As the market environment and macroeconomics change, the narrative of DeFi products is also changing. A new source of real yield is gradually emerging: real world assets (RWA) that exist off-chain are brought to the chain through tokenization as another source of income for the DeFi ecosystem.
Since MakerDAO successfully shifted its focus from crypto-collateralized lending to RWA, RWA (real-world asset) Vault has become the largest source of revenue for the MakerDAO protocol. According to data from makerburn.com, as of June 29, Maker's annual profit performance was excellent, estimated at $73.67 million, the highest in more than a year. At the same time, we can see from DefiLama data that the concept currency of the RWA narrative has performed exceptionally well in the past month.
As the popularity of the physical asset tokenization (RWA) track gradually heats up, Compound founder Robert Leshner has also started a new entrepreneurial journey and founded a new company Superstate in the RWA track. RWA seems to have the potential to become the next wave of popular concepts.
RWA has obviously also attracted the attention of TRON. TRON founder Justin Sun announced on social media that stUSDT will be launched on July 3. This is the first RWA physical asset tokenization track product in the TRON ecosystem. The original intention of stUSDT is to build a platform similar to Yu'ebao for the crypto field, running through the crypto mortgage lending protocol JustLend established on the TRON network.
What is stUSDT? RWA concept, Yu’ebao in the crypto world
The stUSDT platform is committed to building bridges between individual and institutional investors, the crypto world and the real world, TradFi and DeFi through smart contracts, bridging the gap between individual investors and institutional investment targets, and providing a fairer RWA investment channel for everyone. By introducing real-world assets into the TRON chain ecosystem, stUSDT hopes to become a pioneer in connecting RWA to the crypto field.
RWA (Real World Assets) can represent many different types of traditional assets (both tangible and intangible), such as commercial real estate, bonds, cars, and almost any asset that can be tokenized to store value. Simply put, RWA is "tokenizing real assets", and any physical asset that can be tokenized and represented on the chain can be called RWA.
StUSDT platform pegged to stablecoins
Compared with real estate, cash (US dollars), gold and silver, luxury goods, bonds, and insurance, stablecoins are one of the products with the highest market fit in RWA in DeFi today. The total market value of stablecoins is currently about 130 billion US dollars, of which USDT accounts for 62%, and it is one of the first cryptocurrencies to link its market value to the legal currency US dollar. For this reason, USDT has become the first target for stUSDT to enter the RWA track.
The token of the stUSDT platform is also simply named stUSDT, which is the RWA voucher token obtained by users staking USDT. The stUSDT token has the same value as USDT and has the same functions as other TRC-20 tokens. It can be transferred at will and is supported by most smart contracts. Within certain rules, the stUSDT platform will always maintain a 1:1 exchange ratio between stUSDT and USDT to ensure that users gain benefits. The stUSDT platform provides a full set of friendly interactive interfaces to facilitate users to pledge stUSDT and unstake USDT.
As a decentralized certificate that connects TRON to real-world assets, users can participate in real-world investments and earn passive income from RWA by holding stUSDT. Through the Rebase mechanism of stUSDT, the amount of stUSDT held by stUSDT holders will gradually increase, and they will receive income distributed by the platform. In other words, the longer you hold stUSDT, the higher the income you get. At the same time, stUSDT will build a decentralized investment strategy, asset management mechanism, and determine investment and data disclosure strategies. The USDT in the stUSDT contract will be used to invest in high-quality, high-rated, low-risk assets in RWA.
Although similar to MakerDAO, it entered the RWA track by starting with crypto-collateralized lending, but the DSR (DAI deposit rate) given by MakerDAO is 3.49%. In comparison, the initial investment of stUSDT in the TRON ecosystem will have an annualized subsidy of 10% after its launch, making it one of the stablecoin RWA products with the highest deposit rate on the market.
How does stUSDT work?
The stUSDT platform provides users with a decentralized credential that will be linked to real-world assets. By staking USDT to the RWA Vault Contract, users can obtain equivalent stUSDT tokens, which are also RWA vouchers. Holders of stUSDT tokens can enjoy passive income from RWA investments, and the amount of income is proportional to the length of time they hold them.
stUSDT operates through RWA DAO, which currently entrusts JustLend DAO to operate. The core operating process of stUSDT mainly includes investment opportunity discussion, pre-voting, contract and execution voting, execution, as well as staking, investment strategy execution, income distribution, performance disclosure, performance evaluation and strategy adjustment, supervision and risk control.
Decentralized RWA DAO
RWA DAO is a decentralized autonomous community focused on RWA investment through the TRON network, aiming to safeguard the rights and interests of community investors and provide an open, equal and secure RWA investment channel for the majority of users. RWA DAO also manages RWA-related smart contracts to ensure their stability, transparency and efficiency.
The roles included in RWA DAO include: Advisory Council, RWA Arranger, Asset Manager and RWA Vault Contract.
RWA DAO roles and functions diagram
The functions of the Advisory Council include: RWA DAO election output, composed of professionals in the fields of TradFi and DeFi investment; responsible for supervising RWA's daily investment and operations, and submitting major adjustments to RWA DAO for voting when necessary; monitoring RWA investment risks and promptly suppressing potential risk impacts; appointing RWA Arrangers and evaluating their performance.
The functions of an RWA Arranger include: finding investment leads and opportunities and formulating investment directional strategies; recruiting Asset Managers and verifying their qualifications; evaluating RWA investment performance and adjusting investment strategies when necessary.
The functions of the Asset Manager include: executing the investment strategy provided by the RWA Arranger, and adjusting the actual investment strategy within a certain range according to the actual situation; Performance Oracle: regularly disclosing RWA investment performance and asset holdings to the chain.
The functions of the RWA Vault Contract include: The RWA Vault Contract is deployed by the RWA Arranger, custodying assets according to established strategies and distributing RWA investment income.
stUSDT investment and operation process
The RWA launch process and daily operation process of the stUSDT platform are rigorously and meticulously arranged to ensure the transparency and efficiency of all operations.
The RWA launch process begins with a discussion of investment opportunities. The Advisory Council will first conduct a preliminary discussion on the potential RWA investment opportunities and corresponding investment strategies proposed by the RWA Arranger, and decide whether to follow up further. In the RWA DAO, a pre-vote will be initiated, which is a key step in deciding whether to advance to the RWA Arranger execution phase. Once the pre-vote is passed, the developers of the RWA Arranger will generate the RWA Vault Contract and the corresponding execution vote. After the execution vote is passed, the RWA Vault Contract will automatically take effect, and the RWA Arranger will initialize the various parameters of the configuration contract.
After the stUSDT platform was officially launched, RWA's daily investment and operation processes were also carefully designed to meet the needs of users and the platform. Users can participate in RWA investment by staking USDT into the RWA Vault Contract. Afterwards, asset managers will use these funds to invest and implement established investment strategies. The income generated by the investment will be distributed to users through the RWA Vault Contract. In order to maintain transparency, asset managers need to disclose RWA investment performance and asset status on a regular basis. Similarly, RWA Arranger also needs to regularly evaluate the performance of RWA investments and adjust investment strategies according to the situation. The supervision and risk control of the entire process are the responsibility of the Advisory Council, who oversee RWA investments and daily operations, and monitor and intervene in potential risks to ensure the security and stability of the platform.
At the same time, the official said that from July 3rd to August 10th, the redemption fee discount activity will be launched simultaneously with the product. To facilitate user inquiries, the investment and Rebase announcements will be disclosed daily. Please see the official Medium for details.
Advantages of stUSDT platform
Decentralized investment decision-making process: On the stUSDT platform, investment decisions are made collectively by the Advisory Council and RWA DAO. Such a structure can effectively prevent the risks brought by a single decision. At the same time, the diversified decision-making structure can ensure a comprehensive investment perspective.
Clear execution mechanism: Pre-voting and execution voting provide clear operational steps for each investment decision, ensuring that each decision is fully considered and justified. This clear decision-making and execution process provides investors with a clear decision path and investment transparency.
Powerful staking and investment strategies: Users participate in RWA investment by staking USDT, and Asset Manager uses these funds to implement established investment strategies. This provides users with a convenient investment channel. At the same time, through the professional operation of Asset Manager, users' investments are more likely to obtain excellent returns, thereby improving users' return on investment.
Timely performance disclosure and strategy adjustment: Asset Managers need to disclose RWA investment performance and asset status regularly, while RWA Arrangers need to regularly evaluate RWA investment performance and adjust investment strategies. This timely information disclosure and strategy adjustment provides investors with timely investment information, allowing them to effectively manage and adjust their investments.
Strong supervision and risk control: The Advisory Council is responsible for supervising RWA investments and daily operations, and monitoring and intervening in potential risks. This efficient supervision and risk control mechanism can help investors understand investment risks in a timely manner, while also providing investors with certain risk prevention.
High yield: Compared to the DSR (DAI deposit interest rate) given by MakerDAO, it is 3.49%. The deposit interest rate for DAI on Aave is 2.6%, the deposit interest rate for USDC is 2.83%, the deposit interest rate for USDT is 2.69%, and stUSDT can provide a yield of up to 5%, which significantly exceeds other platforms.
Backed by Tron: stUSDT also greatly utilizes the advantages of Tron. As an efficient blockchain network, Tron is fast, secure, and low-cost. On the Tron network, stUSDT can take advantage of these advantages to provide users with a faster, cheaper, and safer service. Not only that, Tron's large user base and extensive application ecology also provide stUSDT with a broad market space and development opportunities.
Will on-chain/off-chain asset circulation become a new model?
Not only native crypto protocols such as TRON, MakerDAO, Aave and Polygon are entering the RWA track, traditional TradFi institutions and companies seem to be more interested in RWA, and are either planning or have already laid out the RWA track, such as: JPMorgan Chase, Goldman Sachs, Hamilton Lane, DBS Bank, UBS Group, Temasek, HSBC, BlackRock, Siemens, etc.
Physical assets occupy a huge share of the traditional financial world. According to Coingecko, as of April 25, 2023, the total market value of the cryptocurrency market is approximately $1.2 trillion. In comparison, according to Statista, the global real estate market is a staggering $228 trillion, the total market value of gold is approximately $12.4 trillion, and the total size of the global bond market is approximately $133 trillion.
However, these huge assets are barely utilized in the world of decentralized finance (DeFi), which is where RWA can play a role and will also be a huge market and opportunity for TRON's stUSDT platform.
From real estate to commodities, from private equity and credit to bonds and art, the tokenization of physical assets has quietly emerged in our lives. These physical assets, once called "security tokens" or "tokenized securities", take advantage of blockchain technology to bring traditional assets to the chain. By doing so, we can lower the minimum threshold for investment, increase access through partial ownership, increase trading of previously illiquid assets, and improve transparency and security. By introducing real-world assets into the DeFi field, RWA also increases available liquidity to the market and provides DeFi participants with a new asset class that can earn investment returns.
The potential impact of RWA on the DeFi market is almost transformative. The tokenization of physical assets may have a revolutionary impact on the DeFi market. RWA provides the DeFi market with a sustainable, diversified, and real yield backed by traditional assets. Moreover, RWA builds a bridge between the decentralized financial system and the traditional financial system for the DeFi market, which means that RWA can import massive liquidity and market opportunities from the traditional financial market to the DeFi market.
Regarding the potential of the physical asset tokenization (RWA) field, Citibank pointed out in its latest research report that RWA is a key link in promoting the blockchain industry to enter the tens of trillions of dollars market, and predicted that by 2030, there will be 4 trillion to 5 trillion dollars of tokenized digital securities. Although it has not yet reached the point of large-scale adoption, it is approaching a growth inflection point.
A statistic and forecast from the Boston Consulting Group (BCG) expressed stronger confidence: the RWA market may reach a staggering scale of 16 trillion US dollars in 2030. If the barriers to traditional finance on the chain can be broken down, the DeFi market will be greeted by exponential growth in scale, and RWA will usher in a trillion-level incremental market, injecting massive liquidity and broad market opportunities into the DeFi market.
TRON network chose to start exploring this field at this time and launched the stUSDT platform, which also saw the possibility of this market. Perhaps we can look forward to the phased outbreak of the RWA track in the second half of this year. At the same time, the stUSDT platform will also occupy a huge market share with its own advantages, giving users excellent benefits and returns.
