In June of this year, a violin that once belonged to Empress Catherine the Great of Russia and was worth approximately $9 million was used as collateral by its holder to borrow millions of dollars from Galaxy Digital, one of the world's largest cryptocurrency asset management companies. Subsequently, the company digitized it.

This legendary violin has obtained a "digital avatar" that can be traded and managed on the blockchain.

Prior to this, Rolex watches had also been "digitized" and successfully mortgaged to allow watch owners to borrow funds. And the watch is divided into several pieces during this process, allowing some people to "hold it together".

Similar logic is also applied in many fields such as real estate, stocks, bonds, etc. For example, on the real estate digital asset platform RealT, digital assets have replaced traditional paper contracts. Users can even own a piece of real estate starting at around $50 and receive weekly rent.

Since 2024, this type of Real World Assets has achieved rapid development. The so-called RWA refers to the digitization of a certain off chain asset and its issuance on the chain. CoinGecko stated in its Q2 2024 crypto industry report that MemeCoin, artificial intelligence, and RWA became the most popular categories, accounting for 77.5% of network traffic.

Some companies have gone further and attempted to use this model as a new channel for financing for physical enterprises. In August of this year, Ant Group issued the first domestic new energy physical asset RWA in Hong Kong. By linking encrypted assets issued on the blockchain with the operational data performance of charging stations in the primary market for financing, mainland technology and energy enterprise Longxin Group has obtained approximately 100 million yuan in financing.

Some practitioners have expressed to the Titanium Media App that since August, the Langxin case has aroused strong interest among many mainland and Hong Kong practitioners in this new model, and some similar projects have been promoted, especially in new energy enterprises. Using offshore funds to serve mainland projects is currently the most appealing aspect for Chinese entrepreneurs

However, at the same time, many practitioners also believe that the underlying technology, business model, and regulatory framework surrounding this innovative model need to be improved. One of the interviewees said, "The Langxin case has made a good start, but the experimental significance of the current project is stronger than its commercial significance

HSBC has also launched its first RWA product for retail investors in Hong Kong, the HSBC Gold Token. The so-called gold digital asset refers to physical gold whose ownership is stored in digital form on the blockchain. Each HSBC gold digital asset represents a partial ownership record of 0.001 ounces of local London gold designated by the London Gold Market Association.

This product is also the first retail gold digital asset recognized by the Hong Kong Securities and Futures Commission.

Boston Consulting Group (BCG) referred to RWA digital assetization as the "third revolution in asset management" in a report on October 29th, predicting that within seven years, the managed assets of digital asset-backed funds may reach 1% of the global managed assets of mutual funds and ETFs, meaning that by 2030, managed assets will exceed $600 billion.

    RWA scenario TVL (Total Value Locked) has grown rapidly since the past year

Regarding the rise of US Treasury RWA, Guosheng Securities pointed out in a recent research report that it is mainly due to the fact that the yield of US Treasury bonds once far exceeded that of the DeFi market, and investors turned to RWA products linked to US Treasury bonds for arbitrage.

With the US dollar raising interest rates, the yield on US Treasury bonds has gradually increased. In July of this year, the Federal Reserve raised the federal funds rate to 5.50%. In comparison, the current median DeFi yield in the market (seven day average) is only around 2%. Therefore, the attractiveness of RWA products linked to US Treasury bonds is obvious, forcing capital to flow into the RWA market for arbitrage.

Some analysts also believe that the bond market, due to its maturity and complexity, coupled with competition among intermediaries, is suitable for digital assetization through blockchain.

For example, State Street Global Asset Management (SSGA) stated in its report that the bond market is mature and suitable for digital assetization; The complexity of these tools, the repetitiveness of issuance costs, and the high competition among intermediaries not only support rapid adoption but also provide space for significant impact; Blockchain technology can play an important role in markets that value transaction speed, such as buybacks and swaps.


How to implement mini IPO for charging stations

Compared to the financial assets of Boxing, the scale of non-financial RWA assets is much smaller. It is understood that real estate is currently a relatively successful non-financial RWA, with a flow rate of only 200-300 million US dollars, and RWA assets involving physical enterprises are even rarer.

In this context, Ant Group's issuance of the "first domestic new energy entity asset RWA" in Hong Kong can also be seen as a pioneering move.

Specifically, this project is being carried out in the Ensemble sandbox of the Hong Kong Monetary Authority, underwritten by UBS. The funds raised from the project will be used to support Longfor's construction of new energy charging piles and other infrastructure. Its digital assets issued on the blockchain (Ant Chain, a subsidiary of Ant Group) will correspond to over 9000 charging piles operated by Longfor and represent partial revenue rights to the charging piles.

A report from the National Finance and Development Laboratory mentioned that through digital assetization, the revenue of each charging station is transparent, verifiable, and tamper proof on the blockchain, avoiding the possibility of hidden revenue by project parties in traditional models. The profit sharing ratio of charging piles can be fixed in advance in the form of smart contracts. For every income generated, profits are distributed to all stakeholders, ensuring investors' returns, improving transparency, and reducing risks.