Grabbing RWA, why do Adaverse and Cardano deploy real-world assets?

There is still a big gap between the current DeFi and Web3 market and the traditional financial market, but the emergence of RWA (Real World Assets) tokenization has brought new opportunities for Web3 to enter the next trillion-dollar market hope.

Among them, Africa is undoubtedly one of the most promising fertile grounds for RWA. Just like the core reason why Axie Infinity can rise rapidly in 2021, it has captured the basic market of ordinary people in Southeast Asia such as the Philippines, who are now eager for financial services and mineral land. The third world with asset liquidity is exactly the fertile ground where RWA can show its talents.

Why do we need real world assets "RWA"?

Since Compound detonated the DeFi midsummer in 2020, the entire DeFi world has ushered in great development. Even though many industry black swan events in 2022 lead to a near-foot retracement, as of June 9, 2023, TVL still has 455 billions (DefiLlama data).

Among them, the lending (pledge) agreements represented by Aave, MakerDAO, and Lido not only contributed the main share of funds, but also became the key infrastructure of many DeFi Lego agreements: transactions, derivatives, synthetic assets, insurance, etc. Almost all DeFi tracks are built on the capital volume of the lending agreement.

In fact, in the early days of DeFi development, the expansion of revolving credit was realized through on-chain forms such as mortgages and loans between native assets. To some extent, it can even be understood as the "cold start" of DeFi, because it solved the seed capital for early development on the one hand. At the same time, it has also greatly stimulated various borderless innovations in the DeFi ecosystem to spontaneously improve the efficiency of capital use.

It can be said that it has made great contributions to the development of DeFi in the early days, but similarly, with the further development of DeFi, the bottleneck of native assets on the chain is gradually revealed. The most direct thing is that the scale of high-quality assets on the chain is directly preset for DeFi. The ceiling of the volume, and in order to solve this problem in the lending agreement, the collateral is the key.

The current loan mortgage model is mainly based on over-collateralization, that is, in order to ensure that trustless loans can occur, the borrower will need to deposit collateral whose value is greater than the loan amount, so in the final analysis depends on the types of collateral on various DeFi lending agreements and mortgages. ratio.

Among them, in terms of collateral types, DeFi lending is still mainly limited to the field of digital assets, and has little connection with real assets. Basically, they are all native assets on the chain, which also leads to extremely limited choices-basically limited to Bitcoin , Ethereum and other very few mainstream encrypted assets. After all, the liquidity and transaction depth of long-tail assets are extremely poor. If you are not careful, you will repeat the mistakes of Venus.

In terms of the mortgage ratio of collateral, since 2017, under-collateralized loans have been the holy grail that DeFi is difficult to achieve. At present, Aave and others have also begun to gradually test the waters of under-collateralization, that is, mortgage 100 and lend 200, which is equivalent to Leverage has been added, but compared with it, the author can only be regarded as an auxiliary technical means, which can only treat the symptoms but not the root cause.

And a new path is also constantly being explored—by accepting real-world assets such as real estate as collateral, so as to achieve a better integration of traditional finance and DeFi, and at the same time introduce real-world assets into the chain, completely opening up DeFi and on-chain finance volume ceiling.

For example, Empowa, on Cardano, is committed to solving the housing shortage of 50 million people in Africa. Through the creative affordable housing "rent first and buy later" model, house ownership is given liquidity through DeFi, thus solving the lack of credit for most African people. Document the pain points of not being able to get a traditional mortgage.

This not only opens up the market with strong loan demand in the African market, but also avoids the risk of pure on-chain mortgage assets through the ownership of affordable housing. This is also a successful example of introducing real-world assets into the chain and solving practical problems.

On the whole, "real-world asset support" is the key. The integration of real-world assets into the traditional world is an inevitable trend for DeFi to break through the existing development volume bottleneck. Even the DeFi wall-breaking trend we are expecting is inseparable The scale of physical assets outside the open access circle continues to grow at an exponential rate.

RWA track start on Cardano

This is not just the beginning, including MakerDAO and Aave, which are veteran lending leaders, have been trying on this path—enabling asset promoters to convert real-world assets into tokens for loan financing.

The most classic of these is to allow cryptocurrency investors to lend out digital currencies for interest income, while borrowers can obtain short-term loans in cryptocurrencies by putting their real-world assets as collateral.

It can be said that the frontier innovations of top DeFi projects are often the most indicative and direct, which can facilitate the decentralized credit market for a wider range of use cases and further push DeFi towards the mainstream, but this is basically They are all carried out around Ethereum, but few people pay attention to the ongoing RWA attempts on other public chains.

It should be known that the usage scenarios of Web3 are not only related to the financial market. Blockchain technology also has great potential in other non-financial fields on the African continent. In addition to the above-mentioned backward technological infrastructure, another major problem in the African region is the lack of Reliable and verifiable records of land ownership, which has also led to many disputes and conflicts.

From this perspective, Africa, with a total population of more than 1.2 billion, lack of financial services, and a real-world asset system that is in urgent need of construction but the Internet is relatively easy to popularize, is naturally a fertile ground for RWA (Real World Assets) to be developed.

We take the example of HouseAfrica and Seso Global, which are working on the RWA track on Cardano, currently aiming to use blockchain technology to create transparent, immutable records that clearly state the ownership of land.

Among them, Seso Global is a blockchain-based secure real estate management, documentation and trading platform for the African real estate market. It can unlock the financing methods of real estate assets in the form of DeFi, and open the door for the African real economy to enter DeFi liquidity.

This not only attracts trillions of dollars of value from traditional finance to meet the needs of African countries' own development, but also revitalizes the application paradigm of real-world assets.

And tokenized physical assets can also achieve fragmented or shared ownership, and at the same time endow them with excellent liquidity (for real-world assets, the quality of liquidity is undoubtedly one of the important factors affecting valuation) .

From another perspective, even though RWA (Real World Assets) mainly introduces real-world assets such as gold, real estate, debts, bonds, artworks, and carbon credits into the chain, the basic volume of public chain assets and the active chain The user base, including the further on-chain DApp ecology, is a key prerequisite for the vigorous development of RWA.

Cardano, as a time-tested and market-tested "old public chain" that has gone through Solana, Terra, Fantom and even the current Aptos, Sui and other new public chains, is still in the top 10 cryptocurrencies, with a total market value of 11.2 billion US dollars, the total lock-up market value exceeds 160 million US dollars, and the number of existing DApps has reached more than 500.

This means that Cardano, as the underlying asset, can provide sufficient volume and innovative support for the subsequent ecology of RWA.

Open the volume bottleneck and push DeFi to the mainstream

MakerDAO founder Rune Christensen previously considered this a "paradigm shift" when talking about real-world assets, saying that it opened the door to scalable DeFi backed by real-world assets, while making DeFi subject to the world's most powerful protection of the legal structure.

For DeFi, this is indeed a "paradigm shift" worth looking forward to, especially at the moment when regulation is facing a critical turning point. Finding a way to legally combine DeFi and real-world assets will be the next step for DeFi. A "detonation point".

In short, the tokenization of RWA (Real World Assets) is not only the key to the mainstream of DeFi and Web3, but also has the potential to subvert certain financial fields.

In fact, it is to connect DeFi and real-world assets, because one side just provides the gameplay, and the other provides funds, and this is the solution that is currently extremely lacking and longing for in Africa.

It is necessary to know that the vast undeveloped resources of the owners of the African continent, whether it is land or minerals, can be introduced into the chain in the form of RWA (Real World Assets) to completely release their liquidity.

In recent years, countries such as China and Africa have attempted to tokenize national mineral resources. For the blockchain world, this will also greatly expand the volume and types of encrypted assets, and may become a new round of DeFi. One of the catalysts of the market​​​​.

After all, after the encryption industry broke through trillions in market value, the entire industry track has become more subdivided, various innovative projects have emerged one after another, and the iteration speed is extremely fast. The competition of the public chain is also more focused on the improvement of the ecology and the vitality of self-innovation.

And the key to Adaverse's layout of the RWA track is this - to embrace the African continent, which is in urgent need of construction, to further stabilize and expand Cardano's status as a smart contract public chain outside of Ethereum, and to provide a new wave of DApps, new users and In the end, the growth of Cardano's ecological TVL is laid.

We are now confidently looking forward to its early arrival.