Four angles to analyze the differences between US dollar RWA and other RWAs: What Alpha opportunities can be captured from it?

Author: ABC Alpha Fellow

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

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

This sounds reasonable at first glance, but if you think about it carefully, you will have problems. RWA is not a monolithic piece. The US dollar RWA and other RWA are hugely different, and they are not even comparable. If other RWAs want to develop rapidly, while learning USD RWA, they still need to find their own development paradigm.

As an investor, if you want to find an Alpha opportunity from the RWA track, you need to clarify the difference between US dollar RWA and other RAWs.

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

1. Usage scenario: US dollar RWA demand is clear, most RWA demands are

still blurred

USDT and USDC are digital extensions of the US dollar, serving transaction settlement, cross-border payments and hedging needs in the cryptocurrency market. These scenes are high-frequency and urgently needed. For example, in countries with severe inflation (such as Argentina and Türkiye), the dollar stablecoin has become a powerful tool to protect wealth, and users have strong demand.

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 and the user base is limited. Players in the crypto market are more willing to invest their funds in native assets such as BTC, ETH or Meme coins. Assets with good off-chain profits already have mature financing channels, while assets with poor returns are actively seeking to be put on the chain, which further limits the market size.

Summary: The US dollar RWA is the "supplyer" 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 any other non-currency RWA that can provide liquidity to the crypto market?

2. Compliance and Trust: US dollar RWA is mature, most other RWAs are

still lacking

Regulatory adaptability

USDC is issued by regulated Circle, with regular reserves audits, and complying with US monetary regulations; although USDT has been controversial, it has won market trust through in-depth cooperation with exchanges. The regulation of other RWAs is much more complicated. For example, real estate is involved in the issue of legal ownership confirmation and cross-border judicial issues. At present, there is a lack of unified standards and it is difficult to expand rapidly.

Trust base

The core of RWA is tokenization of credit. The US dollar RWA anchors the US dollar, behind which is the US national credit and has extremely high user trust. Other RWAs rely on the credit of off-chain asset issuers. For example, real estate tokenization requires authoritative institutions to prove ownership, otherwise users will not be able to believe that the on-chain tokens really correspond to the physical object.

Summary: The trust base of the US dollar RWA is unparalleled, and other RWAs are difficult to reach. The RWA category with low compliance thresholds and easy to build trust is worth paying attention to in the short term.

3. Technical implementation: US dollar RWA is relatively simple, while

other RWAs are relatively complex

The technical logic of US dollar stablecoins is clear: on-chain issuance and redemption, the threshold is low. 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 oracles also need to verify off-chain data in real time. The on-link processes of different assets (such as real estate) vary greatly, and the implementation of compliance standards and technology is difficult, so the development is naturally slow.

Summary: Non-standard RWA needs to customize standards for each type of asset, and it is difficult to make breakthroughs in the short term. However, RWA, which is relatively easy to standardize, is relatively easy.

4. Promotion method: US dollar RWA comes from bottom to top, other RWAs

come from top to bottom

The rise of USDT originated from user demand: fiat currency buying is subject to regulatory restrictions, and the exchange launched USDT trading pairs to solve the problem. As usage increases, it evolves into a digital dollar, integrated into DeFi and cross-border payments. This is the bottom-up result of market demand.

RWAs such as real estate and stocks are mostly driven by large institutions, and out of financing or liquidity needs, they are top-down models. The participation of ordinary users and entrepreneurs is low.

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

Summary and prospect

The success of USDR RWAs such as USDT and USDC is inseparable from clear demand, high liquidity, a solid foundation of trust, low technical thresholds and bottom-up market drive. Other RWAs are struggling with ownership mapping problems, regulatory uncertainty, technical complexity and traditional interests resistance, and are struggling to develop.

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

1. Regulatory collaboration: Promote transnational laws to recognize on-chain assets ownership.

2. Compliance framework: Develop segmentation standards according to asset categories 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 US dollar RWA and other RWAs and see the current development of the RWA track.

First of all, we need to pay attention to the development of the US RWA compliance framework, and at the same time, we need to 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 projects in the RWA track, such as RWA oracles, RWA issuance platforms, RWA liquidity protocols, etc.