bipartisan move on stablecoin legislation in the United States.a rare consensus. Both parties agreed that stablecoins can not only consolidate the U.S. dollar's status as the global reserve currency, but also become an important buyer of U.S. Treasury bonds, which contains huge economic potential. Tether, for example, demonstrated its profitability last year by generating $6.3 billion in profits with just 125 employees.

This bill may become the first comprehensive cryptocurrency legislation to pass Congress in the United States, promoting traditional banks, enterprises and individuals to have widespread access to encrypted wallets, stablecoins and cryptocurrencies based on Blockchain payment channel. In the next few years, stablecoin payments are expected to become popular, becoming another "step development" in the crypto market after Bitcoin ETFs.

Although compliant institutional investors cannot directly benefit from the appreciation of stablecoins, they can profit by investing in stablecoin-related infrastructure. For example, mainstream blockchains that support a large supply of stablecoins (such as Ethereum, Solana, etc.) and various DeFi applications that interact with stablecoins will benefit from the growth of stablecoins. Stablecoins currently account for over 50% of blockchain transactions, up from 3% in 2020. Its core value lies in seamless cross-border payments, a feature that is growing particularly rapidly in emerging markets. Taking Türkiye as an example, stablecoin trading volume accounts for 3.7% of its GDP; while in Argentina, the stablecoin premium is as high as 30.5%. Innovative payment platforms such as Zarpay and MentoLabs use local agents and payment systems to attract users into the blockchain ecosystem with grassroots market strategies, further promoting the popularity of stablecoins.

Currently, the size of the cross-border B2B payment market processed by traditional payment channels is approximately US$40 trillion, while the global consumer remittance market generates hundreds of billions of US dollars annually. income. Stablecoins provide this market with a new means of achieving efficient cross-border payments through encrypted channels. The adoption rate is increasing rapidly. It is expected to enter and subvert this part of the market and become an important force in the global payment landscape.

https://mirror.xyz/sevenxventures.eth/_ovqj0x0R_fVAKAKCVtYSePtKYv8YNLrDzAEwjXVRoU< /em>

RLUSD launched by Ripple Stablecoins are designed specifically for corporate payments and aim to improve the efficiency, stability and transparency of cross-border payments to meet the needs of U.S. dollar-denominated transactions. At the same time, Stripe acquires stablecoin platform Bridge for $1.1 billion, making the deal the largest acquisition in the history of the cryptocurrency industry. Bridge provides enterprises with seamless conversion between fiat currencies and stablecoins, further promoting the application of stablecoins in global payments. Bridge's cross-border payment platform handles more than $5 billion in annual payment volume and has provided global fund settlement for high-end customers including SpaceX, demonstrating the convenience and effectiveness of stablecoins in international transactions.

In addition, PEXX, as an innovative stablecoin cross-border payment platform, supports the exchange of USDT and USDC into 16 legal currencies, and can remit money directly to bank accounts . Through a streamlined onboarding process and instant conversion, PEXX enables users and businesses to make cross-border payments efficiently and cost-effectively, breaking down the barriers between traditional finance and cryptocurrencies. This innovation not only provides faster and more cost-effective cross-border payment solutions, but also promotes decentralization and seamless connection of global capital flows. Stablecoins are gradually becoming an important part of global payments, improving the efficiency and popularity of the payment system.

Supervision on perpetual contract transactions is expected to be relaxed

Due to the high leverage nature of perpetual contract transactions, which can easily lead to customer losses, regulatory agencies in various countries have always had very strict compliance requirements. Harsh. In many jurisdictions, including the United States, not only centralized exchanges (CEX) are prohibited from providing perpetual contract services, but decentralized perpetual contract exchanges (PerpDEX) cannot escape the same fate. This directly compresses the market space and user scale of PerpDEX.

However, with Trump's victory in the election, the compliance process in the encryption industry is expected to accelerate, and PerpDEX is very likely to usher in a spring of development. There are two landmark events worthy of attention recently: First, David Sacks, the encryption and AI consultant appointed by Trump, has invested in dYdX, a veteran player in this track; second, the U.S. Commodity Futures Trading Commission (CFTC) is expected to replace the U.S. Securities and Exchange Commission (SEC), becoming the primary regulator of the crypto industry. The CFTC has accumulated rich experience in the launch of Bitcoin futures trading on the CME Group and has a more friendly regulatory attitude towards PerpDEX than the SEC. These positive signals may open new market opportunities for PerpDEX and create more favorable conditions for its growth under future compliance frameworks.

The stable income value of RWA is being discovered by crypto users

In the past, the high-risk and high-return crypto market environment made RWA (Stable returns from real-world assets were once ignored. However, in the past bear market cycle, the RWA market has bucked the trend and has grown, with its lock-in value (TVL) jumping from less than one million US dollars to today’s hundreds of billions of US dollars. Unlike other crypto assets, RWA’s value fluctuations are not driven by crypto market sentiment. This feature is crucial to shaping a robust DeFi ecosystem: RWA can not only effectively increase the diversification of investment portfolios, but also provide a solid foundation for various financial derivatives, thereby helping investors to hedge against violent market turmoil. risk.

According to data from RWA.xyz, as of December 14, RWA has 67,187 holders, the number of asset issuers has reached 115, and the total market value A whopping $139.9 billion. Web3 giants including Binance predict that the RWA market is expected to expand to $16 trillion by 2030. This market structure with huge potential, as well as the investment attraction brought by its stable income, is gradually becoming an indispensable and important part of the DeFi ecosystem.

https://app.rwa.xyz/

After the thunder of Sanjian Capital, the encryption industry exposed a key problem: the lack of sustainable income scenarios for assets. As the Federal Reserve begins the process of raising interest rates, global market liquidity tightens, and cryptocurrencies, which are defined as high-risk assets, are particularly affected. In contrast, the yields on real-world assets such as U.S. Treasuries have risen steadily since the end of 2021, attracting market attention. From 2022 to 2023, the median return of DeFi dropped from 6% to 2%, which is lower than the 5% of the risk-free return of U.S. bonds during the same period, making high-net-worth investors lose interest in on-chain returns. As on-chain revenue dries up, the industry begins to turn to RWA, hoping to reinvigorate the market by introducing stable off-chain revenue.

https://www.theblockbeats.info/news/54086< /em>

In August 2023, MakerDAO increased the DAI deposit rate DSR (DAI Savings Rate) in its lending protocol Spark Protocol to8%, triggering the recovery of the long-dormant DeFi market. In just one week, the protocol’s DSR deposits surged by nearly $1 billion, and the circulating supply of DAI increased by $800 million to a three-month high. The key factor driving this growth is none other than RWA (Real World Assets). Data shows that in 2023, more than 80% of MakerDAO’s fee income will come from RWA. Since May 2023, MakerDAO has increased its investment in RWA, purchasing U.S. Treasury bonds in bulk through entities such as Monetalis, Clydesdale, and BlockTower, and deploying funds to RWA lending protocols such as Coinbase Prime and Centrifuge. As of July 2023, MakerDAO has an RWA portfolio of nearly $2.5 billion, with more than $1 billion in U.S. Treasuries.

MakerDAO’s successful exploration triggered a new round of RWA craze. The DeFi ecosystem reacted quickly, driven by high returns on blue-chip stablecoins. For example, the Aave community proposed to list sDAI as collateral, further expanding the application of RWA in DeFi. Similarly, in June 2023, Superstate, a new company launched by the founders of Compound, focuses on bringing real-world assets such as bonds into the blockchain to provide users with stable returns similar to the real world.

RWA has become an important bridge connecting real assets and on-chain finance. As more and more innovators explore the potential of RWA, the DeFi ecosystem has gradually found a new path to stable returns and diversified development.

Licensed institutions go on-chain to expand market size

In March this year, BlackRock launched the first U.S. debt tokenization fund issued on a public blockchain BUIDL, attracting market attention. The fund provides accredited investors with the opportunity to earn income on U.S. debt and was first deployed on the Ethereum blockchain, later expanding to multiple blockchains including Aptos, Optimism, Avalanche, Polygon and Arbitrum. Currently, $BUIDL has no practical utility as a token income certificate, but its landmark release has taken an important step towards tokenized finance.

https://app.rwa.xyz/assets/BUIDL

At the same time, Wyoming Governor Mark Gordon announced that the state plans to issue a stablecoin pegged to the U.S. dollar in 2025 and pass U.S. Treasury bills and repurchase agreements back it up. The stablecoin is expected to be launched in cooperation with the trading platform in the first quarter of 2025, marking that stablecoin experiments at the level will become a new highlight in the market.

In the traditional financial field, State Street, as one of the world's top asset management companies, is actively exploring the integration of blockchain payment and settlement systems of various ways. In addition to considering issuing its own stablecoin, State Street also plans to launch a deposit token that represents customer deposits on the blockchain. As the world's second largest fund custodian bank with more than $4 trillion in assets under management, State Street seeks to improve service efficiency through blockchain technology, marking positive progress in the digital transformation of traditional financial institutions.

JPMorgan Chase is also accelerating the expansion of its blockchain business and plans to launch on-chain foreign exchange functions in the first quarter of 2025 to achieve round-the-clock automated multi-currency settlement. Since launching its blockchain payment platform in 2020, JPMorgan Chase has completed more than $1.5 trillion in transactions, involving areas such as intraday repurchases and cross-border payments. Platform users include large global companies such as Siemens, BlackRock, and Ant International. JPMorgan plans to expand its platform to support automated settlements in U.S. dollars and euros first, with more currencies to come in the future.

JPMorgan Chase’s JPM Coin is an important part of the bank’s blockchain strategy. As a digital dollar designed for institutional clients, JPM Coin provides global Instant payments and settlement. Its launch has accelerated the process of putting digital assets on the blockchain for financial institutions and has taken the lead in cross-border payments and capital flows.

In addition, Tether’s recently launched Hadron platform has also promoted the process of asset tokenization, aiming to simplify the tokenization of multiple assets such as stocks, bonds, commodities, funds, etc. Digital token conversion. The platform provides tokenization, issuance, destruction and other services for institutions, funds, and private companies, and supports functions such as KYC compliance, capital market management and supervision, further promoting the digital transformation of the asset management industry.

RWA token issuance compliance tools emerge

Securitize is an innovative platform focusing on fund issuance and investment on the blockchain. It and BlackRockRock's cooperation began with its deep involvement in the field of RWA (real world assets) and provides professional services to many large asset securitization companies, including the issuance, management and trading of tokenized securities. Through Securitize, companies can issue bonds, stocks and other types of securities directly on the blockchain, and use the full set of compliance tools provided by the platform to ensure that the tokenized securities issued strictly comply with the legal and regulatory requirements of each country.

Since obtaining registration as a transfer agent with the U.S. Securities and Exchange Commission (SEC) in 2019, Securitize has rapidly scaled its operations. In 2021, the company raised $48 million in funding led by Blockchain Capital and Morgan Stanley. In September 2022, Securitize helped KKR, one of the largest investment management companies in the United States, tokenize some of its private equity funds and successfully deployed it on the Avalanche blockchain. The following year, also on Avalanche, Securitize issued equity tokens for Spanish real estate investment trust Mancipi Partners, becoming the first company to issue and trade tokenized securities under the EU’s new digital asset pilot regime.

Recently, the leading stablecoin issuer Ethena announced its cooperation with Securitize to launch a new stablecoin product USDtb. The stablecoin’s reserve funds are invested in BlackRock’s USD Institutional Digital Liquidity Fund (BUIDL), further solidifying Securitize’s position in the blockchain financial ecosystem.

In May 2023, Securitize once again received US$47 million in strategic financing led by BlackRock. The funds will be used to accelerate cooperation with the financial services ecosystem. Expansion of partnerships. As part of the financing, Joseph Chalom, BlackRock’s head of global strategic ecosystem partnerships, was appointed to Securitize’s board of directors. This collaboration marks Securitize’s further deepening of the integration of traditional finance and blockchain technology.

Opportunities and Challenges Private Credit RWA Entering the Payfi Era, How to Solve the Default Problem

Private credit currently totals approximately US$13.5 billion, of which the value of active loans is US$8.66 billion. The current average annual interest rate is 9.46%. Private credit remains the second largest asset class in the RWA (real world assets) market, with about 66% of issuance share represented by Figuprovided by re Markets.

Figure Markets is a trading platform built on the Provenance blockchain, covering a variety of asset types such as stocks, bonds and real estate. The platform received more than US$60 million in Series A investment from Jump Crypto, Pantera Capital and other institutions in March this year. The current TVL (total value locked) has reached US$13 billion, making it the platform with the highest TVL in the RWA market. Different from traditional non-standard private credit RWA, Figure Markets mainly focuses on the standardized market of real estate loans (HomeLoan), which gives it a large market size and growth potential, and there will be more opportunities in the future.

https://app.rwa.xyz/?ref=ournetwork .ghost.io

In addition, private credit also includes corporate institutional loans. The projects that emerged in the last cycle mainly include Centrifuge and Maple Finance and Goldfinch.

TVL rebounded this year https://app.rwa.xyz /?ref=ournetwork.ghost.io

Centrifuge is a decentralized asset financing protocol that integrates real-world assets through its Tinlake protocol (such as real estate, bills, invoices, etc.) tokenized as NFT, used as collateral for borrowers. Borrowers can obtain liquidity in decentralized capital pools through these NFTs, and investors provide funds through these capital pools and receive fixed returns. Centrifuge's core innovation is to combine blockchain with traditional financial markets to help enterprises and startups obtain financing at a lower cost, and reduce credit risks and intermediary costs through the transparency and decentralization provided by blockchain.

However, Centrifuge also faces risks caused by market fluctuations. Although its asset tokenization model is favored by many traditional financial institutions, it has become increasingly popular in times of greater market volatility.In this case, the borrower may not be able to repay the loan on time, leading to a default event. For example, some assets with high market volatility may not be able to fulfill their loan contracts, especially in the bear market stage when liquidity is insufficient, which puts the borrower's repayment ability to a greater test.

Maple Finance specializes in high-yield secured loans to corporate and institutional borrowers. The loan pool on the platform is usually over-collateralized by crypto assets such as BTC, ETH, SOL, etc. Maple uses an on-chain credit scoring mechanism that allows institutional borrowers to provide stable income to lenders by creating and managing loan pools. This model is particularly suitable for institutions within the crypto industry, reducing risk and increasing capital returns by providing over-collateralized loans to these institutions.

However, the Maple platform also faces severe tests in the bear market. Several major breaches have occurred one after another, especially as the overall crypto market is declining. Orthogonal Trading, for example, failed to repay a $36 million loan on Maple Finance, putting significant default pressure on the platform.

Goldfinch is a platform focused on on-chain credit lending, aiming to provide loans to start-ups and small and micro enterprises that cannot obtain financing through traditional channels. Unlike other RWA lending platforms, Goldfinch adopts an unsecured loan model and relies on borrowers’ credit records and third-party appraisal agencies to judge their ability to repay. Through capital pools, Goldfinch lends funds to borrowers in need and provides fixed returns to capital providers.

Goldfinch’s problem is mainly reflected in the choice of borrowers. Many borrowing companies face higher default risks, especially start-ups and small and micro enterprises from high-risk markets. For example, in April 2022, Goldfinch suffered a $10 million loan default, with the main losses coming from riskier small and micro businesses and startups. Despite Goldfinch's investment from a16z, these defaults revealed deficiencies in risk control and market demand.

https://dune.com/huma-finance/huma- overview

Solana RecentThe proposed "Payfi" concept has certain similarities in business logic with the private credit field, and further expands its application scenarios to diversified scenarios such as cross-border financing, lending, and cross-border payment swaps. Taking Huma Finance as an example, the platform focuses on providing financial services to investors and borrowers. Investors earn income by providing funds, and borrowers can borrow and repay. At the same time, Huma’s subsidiary Arf focuses on cross-border payment advance services, greatly optimizing the traditional cross-border remittance process.

When sending money from Singapore or Hong Kong to South Africa, for example, traditional Swift money transfer methods are often time-consuming and costly. Although many people choose companies such as Western Union, these remittance companies need to cooperate with local partners in South Africa and rely on huge local advances to complete same-day settlement. This model brings a huge burden to remittance companies, because they need to process advances in different legal currencies in multiple locations around the world, and efficiency is difficult to guarantee. Arf abstracts the advance service by introducing stablecoin to provide payment companies with fast fund flow support.

For example, when a user sends $1 million to South Africa, Arf ensures that the funds enter a regulated account and completes cross-border settlement via stablecoins. Huma conducts due diligence on payment companies before settlement to ensure security. Throughout the entire process, Huma lends and withdraws stablecoins, without the need to intervene in the deposit and withdrawal operations of legal currency, thus achieving fast, safe and efficient capital flow.

Huma’s main customers come from developed countries such as the United Kingdom, the United States, France and Singapore. The bad debt rates in these areas are extremely low, and the account period is usually 1 to 3 days. Charges are charged every day, and the capital chain is transparent and efficient. Currently, Huma has achieved $2 billion in cash flow and maintains a 0% bad debt rate. Through its partnership with Arf, Huma has achieved substantial double-digit gains that are token-agnostic.

In addition, Huma plans to further integrate into DeFi projects, such as Pendle, and explore token point reward mechanisms and broader decentralized financial gameplay to further enhance user experience. Earnings and Market Attractiveness. Huma’s model could be an innovative way to address private credit defaults.

How will the leader of income-based stablecoins belong?

This cycle may be as safe as USDT/USDC and can provide at least 5% sustainable income. currency. This market undoubtedly contains huge potential. Currently, USDT issuanceTether’s annual profits are close to tens of billions of dollars, but its team only has about 100 people. If this part of the profits can be returned to users, can the vision of a revenue-based stable currency be realized?

The underlying gameplay of treasury bonds

At present, stablecoins built with treasury bonds as the underlying assets are becoming New trends in the crypto market. These stablecoins introduce traditional financial assets into the blockchain through tokenization, which not only retains the stability and low-risk characteristics of treasury bonds, but also provides the high liquidity and composability of DeFi. They use a variety of strategies to increase risk premiums, including fixed budget incentives, user fees, volatility arbitrage, and leveraging reserves such as staking or re-hypothecation.

The launch of USDY by Ondo Finance is a classic example of this trend. USDY is a tokenized note guaranteed by short-term U.S. Treasury bonds and bank demand deposits. Its structure is designed to comply with U.S. laws and regulations. It can be used as collateral in DeFi protocols and as a transaction medium for Web3 payments. USDY is divided into two types: accumulation type (USDY) and rebased type (rUSDY). The former is suitable for long-term holding, while the latter realizes profits by increasing the number of tokens and is suitable for use as a settlement tool. At the same time, the OUSG token launched by Ondo Finance focuses on providing highly liquid investment opportunities linked to U.S. short-term Treasury bonds. Its underlying assets are deposited in the BlackRock USD Institutional Fund and support instant minting and redemption.

In addition, OpenTrade provides a variety of Vault products based on treasury bonds, including fixed-income U.S. Treasury Bill Vault and flexible-income USDC Vault to meet the asset management of different users need. OpenTrade deeply integrates its tokenized products with DeFi to provide holders with a seamless deposit and earning experience.

Comparison of USDT issuer income distribution and usual income distribution https:// docs.usual.money/

The stablecoin USD0 launched by Usual Protocol provides two A casting method: users can directly deposit RWA assets or deposit USDC/USDT indirect castingUSD0, and can also be upgraded to USD0++ with higher returns, and provide users with additional loyalty rewards through cooperation with DeFi platforms such as Pendle.

The sUSD stablecoin launched by Solayer on the Solana blockchain uses U.S. Treasury bonds as the Collateral provides holders with an on-chain yield of 4.33% and supports being used as a pledged asset to enhance the stability and security of the Solana network. Through these mechanisms, the two not only improve the profitability of stablecoins, but also enhance the stability and efficiency of the DeFi ecosystem, demonstrating the huge potential of the integration of traditional finance and blockchain technology.

Low-risk on-chain arbitrage gameplay

In addition to the design with treasury bonds as the underlying layer, another This type of income-based stable currency uses the fluctuations of the crypto market, MEV and other characteristics to perform arbitrage to obtain low-risk returns.

Ethena is the fastest-growing non-currency-backed stablecoin project since the collapse of Terra Luna. Its native stablecoin USDe surpassed Dai with a volume of US$5.5 billion. Currently ranked third in the market. The core design of Ethena is based on the Delta Hedging strategy of Ethereum and Bitcoin collateral, which hedges the impact of collateral price fluctuations on the value of USDe by opening a short position on CEX that is equal to the value of the collateral. This hedging mechanism relies on over-the-counter settlement service providers, and the protocol assets are hosted on multiple external entities. It aims to maintain the stability of USDe through the complementary rise and fall between the value of the collateral and the short position.

Project income mainly comes from three aspects: Ethereum pledge income generated by users staking LST; funding rate or basis income generated from hedging transactions; and Liquid Stables Fixed rewards, that is, the deposit interest earned by depositing USDC or other stable coins on Coinbase or other exchanges. In essence, USDe is a packaged CEX low-risk quantitative hedging strategy financial product that can provide a floating annualized rate of return of up to 27% when market conditions are good and liquidity is sufficient.

Ethena's risks mainly come from the potential thunderstorms between CEX and the custodian, as well as the price decoupling and systemic risks that may result from insufficient counterparties during a run. In a bear market,As funding rates may remain low during this period, risks will further intensify. During the market volatility period in the middle of this year, the protocol yield became negative -3.3%, but no systemic risk occurred.

Nevertheless, Ethena provides an innovative design logic for integrating on-chain and CEX, by introducing a large number of LST assets brought by the main network merger to provide exchange Provide scarce short liquidity while bringing fee income and market vitality. In the future, with the rise of order book DEX and the maturity of chain abstraction technology, there may be an opportunity to implement a fully decentralized stablecoin based on this idea.

At the same time, other projects are also exploring different income-based stablecoin strategies. For example, CapLabs achieves income by introducing MEV and arbitrage profit models, while Reservoir adopts The diversified high-yield asset basket strategy optimizes asset allocation. Recently, DWF Labs will also launch the income-based synthetic stablecoin Falcon Finance, including two versions: USDf and USDwf.

These innovations have brought diverse choices to the stablecoin market and promoted the further development of DeFi.

RWA assets and DEFI applications help each other

RWA assets improve the stability of DEFI applications

Ethena's recent The reserve funds of the issued stablecoin USDtb are mainly invested in BlackRock's U.S. Debt Tokenization Fund BUIDL, of which BUIDL accounts for 90% of the total reserves, which is the highest BUIDL allocation among all stablecoins. This design allows USDtb to effectively support the stability of USDe in difficult market environments, especially during periods when funding rates are negative. Ethena’s risk committee approved a proposal last week to use USDtb as the backing asset of USDe, so that when the market is uncertain, Ethena can close the underlying hedging position of USDe and reallocate the backing assets to USDtb, further mitigating market risks.

In addition, CDP stablecoins (such as Collateralized Debt Positions) have also improved the collateralization and liquidation mechanisms by introducing RWA assets to increase peg stability. In the past, CDP stablecoins primarily used cryptocurrencies as collateral but faced scalability and volatility issues. By 2024, CDP stablecoins will be able to secure their currency by accepting more liquid and stable collateral such as CurveThe crvUSD recently added USDM (physical assets) to enhance its risk resistance. Some liquidation mechanisms have also been improved, especially the soft liquidation mechanism of crvUSD, which provides a buffer for further bad debts and effectively reduces risks.

DEFI mechanism improves RWA token asset utilization efficiency

The new "RWA" launched by Pendle The current TVL of related assets in the partition has reached 150 million US dollars, covering a variety of income-generating assets, including USDS, sUSDS, SyrupUSDC and USD0++.

Among them, USDS is similar to DAI, and users can receive SKY token rewards after depositing it into the SKY protocol; sUSDS is similar to sDAI, and part of its income comes from MakerDAO Treasury bond investment; SyrupUSDC is an income asset supported by the Maple digital asset lending platform, generating income by providing fixed interest rates and over-collateralized loans to institutional borrowers; while the income of USD0++ comes entirely from 1:1 Backed by Treasury bonds, ensuring a stable rate of return.

Currently, the annualized rate of return provided by Pendle is quite attractive, of which sUSDS LP is as high as 432.4%, SyrupUSDC LP is 98.88%, and USD0++ LP is 43.25%. USDS LP is 22.96%, and the high yield attracts users to join in purchasing RWA stablecoins.

Syrup, a project launched by Maple in May this year, also relied on DeFi gameplay to achieve rapid growth, helping Maple regain a new lease of life after experiencing loan defaults in the bear market.

https://dune.com/maple-finance/maple- finance

In addition, purchasing USD0++ of YT assets on Pendle can also get usual airdrops, giving the U.S. debt on the chain more potential through token gameplay. Profit space.

Can RWAFI public chain empower institutional finance?

Plume is a Layer 2 ecosystem focused on RWA, committed to integrating traditional finance (TradFi) with decentralized finance (DeFi) to create a financial ecological network covering more than 180 projects, and through the Enterprise Ethereum Alliance (EEA) and the Tokenized Asset Alliance (TAC) have established strategic alliances with institutions such as WisdomTree, Arbitrum, JP Morgan, a16z, Galaxy Digital and Centrifuge to promote industry standards and institutional-grade The implementation of RWAfi solution.

Plume adopts a modular, permissionless compliance architecture that enables KYC and AML to be configured independently at the application level, embedding anti-money laundering (AML) protocols and integrating with district Work with blockchain analytics providers to ensure global security compliance, while working with regulated brokers/dealers and transfer agents to ensure compliant issuance and trading of securities in markets such as the United States. The platform introduces Zero Knowledge Proof of Reserve (ZK PoR) technology to verify asset reserves while protecting privacy, supports global securities exemption standards such as Regulation A, D and S, and serves retail and institutional investors in multiple jurisdictions.

https://www.plumenetwork.xyz/

Functionally, Plume supports users:

Use tokenization RWA (such as real estate, private credit) borrows stablecoins or crypto assets as collateral, providing low-volatility collateral to ensure security;

Introducing liquidity collateral , users can pledge assets to obtain liquidity tokens to participate in other DeFi protocols and increase compound income; the platform provides compound income assets, such as private credit and infrastructure investment, to generate stable returns and help reinvest income;

Support RWA in sustainable DEX For listed transactions, users can go long/short real estate or commodities and other assets to achieve the combination of TradFi and DeFi transactions;

In addition, Plume provides an annualized rate of 7- 15% Stable yielding assets, covering areas such as private credit, solar and mining, attracting long-term investors; speculative assetsOn the other hand, Cultured provides on-chain speculation opportunities based on data such as sports events and economic indicators to meet users’ needs for short-term high-yield transactions.

Avalanche is the first L1 public chain to fully embrace RWA. It has been exploring enterprise-level applications frequently since the end of 2022. With its unique subnet architecture, it helps Organizations deploy custom blockchains optimized for specific use cases and seamlessly interoperate with the Avalanche network with unlimited scalability. From the end of 2022 to the beginning of 2023, entertainment giants from South Korea, Japan and India successively built subnets on Avalanche. Avalanche has also keenly observed Hong Kong's trends in the field of asset tokenization. In April 2023, it launched the Evergreen subnet at the Hong Kong Web3.0 Summit to provide financial institutions with specialized blockchain deployment tools and services to support the development of private chains. It conducts blockchain settlement with licensed counterparties and maintains interoperability through the Avalanche local communication protocol (AWM), attracting institutions such as WisdomTree and Cumberland to join the test network Spruce.

https://www.avax.network/evergreen

In November of the same year, Avalanche cooperated with JPMorgan Chase's Onyx platform to use LayerZero to connect Onyx and Evergreen to promote WisdomTree Prime Provides subscription and redemption of tokenized assets, and the cooperation is included in the "Guardian Plan" of the Monetary Authority of Singapore (MAS). Subsequently, Avalanche continued to expand institutional cooperation. In November, it helped the financial services company Republic launch the tokenized investment fund Republic Note. In February 2024, it conducted tokenized trials of private equity funds on the Spruce test network with Citibank, WisdomTree and other institutions. 3 In April, it cooperated with ANZ and Chainlink to connect the asset settlement of Avalanche and Ethereum through CCIP. In April, it also completed integration with the payment giant Stripe.

In addition, the Ecological Internal Foundation also actively promotes the development of RWA, launching the Avalanche Vista plan and investing 50 million to purchase tokenized assets such as bonds and real estate, and invest in RWA projects such as Balcony and Re through Blizzard Fund. John Wu, Executive President of Ava Labs, said that Avalanche’s mission is to “present the world’s assets on the chain” and bring the strong regulatory entities of traditional finance into the on-chain space through instant settlement and other blockchain advantages, empowering RWA to rise and become The best choice for institutions to achieve on-chain implementation.

A new direction worth looking forward to on-chain foreign exchange

The traditional foreign exchange system is inefficient and faces many challenges, including counterparty settlement risk (although CLS has improved security, the process Still cumbersome), high coordination costs for multiple banking systems (for example, an Australian bank’s purchase of Japanese yen requires coordination among six banks), global settlement time zone differences (for example, the overlap between the Canadian dollar and Japanese yen banking systems is less than 5 hours a day), and access to the foreign exchange market Limitations (retail users pay the same fees as large institutions 100 times). On-chain FX provides instant price quotes through real-time oracles (such as Redstone and Chainlink), and uses decentralized exchanges (DEX) to achieve cost-effectiveness and transparency. For example, Uniswap's CLMM reduces transaction costs to 0.15 %-0.25%, which is about 90% lower than traditional foreign exchange. Instant settlement on-chain (replacing traditional T+2 settlement) also provides arbitrageurs with more opportunities to correct market pricing errors. In addition, on-chain FX simplifies corporate financial management, allowing access to multiple products without the need for multiple currency-specific bank accounts; retail users can obtain the best exchange rates through wallets embedded with DEX APIs. In addition, on-chain foreign exchange achieves the separation of currencies and jurisdictions, getting rid of dependence on domestic banks. Although this approach has pros and cons, it effectively utilizes digital efficiency and maintains monetary sovereignty.

However, on-chain foreign exchange still faces challenges such as the scarcity of non-USD-denominated digital assets, oracle security, long-tail currency support, regulatory issues, and unified interfaces in and out of the chain. . Nonetheless, the potential is huge and Citibank is developing a blockchain-based FX solution under the guidance of the Monetary Authority of Singapore (MAS). The foreign exchange market trades more than $7.5 trillion daily, especially in the global South, where individuals often exchange dollars through the black market to get better exchange rates. Although Binance P2P provides options, it lacks flexibility due to the order book model. Projects such as ViFi are developing automated market making (AMM) foreign exchange solutions based on the chain, bringing new possibilities to the on-chain foreign exchange market.

Cross-border payment stack

Cryptocurrencies have long been seen as the solution to the trillion-dollar cross-border payments marketA key tool, especially in the global remittance market, which generates hundreds of billions of dollars in revenue annually. Stablecoins now provide a new path for cross-border payments, which mainly include three levels: merchant layer, stablecoin integration and foreign exchange liquidity. At the merchant level, through applications and interfaces that initiate retail or commercial transactions, merchants can establish stablecoin flows and form a moat, and then upsell other services, control user experience, and achieve end-to-end customer coverage, similar to Robinhood in the stablecoin field. . The stablecoin integration layer provides entry and exit channels, virtual accounts, cross-border stablecoin transfers, and stablecoin and fiat currency exchanges. Licenses will become core competencies to ensure the lowest cost and maximum global coverage. For example, Stripe’s acquisition of Bridge demonstrates this moat. construction method. The foreign exchange and liquidity layer is responsible for the efficient exchange of stablecoins with US dollars, fiat currencies or regional stablecoins. In addition, as crypto exchanges continue to emerge to cater to players from all over the world, cross-border stablecoin payment applications and processors targeting specific markets will also gradually emerge.

Similar to traditional financial and payment systems, building a defensible and scalable moat is key to maximizing business opportunities at all levels. Over time, each layer of the stack will gradually integrate, and the merchant layer has the greatest potential for aggregation, being able to package other layers to provide users with additional value, increase sources of profit, and control foreign exchange transactions, entry and exit channel selection, and stablecoin issuance. cooperation with merchants to build a comprehensive and efficient cross-border payment solution.

Multi-pool model stablecoin aggregation platform

In a world where most companies issue their own stablecoins, the problem of stablecoin funding fragmentation is becoming increasingly serious. While traditional on-chain and off-chain solutions provide short-term relief, they fail to deliver the efficiencies promised by cryptocurrencies. To solve this problem, Numéraire on Solana introduces USD*, providing the Solana ecosystem with an efficient and flexible multi-asset stablecoin exchange platform that specifically addresses the challenge of stablecoin fragmentation.

The platform realizes the seamless creation and exchange of different stablecoins through the AMM mechanism. All stablecoins share the same liquidity pool, avoiding the dispersion of funds. , thereby significantly improving capital efficiency and liquidity management. As the core element of the system, USD acts as an intermediary unit, simplifying the exchange process between stablecoins, promoting more accurate price discovery, and reflecting the market's valuation of various stablecoins in real time. Users can not only mint stablecoins through the protocol, but also use the layered collateralized debt position system to customize risk-reward configurations to further improve capital utilization. At the same time, the lending function allows excess stablecoins to be efficiently recycled within the system, optimizing capital operations.

Although Numéraire still has a gap with platforms such as Raydium in terms of liquidity, its innovative design proposes a more forward-looking solution to the fragmentation problem of stablecoin ecology. It can more effectively meet institutional needs and the actual demand for stablecoin liquidity in the real world.

Looking back at the last market cycle, stablecoin products using the multi-pool model have only been successfully implemented on Curve on Ethereum. It is widely praised for its efficiency in stablecoin exchange. Looking to the future, as the scale of stablecoin issuance on other public chains continues to expand, similar multi-pool model products are expected to gradually appear in more blockchain ecosystems, thereby further promoting the scale and maturity of the stablecoin market.