Investment opportunities in the RWA track

1. The biggest advantage of RWA lies in its Liquidity and the lack of permission, for example xstock, with a direct pool logic, there's no way to KYC, right?

A fundamental characteristic of RWA is the tokenization of physical assets on the blockchain; in this process, the act of tokenization is just a form, but the physical assets are the essence.

When we examine physical assets, we must pay attention to the fact that they are subject to strong regulation in the West, especially in the United States. Being heavily regulated means that even if they are put on the blockchain, the regulatory attributes they are subject to will eventually be reflected on the blockchain.

For example: In the United States, stock trading is subject to capital gains tax.

Therefore, the highly discussed tokenized trading of US stocks will eventually be subject to tax regulation. The reason why some exchanges or DEX can conduct permissionless trading right now is, in my opinion, that the trading volume is still very small. In the future, when this trading volume increases, it will definitely attract the attention of the US tax regulatory authorities.

Regulatory agencies only need to focus on one point when regulating stock tokenization trading: whichever institution has collateralized the tokenized stock, that is the institution they regulate. Once the tokenized stocks collateralized by this institution generate profits during the trading process, the regulatory agency can require this institution to pay capital gains tax.

In this case, the institution will be forced to use various means for KYC and all means to record all profits.

Additionally, there are now some platforms offering tokenized stocks, but the vast majority of traders do not pay attention to whether these tokens are genuinely backed by sufficient collateral in stocks. This means that it is entirely possible for some platforms trading stock tokens to not have any stocks behind them, and they might only have some tokens that are allegedly "pegged" to stocks, which are actually empty tokens.

Currently, the risks here have not yet been exposed or will not be exposed for the time being, and that is also because the scale is still very small. I believe that when its scale reaches a certain level, regulatory agencies will also get involved.

In the field of stablecoins, Tether faces a similar issue: it has long been criticized for whether it truly has sufficient dollar assets to back the issuance of USDT. It is precisely to eliminate this doubt that it recently launched a new plan specifically to issue stablecoins that comply with U.S. regulatory standards.

I believe that the situations listed above will eventually occur. KYC in the RWA sector will definitely become increasingly strict. For users in mainland China, we only have disadvantages and no advantages when it comes to KYC.

In the future, even if there are truly RWA investments that can be participated in directly without KYC, I estimate that those will most likely only be in some marginal and gray areas.

So I am not very optimistic about this field.

2. Is ONDO trustworthy?

I did not participate in this project and have very limited understanding of it.

Seeing this comment question, I want to clarify a statement: the RWA I mentioned in the article is not the broad sense of RWA, but the narrow sense of RWA.

In a broad sense, RWA encompasses anything related to RWA, so the scope is very wide. For example, Ethereum and US dollar stablecoins that support the issuance of RWA assets are also considered RWA. These assets are certainly important for retail investors, and they should hold them as well.

The narrow definition of RWA refers to certain assets that could originally only be traded off-chain in the real world, which are now and will be mapped onto the blockchain as tokens, allowing investors to purchase these tokens on-chain. The most attractive assets among these are stocks, unlisted equities, precious metals, real estate, etc.

When I usually say that retail investors have limited advantages and opportunities in the RWA ecosystem, I am referring to these narrowly defined RWAs.

3. The best investment opportunity for retail investors in the RWA track right now is probably only the stock of USDe?

My attention to the RWA track is limited, and I cannot determine which among them is the best opportunity for retail investors.

However, if we set aside KYC and qualification restrictions, in the RWA sector that I focus on and observe, my favorite is still the equity of unlisted companies, and I have little interest in other fields.

Currently, there are many very good equity tokens of unlisted companies on some trading platforms, which gather companies from the forefront fields in the US such as AI, big data, robotics, new materials, and aerospace. There will be some great opportunities among these companies, but these platforms have relatively high requirements for KYC and qualifications.

It's best to have a KYC identity from another region and possess certain qualifications if you want to invest in this field.