summary

This paper systematically studies four typical RWA projects in the United States: RealT (Real-to-Tank), Ondo Finance (Ondo Finance), Centrifuge (Centrifuge), and Pre-IPO Equity RWA. The research aims to reveal the institutional logic and underlying technology of RWA in the global financial restructuring wave of 2025 through case analysis, compliance structure dissection, and revenue model comparison.

1. Asset Structure Level: RealT breaks through the barriers for real estate investors and enables small-scale segmented investment through SPV confirmation and Reg D/S compliant issuance models; Ondo uses US Treasury bonds as underlying assets and leverages the custody mechanisms of BlackRock and Coinbase to realize on-chain money market fund-like functions; Centrifuge uses the Tinlake mechanism to put supply chain receivables on-chain, and MakerDAO provides collateralized DAI liquidity, forming a new paradigm of on-chain factoring.

2. Compliance and regulatory aspects: Research has found that the main regulatory paths of the U.S. SEC in the design of the RWA structure are Reg D, Reg S, Reg CF and Reg A+, with the core principles being investor eligibility, information disclosure obligations and liquidity constraints.

3. Technical Support: In terms of technology, the Aave module provides a funding bridge for institutions and ensures the effectiveness of fund flows, while the Chainlink oracle guarantees the credibility of asset valuation, collateral ratio, and yield settlement.

4. Risks and Outlook: The future development of RWA will be constrained by three key bottlenecks: compliance disclosure costs, cross-border custody compliance, and stablecoin peg risks. However, considering the trend of institutional participation and the risk-reward ratio, RWA is considered one of the most sustainable asset classes in on-chain finance.

Keywords: RWA, Tokenization, Digital Securities, Asset On-Chain, Supply Chain Finance

01 Real Estate RWA (RealT): Asset Confirmation, Share Splitting, and Breaking Down Investor Thresholds

1.1 The Development Logic of RWA Real Estate in the United States

Real estate was one of the earliest asset classes to be tokenized and is also the sector within the RWA (Real Estate Tokenization) field with the highest degree of integration with the real-world financial system. Its core logic lies in the complete reshaping of the high barriers to entry and low liquidity of traditional real estate through on-chain ownership confirmation, fractional governance, and smart contract allocation mechanisms. RealT, as the most representative practice platform in the United States, has built a compliant tokenized real estate system based on Ethereum and the Gnosis chain since 2019, becoming a model for the integration of asset tokenization and regulation.

Compared to traditional REITs (Real Estate Investment Trusts), the innovation of the RealT model lies in:

1) The SPV (Special Purpose Vehicle) token issuance structure based on specific properties enables independent governance of each property;

2) The rental distribution based on stablecoins (USDC/DAI) improves the traceability and immediacy of earnings;

3) After passing KYC/AML verification, investors can participate in the distribution of overseas property income with a very low capital threshold (usually starting from US$50).

1.2 Asset Ownership Confirmation and SPV Structure Design

In the RealT system, the title confirmation process is the most critical regulatory step. Before a property is put on the blockchain, it must undergo title verification, valuation certification, and SPV registration. This SPV is typically established in Michigan or Delaware, USA, and exists as an LLC (Limited Liability Company). RealT is responsible for property management and revenue distribution. The table below illustrates the RealT standardized asset title confirmation process.

Note : RealT adopts a two-tier structure of SPV + Token. In essence, it does not avoid the fact that the token is a security. On the contrary, RealT's token is explicitly regarded as a security. It just chooses to issue through the Reg D / Reg S exemption path, so it does not need to be publicly registered (Non-Public Offering).

1.3 Share Split and Lowering Investor Thresholds

RealT's success lies in lowering the barrier to entry and increasing participation. Traditional real estate investment often requires millions of dollars, while RealT enables share-based participation through tokenization. Investors can freely choose to invest in individual properties, and profits are automatically distributed according to the token ratio.

Note : RealT's token circulation primarily relies on its self-built Marketplace, and in some cases, it connects to DEXs such as Uniswap. Its advantages lie in instant liquidity and global participation, but due to regulatory hurdles, its investor base remains concentrated among qualified investors with KYC verification.

1.4 Economic Benefit Model and On-Chain Revenue Distribution

RealT’s revenue mainly comes from rental income and secondary market price differences. [4] Based on publicly available data (2025), RealT properties have an average net rental return of 10%, which remains high even after deducting property management and maintenance costs.

Note : RealT's value lies not only in its stable cash flow but also in transforming real estate into quasi-monetary assets. During periods of high interest rates from the Federal Reserve, its stable returns and asset preservation characteristics make it a safe source of income for stablecoins like USDC. Some DeFi protocols have already integrated RealT tokens as collateral.

1.5 Regulatory Challenges and Future Outlook

The advantages of the RealT model are accompanied by risks: First, there's the issue of regulatory gray areas . Although the project follows the Reg D/Reg S framework, whether the trading of its tokens on the secondary market constitutes the circulation of unregistered securities remains a legal dispute. Second, there are bottlenecks to compliant expansion . Differences in laws regarding real estate transactions and SPV establishment across different states make asset standardization difficult. Third, there are issues with oracles and on-chain valuation . Currently, RealT uses a fixed valuation method and lacks a dynamic market pricing mechanism.

However, from a macro perspective, RealT (Real Asset Management) is gradually integrating with the traditional financial system. Institutions such as BlackRock and Franklin Templeton are exploring structured combinations of on-chain funds and physical assets; while the open regulatory environments in markets such as Hong Kong and the UAE provide fertile ground for the international replication of the RealT model.

1.6 Case Analysis

1.6.1 Detroit Rental Housing Project (2024)

Detroit is a key city for RealT's layout. Its housing prices are low and rental prices are stable, making it an ideal target for high returns and low volatility. Take a residential project that went on the blockchain in 2024 as an example [5]:

• Property value : USD 72,500
• Token issuance : 1450 tokens (US$50 each)
• Net annual rental income : USD 7400
• Investor return : 10.2%
• Payment method : USDC will be automatically distributed weekly.
• Investor sources : Primarily KYC-verified investors from the EU, Canada, and Singapore.

Key to success: The project's success lies in the integration of real-world assets with on-chain contracts. Rental income is distributed in real-time via stablecoins, and investors can directly verify their earnings through a blockchain explorer. Property management data and lease contracts are uploaded in hash format, ensuring tamper-proof and auditable data.

Risk points: Operations (property management, taxation, tenant disputes) remain off-chain determinants; tokenization cannot replace on-site management. RealT's expansion has seen feedback regarding weak operational integration, indicating that on-site KPIs should be routinely disclosed along with on-chain data. During due diligence, it is essential to obtain on-site due diligence reports, custody/insurance terms, and property management contracts.

1.6.2 St. Regis Aspen or Aspen Coin

In 2018, Elevated Returns tokenized a portion of its stake in the St. Regis Aspen Resort in Colorado (Aspen Coin),[6] issuing it to accredited investors in the form of security tokens and raising approximately $18 million. This case is often regarded as a representative example of legalization before technologicalization.

• Property value : The fundraising amounted to approximately $18 million, representing nearly 18% of the hotel's equity. Based on this, the overall valuation of the hotel at that time was estimated to be approximately $95 million - $100 million+ [6] .
• Token Issuance : At the time of issuance, it will be sold at a price of $1 per coin, which is estimated to be 18,000,000 Aspen Coins.
• Annual net rental income : This product distributes dividends based on hotel revenue. The annualized return depends on the hotel's operating data and is publicly disclosed as a form of dividend return to shareholders.
• Investor Returns : As an equity product, returns come from hotel operating profits and capital gains; the project does not promise a fixed return.
• Payment methods : It can be purchased publicly using USD, BTC, ETH, etc.; dividends and distributions are executed through traditional payment or escrow procedures within a legal and escrow framework, and on-chain tokens serve as registration and circulation tools.
• Investor sources : mainly qualified, institutional and restricted investors, and a minimum purchase limit (10,000 Tokens) is set to target compliant investors[7].

Success factors: Prioritizing the resolution of legal and custody issues (SPV, trustee, securities registration), treating tokens as electronic securities, providing a compliant path for institutions and qualified investors, and reducing regulatory resistance.

Risks: High compliance costs and limited secondary market liquidity; suitable for high-value, low-frequency trading assets. For issuances targeting institutions or family offices, compliance is usually a top priority.

1.6.3 Roofstock onChain (Single Property NFT or LLC Structure)

Roofstock onChain enables a closed loop between on-chain transactions and off-chain property transfer by establishing a single-member LLC for each property (often a rental property) and minting NFTs representing the LLC's equity on the blockchain. The platform also supports on-chain financing and KYC compliance.

• Property Value : Publicly available sales examples include a South Carolina property sold in 2022 for $175,000 USDC .
• Token Issuance : Roofstock On Chain primarily uses a single NFT (ERC-721) to represent the entire property.
• Annual net rental income : For a property of $175k–$180k, the typical rental return rate will vary depending on market fluctuations, generally ranging from about 4% to 8% net rental return[8].
• Investor return : For buyers of the entire property, the return consists of net rental income plus capital appreciation; for fractional holders (if subdivided), the return is distributed according to shareholding.
• Payment methods : Payment can be made using USDC (stablecoin) in conjunction with on-chain lending (Teller or USDC Homes), and fiat currency payment is also supported (the platform supports multi-channel settlement).
• Investor sources : targeting general investors, real estate investors, and the blockchain community; both parties in the transactions are mostly real estate buyers or investors, and the platform usually cooperates with KYC or compliance processes.

Success factors: Standardizing the business process of property transfer (LLC and NFT), solving the problem of the connection between on-chain transactions and traditional land registration, improving transaction efficiency and supporting on-chain financing.

Risk factors: If the original mortgage or lien is not clearly resolved, or the lender does not agree to the on-chain transfer, the legal validity may be affected, and settlement or consent must be obtained before going on-chain. It is essential to complete the settlement of mortgages/priority claims or obtain written consent before going on-chain.

1.6.4 Harbor (A Case Study of a Failed Student Housing Project)

Harbor's early plans in 2019 to tokenize real estate projects such as student housing (e.g., The Hub at Co.)

(e.g., lumbia), but due to conflicts with existing lenders' terms and collateral/priority issues, the corresponding tokenization plan was forced to be canceled or restructured, becoming a lesson learned in the process of tokenization implementation.

• Property value [9]: $20M
• Token Issuance : Due to the cancellation of the plan, there is no final issuance quantity or actual token circulation data.
• Net annual rental income : Project not yet completed, no publicly available data on actual distribution.
• Investor Returns : No offering has been completed, and historical return data is unavailable.
• Payment method : The plan was to use a tokenized REIT, potentially combining fiat currency or on-chain settlement, but the plan was withdrawn before implementation, and details have not been fully disclosed.
• Investor source : Originally planned to target qualified or institutional investors and platform users, but the offering was not completed, therefore there is no data on the actual investor composition.

Lessons learned from failures: Before pushing forward with real estate tokenization, it is essential to address and obtain the consent of all existing creditors, restructure the debt, or establish a clear legal priority order; otherwise, even the best technical solutions may be rejected due to debt law or security priority.

02 Fixed Income RWA (Ondo Finance): Product Design, Risk Control, and Institutional Investor Participation Logic

2.1 Background and Industry Positioning

In the RWA (Real World Assets) sector, compared to real estate, private equity, or supply chain finance, fixed-income assets, especially US Treasury bonds and short-term government securities, are regarded as a safe haven for on-chain funds due to their high credit rating and low yield volatility. Ondo Finance is one of the pioneers in this field, and its main products include USDY and OUSG, which correspond to a wider range of investor access and a strict qualified investor channel, respectively. In June 2025, the media disclosed that OUSG had achieved a scale of approximately $693 million on the ONDO platform, demonstrating the scaling potential of fixed-income RWA[1].

The core value of this model lies in connecting highly standardized, high-credit-rating off-chain government bond assets to an on-chain liquidity pool through SPV and smart contracts, thereby achieving three major benefits: improved liquidity, lower investment threshold, and access to compliant assets.

2.2 Product Design Structure

2.2.1 Product Category and Target Audience

• USDY: Targeting non-accredited investors and global users, it is backed by US short-term Treasury bonds and bank deposits, and offers a floating annualized yield.
• OUSG: Targeting Qualified Purchasers in the United States, focusing on short-term U.S. government bonds, emphasizing extremely high credit ratings and low risk[10].

2.2.2 Structural Diagram

The following structure is selected:

• Underlying assets → U.S. Treasury bonds or short-term government securities (such as T-Bills)
• Custodian and auditing firms (traditional asset management firms such as BlackRock's BUIDL fund act as the underlying entity)
• SPV/trust structure setting up to hold underlying assets
• On-chain issued tokens (USDY or OUSG) — Holders have the right to the income of the underlying assets but no direct ownership.
• The smart contract is configured with a minting/redemption mechanism and a profit distribution mechanism (such as daily or weekly interest accrual).
• Secondary market or platform market-making mechanisms enhance liquidity

2.2.3 Logic of Institutional Participation

The driving forces for institutional participation in fixed-income RWA include: first, traditional funds want to maintain on-chain allocation without giving up low-risk returns; second, to enable asset managers to obtain a transparent, traceable and low-friction issuance channel on the chain. For Ondo, its compliance background, custody arrangements and cooperation with well-known asset management companies (such as BlackRock and Franklin Templeton) have enhanced its institutional trust. [2] At the same time, tokenized government bonds can also serve as collateral assets in the DeFi ecosystem, improving capital efficiency.

2.3 Risk Control and Compliance Mechanisms

In fixed-income RWA products, risk control and compliance mechanisms are essentially the core prerequisites for their acceptance by institutional investors. Current US practice shows that these products typically use short-term US government securities as underlying assets, resulting in extremely low credit risk—a key advantage distinguishing them from native on-chain assets. Simultaneously, the yield settlement mechanism is automatically executed through smart contracts, significantly improving transparency and auditability while reducing human error risks. Combined with custodian banks and third-party auditing mechanisms, this ensures a one-to-one correspondence between the underlying assets and the tokens, thus building a dual guarantee at the institutional level: the real existence of the assets and the trustworthiness of the on-chain mapping.

From a structured risk control perspective, its core is not a single measure, but a dual-track system of on-chain triggering mechanisms and traditional financial regulation. Specifically, regarding asset backing ratio, a rigid constraint of a minimum 1:1 ratio between underlying assets and tokens is enforced, combined with a Proof-of-Reserve mechanism to ensure on-chain verifiability, while the custodian bank provides audit endorsement. For liquidity management, a 24/7 minting and redemption mechanism and market maker commitments are relied upon, with on-chain event recording ensuring full traceability. Regarding investor eligibility control, KYC/AML and a qualified investor system combined with a whitelist mechanism are used to achieve on-chain permission management and align with US securities regulatory requirements (such as the SEC framework). Technically, smart contract auditing, multi-signature governance, and on-chain audit reports reduce protocol-level risks. Furthermore, in collateral and liquidity usage scenarios, all collateralization activities are transparently recorded on-chain and disclosed on the platform, preventing the accumulation of hidden leverage risks.

From a compliance perspective, such token issuances generally rely on the Reg D and Reg S frameworks of the U.S. Securities Act, using private placement exemptions to circumvent the registration requirements for public offerings, while strictly limiting the scope of investors and information disclosure obligations; the custody of underlying assets must comply with the banking regulatory system, and the authenticity and independence of assets must be ensured through regular audits; in terms of trading and exit mechanism design, on-chain transfers are not completely free, but rather embed investor eligibility verification and compliance restrictions, thereby achieving a dynamic balance between liquidity and regulation.

In essence, the current RWA risk control system transforms the traditional financial mechanisms of credit intermediation and audit trust into a combined structure of on-chain verifiable data and automatically executed rules. This model does not weaken regulation; rather, it strengthens regulatory enforcement at the technological level. However, it's important to note that the risks have not disappeared. Instead, they have shifted from primarily credit risk to primarily structural and compliance risks, such as the failure of custodian institutions, discrepancies between on-chain data and real assets, or uncertainties arising from changes in regulatory policies. Therefore, the key to RWA's large-scale institutional implementation in the future lies not in technological maturity, but in the long-term stability and regulatory viability of this integrated on-chain and off-chain risk control system.

2.4 Profit Model and Quantitative Analysis

In the fixed-income RWA system, the core logic of the income model has not deviated from the essence of traditional finance, but has achieved more efficient income redistribution and liquidity enhancement in the on-chain structure. The income of the Treasury bond RWA products represented by Ondo Finance mainly comes from the interest of the underlying US Treasury bonds, while the structural premium brought about by the efficiency of fund pool operation and the liquidity premium given by the on-chain secondary market. According to actual data, the annualized yield of USDY and OUSG products in 2024 was about 4.6%–5.4% [3]. This level is not only significantly higher than most traditional money market funds in the current interest rate environment, but also reflects the advantages of on-chain assets in fee compression and distribution efficiency. More importantly, these products repackage the income assets that were originally closed in the institutional system through tokenization, so that they can be targeted at both retail and qualified investors, thereby creating market expansion value in addition to the income structure.

From a cost and structural perspective, on-chain notes exhibit a significantly lighter approach compared to traditional MMFs (money market funds) or bond funds. On one hand, management fees are significantly reduced, reflecting a reduction in intermediary layers; on the other hand, the on-chain minting-redemption-trading mechanism significantly improves capital turnover efficiency. Investors do not need to rely entirely on fund redemption windows but can achieve liquidity release through the secondary market. This near-real-time liquidity is essentially a structural transformation of traditional assets by DeFi mechanisms. Its significance lies not in the increase in yield itself, but in the improvement of capital utilization efficiency and asset composability. In other words, RWA's competitiveness is shifting from higher returns to greater efficiency at the same risk level.

According to data from the RWA.xyz platform, as of April 1, 2026, Ondo had approximately $2.3 billion in assets locked in the US Treasury bond RWA market, representing a market share of approximately 18.11%, making it one of the leaders in this segment.

 Figure 7: Market capitalization and market share of the top 10 global RWA issuance protocols (as of April 1, 2026) 

 Source: rwa.xyz/treasuries, Pharos Research

2.5 Institutional Participation and Secondary Mechanisms

As the fixed-income RWA system matures, the participation pathways of institutional investors and the construction of secondary market mechanisms become key variables determining product size and liquidity. Ondo Finance's approach is not simply about introducing institutional funds, but rather about effectively connecting traditional asset management institutions (such as asset managers and custodian banks) with on-chain investors through a structural design that combines off-chain asset management with on-chain liquidity expression. This achieves a two-way expansion of both funding sources and asset supply. In this process, institutions primarily undertake responsibilities such as underlying asset selection, portfolio management, and compliant custody, while the on-chain component handles share allocation, liquidity release, and investor distribution. This creates a new collaborative relationship characterized by functional decoupling but interconnected risks. This structure allows RWA products to meet both institutional requirements for security and compliance, and on-chain users' needs for flexibility and tradability.

Looking further, the secondary market mechanism is the core driving force for RWA's transformation from a fund-like product to a tradable asset class. The secondary trading mechanism revitalizes token circulation and improves asset fundraising. Ondo's Nexus platform states that it can realize an instant minting and redemption mechanism, enhancing liquidity [2]. This mechanism essentially reshapes the traditional fund subscription and redemption-driven liquidity model, so that investors no longer rely entirely on the issuer to provide liquidity outlets, but can realize share transfers through matching transactions on the chain, thereby significantly shortening the capital exit cycle. At the same time, the introduction of market making mechanism and liquidity pool has also reduced the liquidity discount problem caused by price fluctuations to a certain extent, making RWA assets gradually have trading characteristics similar to bond ETFs.

At a deeper level, there is a clear positive feedback loop between institutional participation and the secondary market mechanism: institutional entry improves the quality and stability of underlying assets, thereby enhancing market confidence; and more efficient secondary market liquidity, in turn, increases institutional allocation willingness and capital turnover efficiency. Once this cycle is established, it will propel the RWA market into a phase of large-scale growth. However, it is important to note that this model still relies on strict compliance boundaries and investor access mechanisms. Especially under the US regulatory framework, secondary market transactions are often subject to transfer restrictions and accredited investor rules, which to some extent limits the realization of completely free circulation.

The secondary mechanism currently being built by Ondo is essentially an attempt to create an on-chain fixed-income market infrastructure. Its significance lies not only in improving the liquidity of individual products, but also in providing a unified trading and pricing framework for multiple types of RWA assets in the future. If this mechanism continues to evolve and gradually introduces more market makers, structured products, and interest rate derivatives, the RWA market could potentially evolve from its current passive yield asset pool into an on-chain bond market with a complete yield curve and risk stratification. At that point, institutional participation will no longer be an incremental variable, but will become a core component of market operation.

2.6 Challenges, Trends, and Implications for the Hong Kong Market

From a broader perspective, while the initial exploration of RWA in the US has validated the feasibility of asset tokenization, its development still faces multiple structural constraints, including an incompletely unified regulatory framework, complex legal ownership between on-chain and off-chain assets, reliance on a few platforms for liquidity, and inconsistent transparency of underlying assets. Meanwhile, clear trends are gradually emerging in the market: first, asset types are expanding from standardized assets like short-term government bonds to more complex categories such as credit and private equity fund shares; second, compliance infrastructure (such as KYC/AML, custody, and auditing) is continuously strengthening; and third, leading institutions are accelerating their entry to drive large-scale development. Against this backdrop, if the Chinese and Hong Kong markets wish to capitalize on the development opportunities of RWA, they can focus on both institutional supply and scenario implementation. For example, leveraging Hong Kong's advantages in international financial and regulatory collaboration, they can pioneer compliant tokenization issuance and cross-border circulation mechanisms, while establishing higher standards in asset screening, information disclosure, and investor protection, thereby achieving innovative breakthroughs under controllable risks.

03 Supply Chain Finance RWA (Centrifuge): Core Enterprise Ownership Confirmation, SME Financing Efficiency and Risk Mitigation

3.1 Overview: RWA's Structural Innovation in Supply Chain Finance

In existing RWA practices, supply chain finance presents a more complex and challenging scenario than real estate or government bonds, but this also makes it more structurally innovative. From my observation, the core issues of traditional supply chain finance revolve around three key words: information asymmetry, broken credit transmission, and low financing efficiency—even with genuine accounts receivable, SMEs still struggle to obtain low-cost funding. The introduction of RWA is not simply about putting accounts receivable on-chain, but rather a complete structural restructuring that breaks down the bank-dominated credit intermediation system into an on-chain combination of asset confirmation, risk stratification, and liquidity matching. In this process, models like Centrifuge offer a relatively clear path: on the one hand, by standardizing and encapsulating accounts receivable through SPVs or legal agreements, giving them verifiable and transferable underlying asset attributes; on the other hand, by introducing a tiered financing structure similar to Tinlake, dividing the asset pool into different risk levels (such as Senior/Junior Tranche), thereby attracting funds with different risk appetites. This design essentially replicates and optimizes the logic of traditional ABS (Asset-Backed Securities) on-chain, but its key difference lies in the fact that blockchain provides a more frequent and transparent ability to update asset status, enabling funders to assess risk more dynamically, rather than relying entirely on periodic disclosures. Furthermore, the involvement of DeFi liquidity (such as stablecoin financing provided by MakerDAO) has further changed the funding structure, allowing supply chain financing to move beyond bank balance sheets and connect to global on-chain capital pools. It can be said that RWA's true innovation in this field is not merely about improving financing efficiency, but about attempting to reshape the underlying mechanisms of how credit is segmented, priced, and circulated—which is what makes it more noteworthy compared to other RWA tracks.

3.2 Centrifuge Platform Design Logic: Tinlake Model and SPV Mechanism

Centrifuge's Tinlake model has a core structure where off-chain SPVs hold real assets, while on-chain tokens represent beneficial rights . Its key innovation lies in achieving risk stratification through a dual-token structure: the TIN token assumes secondary risk, while the DROP token provides stable returns for senior investors.

This model creates a credit tiering similar to traditional asset securitization, but with greater on-chain transparency in terms of liquidity and auditing mechanisms.

Chart Explanation : This structure ensures full compliance for RWA assets, from offline ownership confirmation to on-chain flow. The SPV legally isolates risk, the NFT ownership confirmation mechanism prevents double staking, and the tiered token design allows investors with different risk appetites to access the platform.

3.3 Cooperation Mechanism with MakerDAO: Stablecoin Liquidity Injection

Within the entire supply chain RWA system, if Centrifuge addresses the issue of how assets are put on-chain and layered, then its integration with MakerDAO answers a more crucial question—how these assets can truly obtain a sustainable and scalable source of funding. In practice, this collaboration is not merely a simple protocol integration, but rather a systematic attempt to migrate traditional factoring financing logic onto the blockchain.

Specifically, Centrifuge introduces DROP tokens generated in Tinlake into the MakerDAO collateral system, allowing assets that originally represented low-risk priority returns to be directly used as collateral in the stablecoin minting mechanism. The core significance of this design lies in its ability to bridge the gap between real-world assets and on-chain credit money (DAI), enabling supply chain finance to move beyond reliance on bank or private lending funds and connect to a more open on-chain liquidity pool. In other words, asset providers gain not just supplementary financing channels, but a fundamental change in their funding structure.

Structurally, this mechanism can be understood as a path of gradual abstraction and enhanced liquidity: real assets → DROP → DAI → secondary market. Each transformation is accompanied by the standardization of asset form and the improvement of liquidity: accounts receivable are first encapsulated as NFTs to achieve ownership confirmation, then transformed into tradable ERC-20 tokens (DROP/TIN) through a layered structure, then released as the stablecoin DAI through the MakerDAO system, and finally enter the broader DeFi market for circulation and reallocation. It is precisely in this process that the relatively closed credit assets in traditional finance acquire composability for the first time, and can be embedded in more complex on-chain financial structures.

Of course, the success of this mechanism hinges on the combined effect of multiple risk mitigation measures. On one hand, Centrifuge prioritizes risk allocation to TIN holders through a tiered structure, thus providing a credit buffer for DROP. On the other hand, MakerDAO sets a high over-collateralization ratio for DROP and employs a liquidation mechanism to control systemic risk. Furthermore, the underlying assets still rely on the SPV structure, auditing, and legal constraints to ensure genuine repayment. This means that on-chain credit is not divorced from the real-world legal system but rather forms a hybrid model of on-chain and off-chain constraints.

From my perspective, the real innovation of this collaboration lies not merely in introducing stablecoin liquidity to RWA, but at a deeper level, in attempting to construct a new credit transmission path: credit no longer relies entirely on bank balance sheets, but rather on asset stratification, protocol collateralization, and market pricing, gradually completing the splitting and repricing on-chain. Once this mechanism matures, its impact may not be limited to supply chain finance, but will extend to a wider range of real-world asset classes.

3.4 Case Study: New Silver and HarborTrade

(1) New Silver Case: Home Renovation Loans Converted into RWA New Silver is a US real estate short-term financing institution that converts home renovation loans into NFTs through the Centrifuge platform. The average loan amount is $100,000 to $250,000. After the assets enter the Tinlake pool, DROP investors can obtain a stable annualized return of 6% to 9%. Project data [11] shows that as of the end of 2024, the cumulative loan amount exceeded $50 million, with an extremely low default rate (historically, it shows a range of 0% to 2%. If a precise figure is required, the issuer's loan rating default table or third-party audit report should be cited).

(2) HarborTrade Case: RWA Transformation of International Trade Accounts Receivable HarborTrade introduces the RWA structure in the trade finance process, with the core asset being the exporter's accounts receivable. [12] After generating NFT vouchers through the Centrifuge system, DROP investors' funds flow directly back to the exporting company through the SPV, reducing the financing period from several weeks to a single week or less (specific projects can be reduced to 1-2 weeks, requiring proof of the project's cash flow).

3.5 Asset ownership confirmation, risk control and on-chain monitoring logic

Centrifuge employs a dual-track mechanism for risk control : real-time on-chain monitoring combined with off-chain legal verification . The underlying documents for each asset (contracts, invoices, payment records) are verified by a third-party auditing firm, and hashes are generated and uploaded to the blockchain. The system includes an Oracle monitoring module that automatically triggers liquidation processes in the event of asset default, delayed payment, or devaluation of collateral.

3.6 Efficiency and Cost Comparison with Traditional Supply Chain Finance

By comparing the traditional factoring model with the Centrifuge model, RWA demonstrates significant advantages in terms of financing cycle, information transparency, funding costs, and default control.

04 Pre-IPO Equity RWA: Asset Compliance, Transfer Restrictions, and Valuation and Pricing Mechanisms

4.1 Market Background and Institutional Logic of Pre-IPO Equity RWA

As seen in the previous analysis of RWA in real estate, fixed income, and supply chain finance, a common underlying logic lies in transforming illiquid real-world assets into financial products with divisible, tradable, and programmable characteristics through asset ownership confirmation, structural packaging, and on-chain circulation. Pre-IPO equity RWA essentially continues this logic, but its complexity and institutional constraints are significantly higher. Its core is no longer just about putting assets on the blockchain, but rather how to achieve compliant digital representation and limited liquidity release of private equity within the strict US securities regulatory framework.

From a market perspective, with the rise of compliant tokenization platforms such as Securitize, Arca Labs, and Republic, the illiquid equity assets held by traditional VC/PE firms have begun to have a technical path for fractionalization and securitization through blockchain. Essentially, this is similar to structurally splitting primary market equity and introducing a quasi-secondary market mechanism in a regulated environment. However, unlike assets such as RealT or Ondo, the risk pricing, information disclosure, and transfer restrictions of pre-IPO equity are more stringent, so its institutional design relies more on the US securities law exemption system. From the perspective of specific implementation paths, the market has gradually formed a compliance triangle centered on Reg D, Reg A+, and Reg CF. Reg D (Rule 506(c)) corresponds to high-net-worth qualified investors and is currently the main channel for large-scale financing and institutional participation. Its characteristics are high issuance efficiency but limited liquidity (usually requiring a one-year lock-up period). Reg A+ (Tier 2) opens up space for public investor participation to a certain extent, balancing financing scale and compliance disclosure requirements, enabling assets to have limited liquidity on the ATS (Alternative Trading System). Reg CF emphasizes diversified participation and risk control. Its system design is not simply about lowering the threshold, but rather about dynamically constraining investors' annual investment amounts, positioning them as a user participation layer or community equity pool. This is somewhat similar to the logic of subordinated funds absorbing risk in supply chain finance RWA. Based on case experience, current mainstream Pre-IPO RWA projects typically adopt a two-tier structure: upper-layer Reg D/Reg S fundraising + lower-layer Reg CF user participation. This balances financing efficiency and community expansion, which is highly consistent with the structural layering trend mentioned earlier. Therefore, it can be argued that Pre-IPO equity RWA is not simply a replication of the on-chain path for real estate or bond assets, but rather an institutional correction to the liquidity issues of traditional private equity under stronger regulatory constraints. Its core value lies in improving asset accessibility and liquidity efficiency by introducing on-chain technology without violating the bottom line of securities law. However, its development boundaries are always determined by the compliance framework.

4.2 Case Studies of Representative Platforms: Securitize, Arca Labs, and Republic

From a practical perspective, the three types of platforms—Securitize, Arca Labs, and Republic—correspond to three typical paradigms: infrastructure-driven, fund structure restructuring, and crowdfunding for inclusive purposes. First, Securitize is more like the underlying operating system of the digital securities era. By integrating issuance, registration, compliance, and trading (ATS), it modularizes and on-chains the previously fragmented private equity process, enabling programmable circulation of pre-IPO equity. Its Pre-IPO Equity Token Program essentially helps companies release some liquidity before their IPO, while strictly limiting the investor base through Reg D and other methods, thus achieving a balance between efficiency and compliance. Second, Arca Labs restructures the asset structure, incorporating pre-IPO equity into fund containers and achieving a quasi-public offering expression through the NAV (Net Asset Value) mechanism. The key to this model is not the liquidity of individual projects, but risk diversification and valuation smoothing at the portfolio level, which is, to some extent, closer to the on-chain mapping of traditional asset management logic. Finally, Republic represents another path—through Reg CF... The framework lowers the barrier to entry, extending pre-IPO investment from high-net-worth individuals to the general public. It automates equity registration and dividend distribution through blockchain, making small-scale, diversified, and decentralized investment structures feasible. However, it also naturally faces stronger liquidity constraints and information disclosure pressures.

From my perspective, these three models are not in competition, but rather collectively constitute the tiered market structure of Pre-IPO Equity RWA: Securitize addresses the issue of compliant circulation, Arca Labs optimizes pricing and holding, while Republic explores the boundaries of who can participate. All three point to a core issue: how to gently restructure traditional equity liquidity through technological means without crossing the bottom line of securities regulation. This restructuring does not completely eliminate illiquidity, but rather achieves controlled liquidity through lock-up period design, investor tiering, and secondary market access mechanisms. This is also the key characteristic that distinguishes Pre-IPO RWA from other asset classes.

4.3 Valuation, Pricing, and Holding Period Mechanisms

The biggest challenges in pre-IPO equity valuation stem from its inherent illiquidity and information asymmetry. To effectively address these challenges, the RWA tokenization project has adopted a dynamic net asset value (NAV) model and verifiable reporting mechanisms for valuation and risk mitigation. In this area, mainstream platforms generally employ three valuation paths to adapt to different market demands and valuation scenarios.

First, milestone valuation is a common valuation method that dynamically adjusts the valuation based on a company's growth stage, such as funding rounds and revenue growth. This method is particularly suitable for early-stage growth companies, accurately reflecting their changing valuation over time. Second, the comparable company method determines a relatively reasonable market valuation for pre-IPO companies by comparing their valuation multiples with those of listed companies in the same industry. This method emphasizes market-driven factors and can flexibly reflect the impact of changes in the market environment. Finally, the on-chain NAV oracle method ensures the transparency and traceability of valuations by having an independent auditing firm periodically upload the company's net asset data to the blockchain. This method is suitable for valuation updates throughout the entire lifecycle and can reflect changes in assets in real time, although its auditing costs are higher.

These valuation approaches do not operate in isolation but are used in combination based on project characteristics and market demand. For example, stage-based valuation and the comparable company approach are often used for financing early- and mid-stage projects, providing flexible and market-oriented valuations. Meanwhile, blockchain net asset value synchronization provides transparent and credible valuation support for mature, less liquid assets.

By combining these valuation methods, the RWA platform not only improves the accuracy of valuations but also enhances investor confidence in projects, thereby promoting healthy market development. Furthermore, these valuation models provide investors with multi-dimensional risk assessment criteria, enabling them to more clearly understand the risk-return profile of projects in complex investment environments.

4.4 Liquidity Mechanism and Transfer Restrictions

In the preceding analysis, we explored the core structures and compliance paths of different asset types, including RealT (Real Assets), Ondo Finance (Ondo Finance), and Centrifuge (Supply Chain Finance RWA). In contrast, the liquidity mechanisms and transfer restrictions of Pre-IPO Equity RWA are more complex, primarily due to factors such as lock-up periods, investor eligibility requirements, and regulatory exemptions. For example, Securitize requires its tokens to be locked up for at least 12 months after issuance before they can be transferred on a corresponding regulated ATS (Automatic Transfer Trust). This process reflects the stringent regulations that Pre-IPO Equity RWA must follow during liquidity release.

To enhance liquidity, the key to Pre-IPO equity RWA lies in establishing a compliant and efficient transfer mechanism. First, a regulatory-recognized token registration system ensures compliant asset circulation and facilitates asset transfers between different platforms. Second, cross-platform KYC (Know Your Customer) verification functionality verifies investor identities across platforms, ensuring investor compliance. Finally, the on-chain compliance layer smart contract further ensures the automatic execution of various compliance requirements during the transfer process, thereby reducing the risk of human intervention.

Based on the above mechanisms, the process of Pre-IPO equity RWA from private placement to compliant circulation typically follows the following path:

(1) During the lock-up period , the tokens are non-transferable, investors need to pass KYC verification, but cannot be traded in any market, and liquidity is completely frozen.

(2) After the lock-up period , the tokens can be traded on regulated ATS markets (such as Securitize Markets and tZERO), but KYC and AML verification are still required to ensure buyer compliance. However, due to insufficient market depth and a limited buyer base, liquidity is still affected to some extent.

(3) During the public offering conversion stage , after meeting the SEC's path disclosure requirements and Reg A+ approval, the tokens can be converted into public market assets and opened to a wider range of investors. However, this process often results in a delay in liquidity release due to approval delays.

Through these multi-layered compliance measures, pre-IPO equity RWAs can gradually release liquidity while ensuring compliance. However, this process also highlights the complexity and cyclical nature of asset liquidity release under the regulatory framework.

Through this liquidity mechanism and transfer restrictions, the market development of pre-IPO equity RWA will gradually improve asset liquidity while meeting regulatory requirements, thus promoting its marketization process.

4.5 Investment Returns and Holding Period Analysis

In Pre-IPO equity RWA, the investment period is typically between 3 and 7 years. According to historical data from the Securitize and Republic platforms [14], the internal rate of return (IRR) for investors ranges from 12% to 25%, despite significant fluctuations. With the emergence of on-chain structured products, tiered return designs have become widely adopted:

(1) Senior Layer (Priority Tokens) : This layer of tokens typically provides stable dividends and is suitable for institutional investors with low risk tolerance. The typical holding period is 2 to 3 years [15], with an annualized return of 8% to 12%.

(2) Mezzanine layer (mezzanine token) : It carries certain risks and is suitable for investors with moderate risk tolerance. The annualized return is 15% to 20%[16] and the holding period is generally 3 to 5 years.

(3) Equity layer (equity token) : This layer of tokens has a higher investment risk and is mainly aimed at risk investors with a high risk appetite. The annualized return can reach more than 25%[17], and the typical holding period is 5 to 7 years.

This tiered design not only attracts institutional investors with different risk appetites, but also provides a more flexible product structure for the tokenized secondary market, better meeting diverse market demands.

This structured design not only optimizes the risk-return matching of different types of investors, but also effectively improves asset liquidity, paving the way for the diversified development of the capital market.

05 Conclusion

Research on early examples of RWA in the US reveals that RWA, as an on-chain asset class, is continuously blurring the lines between traditional finance and blockchain, demonstrating profound innovative potential across multiple fields. Real Estate RWA (RealT) achieves fractionalized management of traditional real estate assets through SPV structure design and tokenization, significantly lowering the investment threshold and ensuring market legitimacy through a compliance framework. Ondo Finance uses US government bonds as underlying assets, enabling the on-chain production of fixed-income products through smart contracts and an SPV architecture, allowing investors to participate in the fixed-income market with low risk and high liquidity. Centrifuge, through its supply chain finance RWA project, transforms the traditional credit system, which previously relied on banks, into a decentralized structure based on blockchain, improving financing efficiency and reducing costs.

However, while these projects have provided valuable experience and innovative pathways for the development of the RWA market, they also face numerous challenges. For example, the high costs of compliance disclosure, cross-border custody compliance issues, and stablecoin pegging risks are all key bottlenecks to the continued development of RWA. Particularly in terms of regulation, although major platforms have designed their systems with compliance in mind, the stringent requirements under the US securities law framework still limit the liquidity release of some products. For instance, the liquidity mechanisms and transfer restrictions of pre-IPO equity RWA need to find a balance between compliance and market demand, especially given the restrictions on lock-up periods and the secondary market, making complete liquidity liberalization difficult.

Compared to the Chinese and Hong Kong markets, while the US has made some progress in the technical framework and compliance design of RWAs, China and Hong Kong, as international financial centers, possess different advantages. China's flexibility in financial technology and innovation regulation allows it to explore RWA paths more suitable for its domestic market by strengthening the integration of blockchain with traditional finance. Hong Kong, as an international financial center, can leverage its mature financial market and global investor structure to promote the compliant circulation of cross-border RWAs, providing an important bridge for the expansion of the global RWA market. Especially in terms of cross-border liquidity and international investor access for RWAs, Hong Kong is expected to become an important testing ground and driving force for the development of this emerging asset class.

In summary, while the United States has achieved a leading position in the development of RWAs, its future large-scale development still faces significant challenges in areas such as compliance and liquidity. The openness and innovation capabilities of the Chinese and Hong Kong markets may offer new opportunities and perspectives for the further expansion of the global RWA market.

06 Reference Sources

[1] Coindesk: Ondo Finance Debuts $693M Treasury Token on XRP Ledger Amid Soaring RWA Trend

[2] Ondo.finance: Introducing Ondo NexusDelivering Instant Liquidity for Third-Party Tokenized Treasures, Leveraging Assets from BlackRock, Franklin Templeton, Wellington Management, and WisdomTree

[3] Plume.org:Plume Network Taps Ondo Finance to Broaden RWAfi Ecosystem with Tokenized US Treasures

[4] outliermedia.org: The real estate scheme gobbling up Detroit, one digital token at a time

https://outliermedia.org/crypto-real-estate-realt-cryptocurrency-detroit/

[5] RealT White Paper - https://realt.co/wp-content/uploads/2019/05/RealToken_White_Paper_US_v03.pdf

[6] Aspentime-https://www.aspentimes.com/trending/in-18-million-deal-nearly-one-fifth-of-st-regis-aspen-sells-through-digital-tokens

[7] Pwco -https://www.pwco.com.sg/insights/blockchain-real-estate-part-iii/

[8] Nftnow - https://nftnow.com/news/roofstock-onchain-origin-story-sell-third-property-via-nft-marketplace/

[9] Harbor Cancels Tokenized REIT of University Dorm 'The Hub at Columbia'-

https://tokenist.com/harbor-cancels-tokenized-reit-of-university-dorm-the-hub-at-columbia/

[10] RWA.xyz: https://app.rwa.xyz/assets/OUSG

[11] Gov.centrifuge: https://gov.centrifuge.io/t/cp95-pop-new-silver-ns3/5603

[12] Gov.centrifuge: https://gov.centrifuge.io/t/issuer-harbor-trade-credit/141

[13] U.S. Securities and Exchange Commission: https://www.sec.gov/resources-small-businesses/regulation-crowdfunding-guidance-issuers

[14] State of the Pre-IPO Market -

https://www.hiive.com/market-reports/state-of-the-pre-ipo-market-2026-annual-report

[15] https://www.blueowlcapitalcorporation.com/investors/sec-filings

[16] https://app.rwa.xyz/credit

[17] https://dune.com/discover/content/trending