guide

guide

The blockchain has brought trust, liquidity, transparency, security, efficiency and innovation, but the bear market in the encryption industry seems to be difficult to find new growth points, and the encryption industry urgently needs a track to carry new narratives. RWA tokenization can open up the channels of traditional finance and encrypted finance, and carry an asset market of tens of trillions of dollars. For the encryption industry, it can be the water of life beyond the bull-bear cycle, so the blockchain has been trying since its birth The tokenization of RWA has been hindered by multiple factors such as technology, regulation, and market.

Today, the RWA track is being discussed again, and many organizations have begun to lay out. RWA projects have shown the characteristics of a wide variety, DeFi-based, high returns, and high risks, and have gradually entered the public eye. However, the projects generally still have problems such as poor liquidity, early stages, and lack of price discovery.

Whether the RWA track can explode in the next few years depends on the development of infrastructure and the improvement of the regulatory system. This research report also proposes that token standardization and compliance are the only way for the development of the RWA track.

Although the RWA track faces multiple challenges, the development of the industry is always moving forward. We have seen the emergence of many innovative projects, especially those based on U.S. debt and U.S. stocks, SME financing, and real assets. The main characteristics of these projects are: :

1. Cooperate with traditional financial institutions;

2. Maximize the benefits of projects and tokens;

3. Introduce more legitimate third-party participation.

These features can partially solve the problems in RWA tokenization, including supervision, centralization, on-chain and off-chain identities, asset valuation, etc. We look forward to more projects in the future to enrich the RWA track.

1. Narratives in the making

After a bear market that lasted for more than a year, the market value of the entire encryption market has shrunk severely, funds have continued to flow out, activities on the chain have been sluggish, DeFi income is no longer attractive, and mutual cuts are serious. Now we can't imagine what the encryption industry should rely on to start the next bull market. There is still a big gap between the encryption market and the traditional financial market. But we can also get a glimpse of huge business opportunities from some thunderstorms in the bear market.It can be said that the main reason for the bankruptcy of some large institutions in 2022 is the use of altcoins for financing and borrowing. When altcoins plummet in the bear market, the liquidation of loans is further exacerbated, and the death spiral begins. We see that institutions and credit drove the bull market in 2021, and they also contributed to the bear market in 2022. In fact, credit drives trillions of dollars worth of business and much of the global economy. The potential it brings is huge. Currently, in the DeFi market, more and more agreements are entering traditional credit markets such as equity and debt financing. Although it brings some risks, this is the only way to bring the traditional financial market of more than 800 trillion US dollars to the chain.

To bridge the huge gap between the crypto market and traditional finance, what we need to do is the tokenization of real-world assets.

In the first half of this year, the traditional and encrypted industries began to pay attention to the RWA sector.

The first is that Goldman Sachs announced the official launch of its digital asset platform GS DAP, which has helped the European Investment Bank (EIB) issue a two-year digital bond of 100 million euros. Soon after, Hamilton Lane, a private equity firm with a management scale of over 100 billion, tokenized part of its $2.1 billion flagship equity fund on the Polygon network and sold it to investors; million euros in digital bonds. Secondly, some government agencies have also begun to test the waters of RWA, including the Monetary Authority of Singapore (MAS), which will cooperate with JPMorgan Chase and DBS Bank.

In April, Binance announced that it would become the node operator of the Layer 1 blockchain Polymesh; secondly, DeFi protocols such as MakerDAO, Aave, and Maple Finance are active on the RWA track, and more crypto investment companies are also seeking RWA projects. At present, there are more than 50 projects in the RWA sector, mainly focusing on financial assets, including fixed income, TradFi, and a small number in the fields of real estate and carbon credits. Recently, RWA concept tokens have all risen, and some have increased by more than 10 times. Does the wave of accumulation in the first half of 2023 indicate that RWA will lead the encryption narrative in the next few years?

2. The past and present of RWA

The concept of RWA is no stranger to the blockchain industry. The earliest RWA project is the BTM Bytom chain of "assets on the chain". At present, the most successful RWAs are the digital dollars USDT and USDC, which map the U.S. dollar to the chain and tokenize it. Stablecoins have subtly affected the entire encryption industry and have become an important cornerstone.

• The full name of RWA is the value tokenization of real world assets (real world assets-tokenization), which is the process of converting the ownership value (and any related rights) in tangible or intangible assets into digital tokens. This enables the digital ownership, transfer and storage of assets without a central intermediary, and the value is mapped to the blockchain and traded. RWA can be tangible or intangible assets.

Tangible assets include: real estate, art, precious metals, vehicles, sports clubs, horse races, etc.

Intangible assets include: stocks and bonds, intellectual property, investment funds, synthetic assets, revenue-sharing agreements, cash, accounts receivable, and more.

2.1 Current status of RWA track

• There are many types of RWA track projects, most of which are based on DeFi. There are three main categories: 1. Fixed-income projects based on off-chain assets such as U.S. bonds, stocks, real estate, and artwork; 2. Public funds issued or traded on the open market Credit projects; 3. Trading market projects based on virtual assets such as carbon credits. In addition, there are infrastructure projects such as vertical public chains.

• The fixed income category provides loans to private individuals and institutions based on the U.S. bond and stock markets. The only difference between these projects and other DeFi lending projects on the chain is that the collateral can be real-world assets.

Public credit can establish investment funds by tracking U.S. bonds or other bonds for crypto users to invest.

In terms of data, according to the statistics of the RWA.xyz website, 8 RWA lending agreements including Centrifuge, Maple, GoldFinch, Credix, Clearpool, TrueFi, and Homecoin have issued a total loan amount of $ 4.38 b, and users can obtain an average APR of 10.52%. It mainly serves countries with below-middle-level development. These credit lending agreements provide higher returns than most DeFi lending, but in the institutional storm in 2022, Maple Finance defaulted on its $69.3 million debt.

According to the Dune data analysis panel, in the Ethereum RWA project, the number of currency holding addresses of $wCFG, $MPL, $GFI, $FACTR, $ONDO, $RIO, $TRADE, $TRU, $BST is also increasing, reaching 3.9 k.

2.2 Advantages of asset tokenization

Ideally, any asset of value could be tokenized. The advantages of asset tokenization are also based on decentralization and the bottom layer of blockchain technology, creating some ecological applications to solve the disadvantages of traditional finance, specifically:

(1) Bring a potentially huge market and attract investors and retail investors

As leading financial institutions look to benefit from the efficiencies and economic possibilities blockchain brings, the tokenization of real-world assets is gaining institutional attention and several tokenized products have already been developed. The RWA project will also stimulate the investment income of DeFi.

Through the tokenization of real-world assets, businesses can leverage the DeFi ecosystem to access capital at low cost and benefit from lower barriers to entry as well as new financing methods, especially for emerging markets. At the same time, the DeFi ecosystem has gained investment income, access to diverse off-chain markets, and new opportunities to expand the traditional financial customer base.

(2) Improve the efficiency of capital flow and promote the positive feedback of asset tokenization

Traditional financial trading markets are labor-intensive, and blockchain technology can provide instant settlement, 24-hour transactions, etc., reducing operating costs and market access for participants. Not only that, asset tokenization can make real illiquid assets into small portfolios, and investors do not need a lot of paperwork, money and time consumption. This leads to fairer markets while creating new business and social models, such as shared property ownership or shared rights.

In terms of securities, tokenization can be a useful tool for securitization, or refinancing of assets from illiquid assets into more liquid securities.

Bringing real-world assets on-chain and into the DeFi ecosystem brings unique collateral or investment opportunities, market efficiencies, and liquidity unavailable in traditional markets. The improvement of capital efficiency will further promote the development of the RWA track and form positive feedback.

(3) Lower the entry threshold for retail investors and increase the liquidity of physical assets

Tokenization removes barriers that currently prevent real-world asset segmentation, making it possible for most retail investors to gain access to asset classes that are usually limited to a few high-net-worth individuals or institutional investors. Especially in real assets, retail investors can invest across geographies Sexual products, or collective investment in a real estate or a work of art, requires a very high threshold in the traditional financial field. And these physical objects may have extremely low liquidity in small markets. Once they are on the chain, they will be available to investors from all over the world. Additionally, issuers gain access to a broader investor base and create new asset classes. Retail investors gain access to previously inaccessible markets and are able to make more informed investment decisions based on transparent data.

(4) Relying on the advantages of blockchain technology, RWA transactions are more efficient and secure

Blockchain technology ensures the transparency of payment and data flow on the chain, the immutability of transaction records, traceability, higher efficiency and lower operating costs, more robust risk management, clear ownership and other advantages, and More composability and a fairer market environment. In the future, with the continuous development of blockchain technology, there will be higher-performance public chains or layer 2 solutions, stricter smart contract review mechanisms, and privacy projects based on zk technology to protect transactions. Road development provides a solid soil.

3. Prerequisites for RWA Track Breakout

Asset chaining is the only key point on the RWA track. Solving this key point also requires two foundations, one is the improvement of blockchain infrastructure, and the other is legal supervision. Blockchain involves the interoperability, security, and privacy of various protocols and tokens. Legal supervision refers to whether there are corresponding legal and regulatory support for off-chain assets and on-chain identities. A lot of issues are being actively discussed, but two are discussed here: token standards and censorship.

3.1 Prerequisites for RWA Track Breakout

• According to the on-chain token standard, there are ERC-721 and ERC-20 on Ethereum, which correspond to indivisible NFT and divisible token standards respectively. In traditional finance, there are various asset attributes, including tangible assets and intangible assets. For use on the blockchain, we also need to create corresponding token standards to tokenize assets based on their attributes. Fungible tokens and non-fungible tokens have the following characteristics:

• Fungible tokens: fungible, each unit has the same market value and validity, which means token holders can exchange assets with each other, confident that they are of the same value; divisible, assets can be divided at the time of issuance Into how many decimal places, each unit will have a proportional value and validity.

Non-fungible assets are not fungible and cannot be replaced because each unit represents a unique value and has unique information and attributes. Non-fungible tokens are usually also indivisible, although there are ways to split the investment cost to provide fractional ownership, for example in commercial real estate.

Most assets can also use fungible token standards, and some assets, such as bonds and derivatives, may be better tokenized through non-fungible tokens. According to the gradual rise of the RWA project, more rich forms may appear. At this time, the pure ERC-20 and ERC-721 can no longer meet the needs of RWA tokenization. Many RWA vertical public chain projects have thought of this and started to create RWA tokenization standards, such as Polymesh. Judging from the development of RWA projects today, most projects are built on Ethereum, so the development of a wider ERC token standard is more universal. ERC-3525 is currently discussed more, and it is possible that more token standards will appear in the future, especially after the baptism of BRC-20. We believe that a token standard that can serve the RWA project well needs to have the following two characteristics:

(1) It has good operability and flexibility for the issuer of RWA tokens, and has the dual characteristics of ERC-721 and ERC-20;

(2) It has certain privacy and can protect transaction information and user information.

3.2 Strict review system

• Security is an important part of tokenizing real-world assets, especially when they serve as a source of collateral. It is important for issuers and investors of RWA to conduct due diligence on DeFi protocols and choose technologies or services that prioritize secured lending, offer strict regulatory compliance, and are built using high-quality open source code. For RWA-related project teams, two necessary solutions may need to be provided:

• Avoid KYC/AML Risks - Conduct KYC (Know Your Customer) or AML (Anti-Money Laundering) checks on users and/or transactions on the platform. Avoid potential interactions or transactions by users, directly or indirectly, with counterparties or politically exposed persons listed on OFAC and other sanctions lists.

Provide effective monitoring means - products and services that monitor and detect suspicious activities of DeFi users.

As a result, projects need to have a dedicated compliance team to review and approve or deny user access to the platform based on customer identity, risk assessment, verification, and due diligence. In addition, customer activity is continuously monitored for any suspicious activity or behavior that may suggest fraud or money laundering.

4. Representative project analysis

There are multiple subdivisions of the RWA track. This research report analyzes 19 RWA representative projects in detail from multiple dimensions such as the RWA tokenization mechanism, protocol status, token functions and performance, protocol advantages and risks. Through the analysis and summary of these projects, we can get a glimpse of the overall development, existing problems, and future potential of the RWA project.

（1 ）MakerDAO

4.1 The concept of US debt

In 2020, MakerDAO officially included RWA in its strategic focus and released guidelines and plans for introducing RWA. In addition to issuing the stablecoin DAI, Maker has also expanded the types of collateral beyond ETH to include collateral in the form of tokenized real estate, invoices, and accounts receivable. The main source of income for the Maker protocol is the loan interest and liquidation penalties of the stable currency DAI.Agreement status:

From the perspective of TVL, Maker is the top three DeFi protocols, ranking behind Lido and AAVE, and is the first CDP (Collateralized Debt Position) protocol. Currently only running on Ethereum, according to 2023-06-02, defillama shows, TVL is $6.29 b, 30-day agreement income is $23.53 m, treasury amount is $68.4 m, governance token $MKR has been listed on Coinbase, Binance, Kucoin, Kraken, OKX, Huobi, Bybit, Gate and other mainstream exchanges have a 24-hour trading volume of $13.58 m, and a 30-day average trading volume of nearly $20 m.Token Functions:

• As the governance token of MakerDAO, $MKR has performed poorly. The main reason is that the value capture ability of the protocol is too weak, but governance has played an important role. The utility of the $MKR token includes the following 4 aspects,

• Governance rights: MKR token holders have governance rights over the MakerDAO system. They can participate in voting and make decisions on important matters such as system parameters, risk management measures and protocol changes. The voting results of token holders have a significant impact on the development and operation of MakerDAO.

• Collateral Stabilization: MKR tokens can be used as collateral in the MakerDAO system. When users generate stablecoins (such as DAI) by locking up a certain amount of encrypted assets (such as Ethereum), they need to pay a certain amount of MKR as collateral. This mechanism is designed to ensure the stability and security of the system.

• System Stability Buyback: The MKR tokens used as collateral are also used in the system stability buyback mechanism. When the value of the stablecoin DAI in the MakerDAO system drops and deviates from the anchor value with the US dollar, the system will automatically initiate the repurchase of MKR tokens and destroy them to stabilize the system.

Risk Sharing: MKR token holders bear the risk in the MakerDAO system. If the debt of the system cannot be repaid or other problems occur, the value of the MKR token may be affected. This gives MKR token holders an incentive to participate in and supervise the operation of the system, ensuring the security and stability of the system.Protocol advantages:

1. Based on EVM and L2 ecology, it has more loyal user groups and stable and secure network support than other public chain RWA protocols; 2. The system advantages have gone through the test of bull and bear cycles, including strict entry threshold for collateral, Coupled with over-collateralization and a perfect auction system, it can guarantee that DAI is pegged to the US dollar at a ratio of 1: 1 in most cases. In extreme cases, the agreement also sets emergency measures for emergency shutdown.Agreement risk:

（2 ）Ondo Finance

1. Governance attacks. The short-term large-scale convergent ownership of MKR tokens may lead to the concentration of governance power, which will lead to a series of governance attacks such as new garbage collateral, emergency shutdown, and malicious modification of risk parameters. As the value of MKR increases And the risk control measures of the agreement itself are sufficient to prevent such risks in most cases; 2. Market price risk, in the case of increased volatility of mainstream tokens, the serial agreement auction liquidation will actively increase the supply of tokens in the market and worsen the market Liquidity problems, which have occurred from time to time in the past two years when mainstream tokens have experienced large-scale declines, but the protocol itself has not experienced large-scale losses.

Ondo Finance is one of the most watched RWA projects in the first half of this year. It received US$20 million in Series A financing led by Founders Fund and Pantera Capital in April. Ondo Finance is a decentralized investment bank. Off-chain mainly invests in U.S.-listed currency funds. On-chain, it cooperates with Flux Finance to carry out on-chain stablecoin lending business, including USDC, FRAX, DAI, and USDT. The current average lending rate is about 5% . The protocol revenue comes from a 0.15% annualized management fee.

• Users need to pass the KYC/AML process before they can trade fund tokens and use these fund tokens in licensed DeFi protocols. Ondo Finance has launched four tokenized bond products for investors to choose from, including:

• U.S. money market fund (OMMF): Ondo Money Market Funds invests in debt instruments such as high-credit U.S. government bonds and short-term bonds. The biggest goal is to preserve capital. The current annualized return is 4.5%.

• U.S. Treasury Bonds (OUSG): Ondo Short-Term US Government Bond Fund, investing with U.S. short-term bill ETFs, currently yielding 4.85% annualized, $100.87 M TVL.

• Short-Term Bond (OSTB): Ondo Short-Term Investment Grade Bond Fund, an actively managed exchange-traded fund (ETF) designed to pursue maximum current income while ensuring capital preservation and daily liquidity. The ETF invests primarily in short-term investment-grade debt securities, with an average portfolio maturity typically no longer than one year, and currently yields 5.77% annualized.

High-yield bonds (OHYG): Ondo High Yield Corporate Bond Fund, which mainly invests in high-yield corporate bonds, currently has an annualized return of 7.9%.Agreement status:

TVL $ 100.5 m on ETH, defillama RWA category first. OUSG is used on the largest scale, and OUSG holders can also deposit into Flux Finance, a decentralized lending protocol developed by Ondo Finance, to obtain income. Tioga Capital investor Tzedonn mentioned in the latest report that the existing market value of bond tokens is $168 million, and Ondo (OUSG) has a 61% market share, of which 28% is deposited in Flux Finance. At present, the total supply of Flux Finance has exceeded 40 million US dollars, and the market value of OUSG has exceeded 100 million US dollars. The lending protocol FLUX has been sold to the Neptune Foundation.Token Functions:

• The functions of the governance token $ONDO include the following 4 functions,

• Platform fee payment: When users conduct transactions, loans or other financial activities on the Ondo Finance platform, they may need to pay certain fees, which can be paid with Ondo Finance tokens.

• Voting Rights and Governance: Holders of Ondo Finance tokens can participate in the governance and decision-making process of the platform. They can vote on matters such as platform upgrades, parameter adjustments, and approval of proposals, and express opinions and suggestions on the development direction of the platform.

• Rewards and incentives: The Ondo Finance platform may attract users to participate in platform activities and ecological construction by issuing token rewards and incentives. These rewards can be issued in the form of Ondo Finance tokens, encouraging users to contribute and support the development of the platform.

Lending and mortgage: On the Ondo Finance platform, users can use Ondo Finance tokens as collateral to obtain lending services. Users who hold Ondo Finance tokens can use them as collateral to get more loans or lower interest rates.Protocol advantages:

For compliance, the products are either low-risk U.S. government-related debt instruments or high-risk ETFs, all of which are compliant products with third-party accounting disclosures. At the same time, users also need to pass the KYC/AML process.Agreement risk:

（3 ）Maple Finance

1. Outside the circle risk, the main products are off-chain ETFs, U.S. government debt instruments, etc. Compliance can be guaranteed, but it will also bring outside market risks, credit risks, etc., especially the credit of high-risk companies such as OHYG Bonds; 2. The risk of exiting the circle. The current personal opinion of the project is that it is stripping off decentralized products and switching to centralized + compliance operations. The use of governance tokens may be stripped and marginalized, and only blockchain will be used in the future The technology is used as item profit + bookkeeping + sales share instead of research and development in the direction of overall decentralization of the project, which deviates from the purpose of most projects in the currency circle.

The Maple Finance protocol has been in development for 3 years, and its mainstream business is lending/institutional credit. The on-chain business is to provide USDC and wETH lending services, but the independent centralized pool manager manages the lending business, including loan objects, quotas, interest rates, strategies, etc. It seems that Maple Finance is not a qualified RWA project, but in April it announced plans to launch a lending pool for investing in U.S. Treasury bonds, supporting non-U.S. DAOs, offshore companies, etc. to invest restricted funds into the pool set up by Maple Finance.Agreement income:

• Maple Finance's income mainly comes from the following aspects,

• Borrowing Fees: Maple Finance charges borrowing fees for funding borrowers. These fees are calculated based on the borrowed amount and loan term, and are set according to the interest rate set by the borrowing pool.

• Loan Fees: As a platform provider, Maple Finance can charge fees related to loan transactions. These fees can include loan application fees, loan disbursement fees, and loan settlement fees, among others.

• Token Mining Rewards: Maple Finance may issue rewards to participants through a token mining mechanism. Users who hold Maple tokens can earn rewards by providing liquidity or participating in lending pools.

Platform Governance Fees: As the manager of lending and borrowing pools, Maple Finance may charge a certain percentage of platform governance fees. These fees are used to support and maintain the operation of the platform, including developing new features, conducting security audits and maintaining community governance, etc.Agreement Status:

In terms of TVL, Maple Finance ranks 145 on defillama, but ranks first among unsecured loan agreements, with a total TVL of $48.56 m, total debt in transit of $32.22 m, cumulative proceeds of $45.6 m, and debt in transit of 18 (due to the provided The most important thing is the centralized credit guarantee debt, so the borrowing objects are all large institutions, the number is small), 8 cash pools (7 USDC+ 1 ETH, the average 30-day return is 7% annualized). In addition, Maple Finance also has a small part of TVL on Solana, but with the decreasing activities on the Solana chain, there is currently only about $16.4k TVL, and most (99%) TVL comes from the ETH mainnet.Token Functions:

• The MPL token is the native token of the Maple Finance platform and has the following functions,

• Fee payment: MPL tokens can be used to pay fees for lending transactions on the Maple Finance platform. Users who hold MPL tokens can receive discounts or other benefits to encourage them to use and hold the token.

• Community Governance: MPL token holders can participate in the governance decisions of the Maple Finance platform. They can make proposals, vote and express their opinions, influencing the development direction and important decisions of the platform.

• Voting rights: MPL token holders have certain rights and interests in voting on the platform, and can participate in voting on protocol parameters, protocol upgrades and other important matters.

• Share Dividends: Users who hold MPL tokens are eligible to share in the profits of the lending pool on the Maple Finance platform. These profits, which may come from interest paid by borrowers or other sources of income, are distributed proportionally to users holding MPL tokens.

Incentives: The Maple Finance platform may facilitate the growth of its ecosystem by providing incentives to MPL token holders. These incentives may include airdrops, rewards, or other forms of rewards to encourage user engagement and support the growth of the platform.Protocol advantages:

There is a certain degree of security. The manager of the pool is responsible for the loan risk and charges a certain management fee in return. The liquidity provider can bear less default risk while enjoying the loan interest rate.Agreement risk:

4.2 TradFi

（1 ）Polytrade

1. Credit risk, lending pool managers and borrowing objects are reviewed by centralized institutions, and debts mainly rely on credit mortgages rather than asset mortgages (mortgage assets come from pool managers), so once a large-scale institutional default occurs, there may be Insolvency; 2. The threshold is too high. In order to ensure the safety of debts, the borrowing threshold is relatively high, which is not suitable for most users, so the community is not very popular.

Polytrade is a decentralized trade finance platform designed to provide seamless lending to businesses across multiple industries. Currently, the project is transitioning from V2 to V3. Since January 2022, there has been no debt default, and LP losses have been 0. In V3, it is expected that the NFT function of real assets will be added, and there may be a secondary trading market for NFT in the future.Agreement status:

The governance token TRADE has been listed on Kucoin, Gate, MEXC, Bitfinex and other exchanges. The main market is in MEXC. The defillama shows that the TVL of the project is only $10,984, which is far from the $17.27 m fully unlocked market value of the project token and there are high According to risk assessment, on March 30, 2023, the project raised $ 3.8 million from the seed financing of Polygon Studios, Matrix, CoinSwitch, Alpha Wave Global and other enterprises.Token Functions:

TRADE is the governance token of the project. Its main function is to vote and make decisions on protocol income and updates. More detailed token function disclosures may be disclosed after V3 is released.Protocol advantages:

1. The transaction cost on the Polygon chain is lower, and EVM has natural advantages such as gas and transaction speed; 2. The track advantage, officially funded by Polygon, is expected to guarantee the competitive advantage on the Polygon EVM.Agreement risk:

（2 ）Defactor

1. Credit risk. Although the loan transaction remains on the chain, the lending object, business, review and other processes are all off-chain. The project party claims that the transaction is guaranteed by institutions such as AIG and Mercury, but it cannot avoid the breach of contract by offline entities; 2. Technical risk. The project is in the migration stage from V2 to V3. Currently, the protocol code does not provide a third-party audit report, and there may be bugs in unknown code technology.

Defactor aims to provide businesses with financing opportunities and liquidity by bridging traditional financing with DeFi. At present, the project has not yet launched and is in the early stages. According to its roadmap, the second half of 2023 is still in the stage of investment promotion + recruitment + development. According to the project's official website, $FACTR is the native token of the defactor ecosystem, which aims to lower the threshold for using applications and infrastructure. It is able to align interests and incentivize the growth of the ecosystem.

（1 ）Goldfinch

4.3 Borrowing

Goldfinch is a decentralized credit protocol for debt funds and fintech companies with off-chain entities, similar to Maple Finance. Goldfinch offers zero-collateral USDC line of credit loans. Goldfinch's model is much like a bank in traditional finance, but with a decentralized pool of auditors, lenders, and credit analysts. Borrowers can convert USDC into fiat currency and deploy it to end borrowers in the local market. Borrowers must be approved by the protocol’s decentralized auditors before applying for a loan. Auditors are independent entities that must stake the governance token, GFI, to have the opportunity to verify borrowers in exchange for rewards.Protocol income sources:

10% of all interest payments from Goldfinch are held in the protocol treasury. At the same time, users will incur a 0.5% fee for redemption from the premium pool, which will also be deposited into the protocol treasury.Agreement Status:

Currently, the total outstanding principal amount of all loans in the Goldfinch agreement is $101.34 million, with a total loss ratio of 0%, and the total amount of principal and interest repaid is $25.1 million. In the past 30 days, the agreement has generated $100,100 in revenue. There are no bad debts.Token Functions:

• Goldfinch currently has two native ERC 20 tokens, GFI and FIDU.

• GFI is the core native token of Goldfinch, which can be used for governance votes, auditor pledges, auditor vote rewards, community grants, staking supporters, protocol rewards, and can be deposited into member treasuries to obtain member rewards to ensure the development of the protocol.

FIDU represents liquidity providers' deposits in premium pools. When liquidity providers provide funds to the advanced pool, they will receive an equivalent amount of FIDU. FIDU can be converted to USDC in the Goldfinch dApp at an exchange rate based on the NAV of the premium pool, less a 0.5% withdrawal fee. Over time, the FIDU rate increases with increasing interest payments in the premium pool.

Advantages of the agreement: The mechanism adopted lowers the threshold for borrowing, which can help users with lower credit ratings to obtain loans to a certain extent. Compared with traditional platforms, Goldfinch has stronger ease of use, and the process is basically handled by smart contracts.

（2 ）Centrifuge 

Protocol risk: The adoption of DeFi is global, but different laws in various countries may lead to higher costs and problems in Goldfinch's business. And, because there is no collateral, the Goldfinch advanced pool also has default risk.

Launched in 2017, Centrifuge is one of the earliest DeFi projects involved in RWA, and is also the technology provider behind leading protocols such as MakerDAO and Aave. Similar to the above lending protocols, Centrifuge is also an on-chain credit ecosystem, aiming to provide small and medium-sized business owners with a way to mortgage their assets on-chain and obtain liquidity.

Centrifuge allows anyone to start an on-chain credit fund and create pools of collateralized loans. Centrifuge created Tinlake, an open asset pool based on smart contracts. Borrowers can tokenize physical assets through Tinlake. The physical collateral will be divided into two tokens, DROP and TIN, according to risk and return, representing the fixed rate of the priority level and the floating rate of the secondary level respectively. Investors can choose to invest in DROP or TIN according to their own risk tolerance and income expectations. Currently, there are no fees for the Centrifuge Agreement.Project status:

On May 23, Centrifuge announced the launch of a new Centrifuge App to replace Tinlake. The new Centrifuge App has improved the speed of KYC and investment participation, added KYB (Know Your Business) process automation, and laid the foundation for subsequent multi-chain support. The previous Tinlake will be automatically migrated to the new application. According to official data, Centrifuge currently has a TVL of US$201 million and total financing assets of US$397 million.Centrifuge Chain's native token CFG is used as an on-chain governance mechanism, and CFG holders can manage the development of the Centrifuge protocol. At the same time, CFG is also used to pay Centrifuge Chain transaction fees.

Project Benefits:Project Benefits:

1. The financing threshold is low, and at the same time, investors can obtain income from real assets. Centrifuge basically simulates the process of corporate credit in traditional finance; 2. Committed to compliance, Centrifuge is based on the legal structure of asset securitization in the United States.Project risk:

（3 ）Clearpool

Loan overdue default risk, according to rwa.xyz data, Centrifuge has 10,194,481 US dollars of loans overdue for more than 90 days.

Clearpool is a DeFi lending protocol that provides institutions with unsecured loans. Clearpool has two products, Prime and Permissionless. Clearpool Prime is only available to whitelisted institutions, and no collateral is required to borrow on Prime. Borrowers create pools of funds with specific terms in the core smart contract. After the pool is created, borrowers can invite any other whitelisted institution to fund the pool. Loan assets are automatically transferred directly to the borrower's wallet address without the need for Clearpool custody. Clearpool Permissionless requires the borrower to be a whitelisted institution, but not the lender.Agreement income:

5% of all interest payments received by Clearpool as an agreement fee.Agreement status:

Clearpool has accumulatively generated $398 million in loans, with a current loan balance of $16.58 million and a Permissionless TVL of $20.78 million.Token Functions:

CPOOL is Clearpool’s utility token and governance token. CPOOL holders can vote on the whitelist of new borrowers.Protocol advantages:

The advantage of Clearpool is that it does not require collateral at all and its loan issuance only needs to go through the agreement itself, which greatly improves efficiency.Agreement risk:

Unsecured, once the market environment turns bad, Clearpool's current whitelist and credit scoring mechanism can hardly prevent borrowers from defaulting.

（1 ）Swarm Markets

4.4 Public Fixed Income

Swarm Markets provides a compliant DeFi infrastructure for RWA token issuance, liquidity and trading, and is supervised by German regulators. Swarm Markets combines an on-chain compliance layer with regulatory clearance to tokenize U.S. Treasury bills and stocks. SwarmX, the issuing entity, acquires publicly traded equity securities as the underlying assets of on-chain tokens, which are held by institutional custodians.Agreement income:

Swarm will receive 25% of the pool swap fee or 0.1% of the assets being swapped (whichever is greater).Agreement status:

Swarm currently offers TSLA (Tesla), AAPL (Apple) stocks and TBONDS 01 (iShares US Treasury Bond 0-1 Year ETF), TBONDS 13 (iShares US Treasury Bond 1-3 Year ETF) bond ETF . On April 25th, Swarm officially announced that it will launch BLK (BlackRock), COIN (Coinbase), CPNG (Coupang), INTC (Intel), MSFT (Microsoft), MSTR (MicroStrategy), NVDA (NVDA) stock tokens .Token Functions:

$SMT is the native Swarm Markets token and offers trading discounts and rewards. Traders can get a 50% discount on protocol fees when they choose to pay with $SMT. $SMT holders can enjoy loyalty rewards, and the specific ratio will vary according to different levels. Similar to the concept of centralized exchange platform currency.Protocol advantages and risks:

（2 ）Acquire.Fi

The advantage of Swarm is that it provides more choices for DeFi users, combining blockchain and traditional assets, and mixing TradFi and DeFi. Of course, Swarm currently offers fewer stocks and bonds, and its depth cannot be compared with traditional markets.

Acquire.Fi is a cryptocurrency M&A marketplace that simultaneously offers everyone real-world gains from fractional equity in cryptocurrency companies, traditional businesses, and real-world assets. In Acquire.Fi, the equity will be NFTized and can be bought and sold through the secondary market. Sellers in the market, sellers, and buyers in the investment pool are required to pass KYC (subsequent, investments below $250 may not require KYC).

Protocol Income: Acquire.Fi uses multi-structured commissions. For business values ​​below $700,000, the commission will be fixed at 15% of the sale price. Commissions will be reduced to 8% between $700,000 and $5 million. Commissions over $5 million will be further reduced to 2.5%.Agreement status:

At present, the Acquire.Fi market provides equity sales of many companies including the NFT market, metaverse, media, DAO and other tracks. According to official statistics, sales of 2k+ online businesses have been completed.token function

: $ACQ is the utility token of Acquire.Fi. Staking $ACQ can enjoy exclusive investment pool, encrypted M&A transaction flow, LP mining rewards and other exclusive advantages.Protocol advantages:

Sell ​​your business online with Acquire.Fi without having to buy a separate service, contact a web host, and get more attention. Compared with other platforms, it has the advantage of being more convenient and faster.Agreement risk:

There are still legal risks associated with M&A or equity purchases through Acquire.Fi, especially if the buyer and seller are not within the same legal entity.

4.5 Summary of financial products

Lending agreements are the most successful examples of RWA projects. The unsecured lending model has been welcomed by institutions in the bull market, but it is also a catalyst for the arrival of the bear market, so the most difficult part of the credit agreement is the risk of default. Projects based on U.S. debt and U.S. stocks are relatively mature, and users can also obtain higher returns in a bear market. There are fewer TradFi projects, and the current business is still focused on financing for small and medium-sized enterprises.

The development space of institutional credit business is very limited. User income mainly comes from stable coins + protocol tokens, and due to non-full mortgages, borrowers need to bear certain bad debt risks. In the bull market stage, the risk-free return of DeFi is also very high, so the institutional credit business may not be sustainable.

We believe that national debt or monetary funds similar to those launched by Ondo are potential directions in the future. First, these funds are already a popular choice for investors in traditional finance, and the risk is relatively low; second, they provide different options for users on the chain. At the same time, the threshold is lowered.

Although the RWA project in the financial field is in its early stage, there are already many interesting use cases. With the strengthening of the composability of various protocols, many gameplay and high-yield projects may be produced, which is a subdivision track worth looking forward to.

（1 ）RealT

4.6 Real Estate Concept

RealT is a real estate tokenization platform, established in 2019, mainly serving real estate projects in Detroit, Cleveland, Chicago, Toledo and Florida. Investors can purchase RWA tokens to realize investment in real estate. To date, the platform has processed over $52 million in real estate tokenization for 970 homes.

There is no native ecological token in the agreement, and $DAI (XDAI/WXDAI) is used for value exchange within the ecology, and realtoken is issued for each real estate asset to obtain rent sharing as collateral.

• Tokenization packaging process:

• Off-chain: Through the third-party real estate management agency, according to the real estate contract, the ownership of the real estate is confirmed, and the rights and interests of members are divided into equal units; the rent of tenants is converted into US dollars through real estate management services. Legal support: RealToken submits documents to apply for securities exemptions in accordance with Regulation D and Regulation S of the US Securities Act, and RealToken may not be provided or sold within the United States or for Americans or for the benefit of Americans.

On the chain: realtoken investors need to use the stablecoin DAI deposit and loan service of the RMM application (RealT market maker) in exchange for realtokens as collateral according to the price of the oracle, and the chain is sent to the realtoken related to the leasing contract in the form of DAI every day The digital wallet address is 1/30 of the total amount of DAI for daily payment.Agreement income:

No specific revenue model found. Possible income comes from the interest rate difference between deposits and loans in the DAI fund pool, and off-chain and on-chain rent commissions.Agreement status:

The current protocol market size is $10.51 m, the total supply of XDAI is $3.224 m, the supply APY is 6.94%, the total borrowing is $2.54 m, and the borrowing APY is 9.93%. There are currently 40+ properties available for investment in the market within the agreement.User income status:

There are 17 people whose weekly rental income is >1 k DAI, and the highest income is 6187.8 3D AI/week.Protocol advantages:

Since its release in 2019, the agreement has maintained a market size of tens of millions of dollars, with continuous real cash flow income.Agreement risk:

（2 ）Tangible

Affected by the market price of real estate leasing and the relationship between supply and demand, there is a difference between the expected rental income and the actual rental income.

Tangible is an RWA tokenization project that provides users with access to RWA tokenization by launching a native yield stablecoin, Real USD. RWA physical items include but are not limited to artwork, fine wine, antiques, watches, luxury items.

• Tokenization packaging process:

Off-chain: There are four tokenized product categories on the platform, including gold, wine, watches and real estate.

( 1) For the transaction and storage of gold bars, Tangible uses the services of PX Precinox in Switzerland.

(2) For wine, they partner with London-based Bordeaux Index.

(3) For the watches, they partnered with UK-based BQ Watches.

• (4) For real estate, Tangible creates a native special purpose vehicle (SPV). These are the legal entities set up for each property. SPVs manage properties by finding tenants, collecting rent, or managing maintenance. All properties are rented out, and rental income is paid to TNFT holders in USDC.

• Legal backing: Every UK-based property has its own UK SPV. This is because real estate cannot be tokenized directly. However, legal entities can. Real estate TNFT holders have title to the SPV, which gives them a beneficial title to ownership of that real estate. However, legal ownership of both remains with Tangible's legal entity, BTS TNFT Ltd, registered in the UK. Tangible also has an entity of the same name registered in the British Virgin Islands.

• On-chain: Tangible launched Real USD (USDR), a native yield stablecoin backed by real estate. Users can use TNGBL or DAI to mint USDR at a 1:1 ratio. On Tangible, users can use USDR to purchase valuable physical goods, including but not limited to art, fine wine, antiques, watches, luxury goods. When a user purchases RWA listed on Tangible, TNFT ("Tangible non-fungible token") will be minted to represent the real thing. Tangible will deposit the physical item in a physical vault and send TNFT to the buyer's wallet. TNFT can be transferred and traded freely.

Ways to guarantee excess mortgage rate & liquidation mechanism:

(1) If the CR of USDR drops below 100%, half of the rental income will be kept in the USDR collateral vault. Therefore, daily rebalancing will be reduced by 50%. In other words, USDR holders will earn less interest until CR returns to 100%.

(2) Treasurys backing USDR always hold a diverse portfolio of liquid assets for fast liquidation (e.g. DAI, protocol-owned liquidity, and TNGBL).

(3) If all DAI and other reserves are depleted, the real estate TNFT will be liquidated. In this case, users will receive pDAI instead of real DAI. pDAI is an IOU Token that represents a claim on real DAI and can be cashed out once liquidation is performed.Agreement income:

Owners of TNFT need to pay storage fees. For example, the storage fee for gold bars is 1% per year. When redeeming, shipping costs must be paid by the person redeeming TNFT.Agreement status:

Agreement TVL $33,665,846, total collateral price $35,367,224. According to the USDR white paper, its mortgage structure should theoretically be as follows: 50 - 80% tangible real estate; 20 - 30% tokens; 20 - 30% liquidity owned by the agreement; 5 - 10% insurance fund; 0 - 10% TNGBL. The actual USDR collateral structure is as follows, which is quite different from the proposed mortgage structure:

Incentivizes use of the market and subsidizes USDR earnings; can be used to mint USDR.

• Token secondary market performance:

• $TNGBL is only circulated on uniswap and has not been supported by centralized exchanges. The liquidity is poor. The daily trading volume is mostly hundreds to thousands of dollars. The highest single-day trading volume in history is $32,000. The market value of the project is $110 million. The currency holding address on the chain is 1,021.

Since the stablecoin USDR was issued at the end of March, it has been trading well. Multiple DEXs have been launched, supporting ETH, BSC, polygon, op, and arbitrum. The 30-day average daily trading volume is $0.7 m, the price is > $1, and the current price is $1.053.

Advantages of the protocol: Create a TNFT market, lock in a large number of circulating tokens, and introduce other physical goods for purchase, including art, high-end wine, antiques, watches, luxury goods, etc.

（3 ）LABS Group

Agreement risk: SDR unanchoring risk. Centralization risk, the team is both the TNFT issuer and the custodian of the underlying assets.

LABS Group was originally positioned as a real estate tokenization platform, allowing homeowners to tokenize their houses to raise funds without an intermediary, and investors can also access other real estate agents with higher liquidity through the secondary market. currency. Currently, LABS Group has launched a Web3 vacation platform Staynex, which provides members with access to global resorts every year and can earn rewards by holding membership. Tokenize "stay" through blockchain technology and embed it into NFT, so that hotels and resorts can create, design and mint their own timeshare plans on NFT, NFT represents membership status and number of days of stay .

Due to the cross-border investment involved, LABS Group's exchange was approved by the government after submitting a complete set of business plans with the government. LABS Group has obtained a compliance license for retail investment.Agreement income:

LABS Group's primary platform, secondary exchange, and decentralized lending platform can obtain various business benefits such as consulting fees, transaction fees, listing fees, and handling fees.Agreement status:

The resort industry is rich in resources, has 60 hotels, and cooperates with Arsenal Football Club as its official hotel membership platform. At present, LABS Group is the best-performing project of real estate RWA track tokens. $LABS is supported by centralized exchanges such as kucoin, gate, and bitmart. It once broke through $35 million, and then the trading popularity declined. In the past year, the single-day trading volume was <$10w, the market value was $1.47m, the FDV was $6.66m, and the number of currency holding addresses on the chain was 11,911.

The community is very popular, with 58,000 followers on Twitter, 19k followers on Telegram, and 511 online users.Token Functions:

Mainly used as a reward token, other functions include governance (voting), a repurchase and destruction mechanism, plans to destroy 80%, of which 50% in the first stage, and 10% of each transaction on the platform will be sent to the liquidity pool permanently locked. There have also been staged staking activities before, such as staking $LABS for football game prediction (https://www.support 2 win.io/), and the activity has ended.Protocol advantages:

The adopted timeshare model, in which one person has access to a vacation property for a certain period of the year, is popular in today's rise of digital nomad culture. In addition, the team has its own resort industry resources, owns 60 hotels, and cooperates with Arsenal Football Club as its official hotel membership platform.The value capture of tokens is poor, and they are mainly used as rewards, and the empowerment is mainly on NFT. And timeshares have their downsides: high annual management fees, difficult sales, unscrupulous players and scams.

summary

summary

At present, the overall market size of real estate projects in RWA is very small, with insufficient liquidity and poor mechanism transparency. It requires the intervention of large centralized entities for endorsement and supervision, and the overall acceptance of utility tokens issued by relevant agreements in the encryption market is poor . The main reason is that physical assets need to be strictly regulated, and the project party also needs to perform complicated operations on the ownership of assets.

The tokenization of real estate can solve: 1. The cross-regional and instant transactions of the blockchain can solve the problem of low liquidity of existing real estate; 2. The threshold is low, and retail investors can also invest in real estate globally to obtain benefits. However, the most difficult problem to solve in real estate tokenization is real estate certification and valuation. The certification determines the authenticity of real estate information, and the valuation determines the price of loans and liquidations. The Tangible project has made bold attempts in these areas: using the Chainlink oracle to price RWA tokens, the information of the oracle mainly comes from the prices provided by hometrack.com; in terms of real estate authenticity, Tangible uses a third-party auditor cooperation model to independently verify Property ownership. In these projects, we can see that before the real estate is put on the chain, third parties are still required to participate, including evaluation, finance, legal and other related institutions. These all require process compliance and legal perfection.

4.7 Carbon credit concept

（1 ）Toucan

Carbon credit refers to the amount of carbon dioxide that a company can reduce or neutralize through the organization's Verified Carbon Standard (Verified Carbon Standard), which is similar to the "voluntary emission reduction (CCER)" in my country's carbon trading system. .

Toucan Protocol is a protocol deployed on Polygon, the goal is to convert carbon credits into tokens, so as to promote carbon credit transactions using decentralized financial means, and ultimately promote carbon neutrality. The carbon credits traded by Toucan Protocol come from the carbon offsets registered on Verra. Verra is a non-profit organization that registers carbon credits.

Tokenization packaging process:

• Carbon Bridge

Toucan's carbon stack consists of three modules: Carbon Bridge, Carbon Pools, and Toucan Registry.

Anyone can bring their carbon credits on-chain through Carbon Bridge. Toucan only supports carbon credits withdrawn from the Verra registry, and Carbon Bridge is an irreversible one-way bridge.

(1) An ERC 721 NFT BatchNFT will be minted at the initial stage of bridging to represent a batch of carbon credits;

(2) Permanently withdraw tokenized carbon credits from the Verra registry and obtain a unique serial number;

(3) Write the serial number received from Verra, and BatchNFT links to the exit entry in the original registry;

(4) BatchNFT automatically submits for review after updating the serial number;

After being approved by Toucan Verifier, it will become a batch of fully tokenized carbon credits, and users can fragment them into ERC 20 tokens TCO 2 at any time.

BatchNFT can be used to mint an equivalent amount of fully fungible ERC 20 token TCO 2 , where 1 TCO 2 token represents 1 carbon credit with a value of 1 tCO 2 e.

• Carbon Pools

The TCO 2 token contract still carries all the attributes and metadata of an NFT, making it specific to a particular project and year, since voluntary market carbon credits trade at very different prices. TCO 2 is an umbrella term for fungible tokenized carbon credits. When you fork the BatchNFT, the ERC 20 token will be prefixed with TCO 2- followed by an informative name including registry of origin, project, year, etc. For example: TCO 2-GS-0001-2019.

Bundling multiple project-specific tokenized TCO 2 tokens into a more liquid carbon index token enables price discovery for different classes of carbon assets. Each pool has a unique configuration with specific logic that dictates which tokens TCO 2 can deposit into it.

The Toucan team has cooperated with KlimaDAO to deploy the first Carbon Pool, namely the Base Carbon Tonne (BCT). The threshold requirements of the Base Carbon Tonne pool are: TCO 2 tokens must be Verra VCU (Verified Carbon Units), and they The year of must be 2008 or later.

TCO 2 tokens that pass the logical screening can be pledged in Carbon Pool, and depositors receive Carbon Pool tokens (such as BCT). Users can redeem at any time. The redemption will burn Carbon Pool tokens and send the basic tokens to the user. When redeeming, you can choose automatic redemption (the lowest TCO 2 in the redemption ranking) and selective redemption (pay a fee to redeem back to specify TCO 2).

There are currently 2 Toucan Carbon Pools, BCT (Base Carbon Tonne) and NCT (Nature Carbon Tonne)

• Protocol income sources:

Exchange Carbon Pool token fee

• If you choose to exchange Carbon Pool tokens selectively, Toucan Protocol charges a fee, part of which is used to burn low-value carbon credits, and the other part will be given to Toucan for the establishment of the agreement. The exchange fee for the BCT pool is 25%, and the exchange fee for the NCT pool is 10%.

Bridging carbon pool fees

This fee is currently set to 0 .

Status of the agreement: Toucan has been launched since October 2021 and currently supports Polygon and Celo. The carbon credits on the Carbon Bridge chain are 21,889,951 tons, the offset carbon credits are 298,173 tCO 2 e, and the carbon supply is 19, 908, 799 (the amount pledged in the BCT and NCT pool), the total liquidity is $ 2, 946, 585 (the total liquidity of BCT and NCT in each exchange).

• Token Functions:

• NCT is the abbreviation of Nature Carbon Tonne, and it is a standardized reference token linked to all carbon credits deposited in Nature Carbon Tonne;

BCT is the abbreviation of Base Carbon Tonne, and it is a standardized reference token linked to all carbon credits deposited in Base Carbon Tonne;

Staking the TCO 2 tokens that pass the logical screening in the carbon pool will get the corresponding tokens; otherwise, the two tokens can be used to exchange tokenized carbon credits.Protocol advantages:

To a certain extent, realize the tokenization of carbon credits and improve the liquidity of carbon credits;Agreement risk:

（2 ）Flowcarbon

Toucan Carbon Bridge is an irreversible one-way bridge, and the actual off-chain credit cannot be redeemed after the tokenization process begins; Verra Registry currently does not support carbon credit tokenization, and prohibits the practice of creating tools or tokens based on exit credit, Toucan chooses Pulling out from the original registry to prevent double counting is not an optimal solution.

Flowcarbon, a blockchain startup founded by WeWork co-founder Adam Neumann, hopes to vertically integrate the entire carbon credit lifecycle, providing strategies and solutions from carbon project initiation and financing to credit sales and corporate carbon portfolio management. In May, completed a financing of US$70 million, led by a16z, and participated by General Catalyst and Samsung Next. Currently, the carbon credit spot market is not yet online. Goddess Nature Token (GNT) will be the first bundled token.

• Tokenization packaging process:

Minting Tokenized Carbon Credits

• All requests to tokenize carbon credits are submitted through the form on the Flowcarbon website. After submitting a tokenization request, Flowcarbon verifies the information with the designated registration authority. Once the account's ownership, project type, and credit amount are confirmed, the carbon credits are transferred to a bankruptcy-segregated special purpose vehicle (SPV). Once the batch information is verified and credits are deposited into the SPV, a new instance contract is created.

A token holder initiates a token withdrawal with Flowcarbon, specifying the amount she wants to withdraw. This will reduce the balance of the token holder and increase her withdrawal amount. Exited tokens are transparently accumulated in the contract until they exceed a pending batch size. Once the threshold is reached, the bankruptcy-segregated SPV exits carbon credits in the underlying registry.

• redemption

redemption

There is a standard 2% fee on redemptions. If a GCO 2 holder requests to redeem 100 GCO 2 , they will receive 98 off-chain carbon credits.

• fluidity

fluidity

GCO 2 tokens can be deposited into a bundle in exchange for bundle tokens using Flowcarbon's dApp. Bundle tokens are issued on a one-to-one basis; if a GCO 2 token holder deposits 50 GCO 2 into a bundle, she will receive 50 bundle tokens in return. Bundled tokens are intended to provide liquidity so users can purchase bundled tokens directly. Bundled tokens are also withdrawable and redeemable.

Agreement income:"Unbundling, swapping, exiting and redemption functions all have associated dynamic fees, with more recent carbon credit actions being more expensive than longer carbon credit actions. This is to incentivize the retirement of old carbon credits. Dynamic fees are passed"rebate (rake back)

contract fulfilled. When one of the functions is activated, the contract performs that function on behalf of the user account, and the rebate contract decides how much of this maximum fee should be sent back to the requester. Say the maximum fee is 15% if Sarah requests that 100 of the bundled tokens be unbonded into GCO 2 for 2020. The bonded token contract will automatically charge 15 GCO 2 in the fee account, and 85 GCO 2 will be sent to the rebate contract. The kickback contract will contain logic about what the fee actually is; 2020 is a relatively new year, and the actual fee is 10%. So in this case the kickback contract will take 5 GCO 2 from the fee and send 90 GCO 2 back to Sarah.

Protocol advantages: Flowcarbon provides a "two-way bridge" that allows GCO 2 tokens to be exchanged for underlying carbon credits off-chain.

（3 ）PERL.eco

Protocol risk: By transferring carbon credits to SPV and creating tokens to realize on-chain transactions, the tokenization of carbon credits has not been truly realized.

PERL.eco is Perlin's latest project focused on bringing real-world bio-ecological assets to the blockchain, with one of the first assets available being tokenized carbon credits. At present, the product has not been officially launched.

Tokenization packaging process:

PERL.eco has partnered with AirCarbon Group, operator of the fully regulated carbon exchange ACX, to establish the PERL.eco Carbon Exchange (PCX), where PERL.eco sources PFC directly from supply-side carbon projects and partners (PERL. eco Future Carbon, tokenized carbon credits for high-quality carbon projects audited by PERL.eco, which have not yet been issued) and other high-quality carbon assets and retail transactions on PCX.

Status of the protocol: The token $PERL has been listed on Binance, but social media attention is low, the project progress is slow, and the white paper has not been updated for more than a year. It is planned to carry out the PFC pilot soft launch in Q3 of 2023 and the early prototype release of PERL.eco Carbon Exchange (PCX); the PCX Alpha version will be released in 2023 Q4, and the PCX Beta version will be released in 2024.

Token Functions:

$PERL is the governance token of PERL.eco. PERL plays a key role in defining the incentive system, building a broad stakeholder base, and facilitating the flow of economic value in the network. PERL holders can vote on this fee model and distribution, among other important decisions. By participating in governance, users can be rewarded with airdrops of carbon credits to offset their emissions.

Protocol risk: PERL.eco only serves as a dealer-like role, which increases the exposure of the target, but does not really improve its liquidity.

summary

summary

The carbon credit market under the chain has problems such as lack of price discovery, poor liquidity, and poor market transparency. The Web3 carbon credit project is committed to establishing a trading pool through the tokenization of carbon credits to provide better liquidity for carbon credit transactions.

However, the Web3 carbon credit project faces problems such as strong isolation and low credibility, and because carbon credits are affected by the registry of origin, projects, years, etc., the prices are not consistent, and it is difficult to achieve true homogeneous tokenization. For example, Toucan, which already has certain transaction data, currently only supports two types of carbon credit carbon index tokens, which can only be pledged through logical screening. Flowcarbon currently only plans to offer one type of bundled token, which needs to meet three requirements. In addition, the carbon credit transaction process is relatively complicated and cannot bypass some centralized verification agencies managed by independent non-governmental entities, such as Verra and Gold Standard. Verra has made it clear that it does not currently support carbon credit tokenization. Blockchain technology can change the problems existing in the traditional carbon credit trading market in many ways, but there is still a long way to go in improving credibility and enhancing market unity and liquidity.

4.8 Vertical public chain