RWA heat is rising as encryption and TradFi integration accelerates.

Recently, the yield on the US 10-year Treasury bond has exceeded 4% for three consecutive days. The high yield makes fixed-income investments in traditional markets more attractive. This may lead some institutional funds in the crypto market to flow into traditional markets in search of more stable returns.

At the same time, the development of physical assets ( RWA ) track has also created opportunities to attract incremental users from traditional markets and enhance liquidity. By putting traditional assets on-chain and tokenizing them, RWA can provide traditional market participants with a more convenient way to invest, while also opening up participation channels for the crypto market. This two-way liquidity is expected to increase the overall liquidity of the market and promote a more effective allocation of capital.

The introduction of RWA tokens has built more liquidity bridges between the traditional market and the crypto market. Traditional market participants can use RWA tokens to engage in the crypto market, while crypto market participants can also enter the traditional market through RWA tokens. This increase in cross-market liquidity helps to improve market efficiency and attract more investors and traders.

In terms of infrastructure, decentralized finance ( DeFi ) is built on blockchain technology and offers a range of financial services such as lending, trading, and liquidity mining. RWA tokens, as representatives of traditional assets in DeFi, can provide DeFi users with a wider variety of asset choices and seamlessly integrate with the DeFi ecosystem. This allows RWA to demonstrate its potential in the DeFi space and attract more attention.

Investors often seek to reduce risk through diversification and asset variety. RWA tokens provide a way to combine traditional assets with the crypto market, enabling investors to access a variety of investment opportunities through a single platform. This demand for asset diversification may drive investor interest in RWA and position it as part of their portfolio.

In the lending agreement sector, there are three main participants worth paying attention to:

Maple was founded in 2019, led by traditional finance bankers and credit investment professionals. It aims to improve traditional capital markets by providing infrastructure for credit experts to operate on-chain lending and connecting institutional lenders and borrowers. Maple combines industry compliance standards and due diligence with transparent, frictionless lending enabled by smart contracts and blockchain technology. Its on-chain operations primarily offer lending of USDC and wETH, and in April of this year, it announced plans to launch an on-chain lending pool for investing in U.S. Treasury bonds.

TrueFi is developed and managed by the TrustToken team, emphasizing transparency and creditworthiness by introducing a decentralized autonomous organization to manage decisions such as loan approvals and risk assessments. Since its official launch in November 2020, TrueFi has issued over $1.7 billion in loans to more than 30 borrowers, primarily including fintech companies, credit funds, and crypto market institutions.

Clearpool is a decentralized financial ecosystem that introduces an unsecured lending protocol for qualified institutions. Institutions can raise short-term funds through a single borrower pool, while DeFi lenders can obtain low-risk returns based on market-derived interest rates. As of now, the total amount of loans from Clearpool's permissionless pools has reached $328 million, with an average yield of 10.24%.

In addition to some lending protocols native to the crypto market, we can also expand new narratives and related products from the perspective of traditional financial markets. Structured deposit products are a common investment tool in traditional financial markets, typically offered by banks or financial institutions. These products combine fixed income and derivatives to provide a certain return while controlling risk to some extent. "Dual-currency wealth management" in the crypto market is a form of structured deposits.

The two main elements of structured deposits include:

1. Underlying assets: can be exchange rates, interest rates, indices, ETFs, stocks, funds, commodities, etc.

2. Product structure: Different structures are suitable for different market conditions (such as uptrends, downtrends, and sideways fluctuations, etc.).

The crypto market is usually characterized by high volatility and risk. Structured deposit products may offer some mechanisms to hedge risks, such as derivative contracts. These products can be used to reduce the risk exposure of cryptocurrency institutions during market fluctuations and provide more stable returns. Therefore, with the support of RWA, some professional investors or institutions may be inclined to choose structured deposits, which are relatively mature products in traditional financial markets.

Overall, with the rise in popularity of RWA, the trend of integration between the crypto market and traditional financial markets is becoming increasingly evident. This integration not only provides investors with more investment options and a diversified asset portfolio but also brings greater liquidity and efficiency to the entire market.