Author of this article: Lawyer Liu Honglin

RWA has become a little girl who can be dressed up as one wishes

The term RWA has recently become ubiquitous. From international financial forums to industry startup groups, everyone is discussing “asset tokenization” and “real world asset mapping”, as if not saying a few words about RWA means one is falling behind the trends in the industry.

But the more the heat rises at such moments, the more we need to calm down and clarify: What problems can RWA really solve, and what basic conditions are needed for it to be implemented.

Many people say that RWA is the “on-chain reshaping” of real-world assets, and lawyer Honglin does not oppose this statement. However, the premise of “reshaping” is to truly break the original information barriers and settlement processes.

In many RWA projects I’ve worked with, the so-called “asset tokenization” is actually a copy of the data that was originally stored in Excel, ERP, or the depository system. However, the whole process is still the same: asset generation, value recognition, income calculation, investment allocation - these are still gradually handled by the offline operation team of the project team, and the chain is just an “enhanced report”.

In this case, it is indeed correct to say that it “uses blockchain”; but to say it “changes the logic of financial operations” is somewhat exaggerated.

What you call “asset mapping” is actually no different from creating a balance sheet in Excel. You can’t just transfer asset-related information from a paper contract into a JSON file written on the blockchain and then claim that you have achieved “tokenization of real-world assets.”

You can use the chain to record assets, but you cannot use the chain to drive finance. Without breaking through this point, RWA will always be stuck at version 0.1.

Two Standards for Identifying the Authenticity of RWA

Many people think that the core of RWA is “right confirmation” - the asset has a source and the chain is registered. But in fact, credible data is only a basic premise, and what really determines whether RWA has financial value is whether it can complete credible liquidation, that is, whether the capital flow mechanism on the chain can run.

Therefore, the value distribution of RWA has two layers: one is credible data, and the other is credible settlement.

Layer 1: Trusted data, which refers to the ability to record changes in the state of real-world assets on the chain. This may seem “technical”, but it is essentially a transformation of business processes. External interfaces such as sensors, custodians, and oracles should be able to push information to the chain in real time, automatically, and objectively when assets change. This is the first threshold for RWA. A project that can truly be called RWA must be able to “know on the chain as soon as an event occurs”, rather than uploading a “report” to the operation department at the end of each month.

In many of the RWA cases we know of packaged by news, many projects still rely on manual operation: a folder contains various asset information, and at the end of the month, someone clicks the mouse to generate an on-chain summary, which is essentially just “on-chain bookkeeping”, which is far from the concept of “native trustworthiness” of the blockchain.

Second Layer: Trustworthy Settlement, is where the true value of RWA lies. In other words, whether the distribution of profits, the return of principal, the handling of defaults, and the transfer of fees can be executed automatically, remain tamper-proof, and be publicly transparent. To achieve this, there must be a currency unit on-chain, which means the participation of stablecoins.

Many projects overlook this point: data is available, contract logic is in place, but at the settlement stage, it still relies on finance personnel to manually transfer funds, or to “simulate” cash flow through third-party platforms. Under this design, on-chain tokens are merely a symbol that “looks like an asset,” but not an actual executable financial right.

So we say that there are two fundamental criteria to measure whether a project is a legitimate RWA.

First, can your data stream be automatically put on the chain without relying on manpower?

You say you are working on new energy charging piles. Is the power, on/off switch, and fault log of the pile body written directly onto the chain from the sensor? You mention accounts receivable financing; can the buyer’s ERP system push the hash onto the chain as soon as the invoice is generated? You say you are selling real estate rental income rights; does the rental flow have a custodian bank API for real-time feedback?

If these actions have to be collected and manually entered by the operation team, then the data “on the chain” is a false proposition. You are not letting the system make judgments, but relying on “people pat their heads” to make judgments, and in the end, it is still the centralized process, but the tool of “writing the ledger” has been replaced by the blockchain. has changed to a more fancy account book, but it is still human flesh, and there is no shortage of reputation risk and tampering risk.

Second, can your funds flow be settled on-chain?

You said that you issued a new energy charging pile income token, did those charging fees be split into N stablecoins by the smart contract as soon as they entered the escrow account, and went directly to the investor’s address? You say that you do accounts receivable financing, and the buyer receives a lump sum payment, can the contract immediately repay the principal, accrue interest, and deduct service fees according to the account period? You say that you sell the right to rental income of real estate, and the tenant clicks “confirm payment” in the second, does the chain synchronously transfer the rent stablecoin to the token holder, and automatically precipitate the liquidated damages and maintenance funds into the risk pool?

If these actions still require the finance lady to verify each transaction and manually transfer funds, then “on-chain settlement” is just a pipe dream. Funds go around in the background and then return to a manual online bank transfer, and the Token becomes a voucher—visible but not redeemable.

True RWA is to let money flow like data in a tap-water manner: verifiable stablecoin reserves, public distribution formulas, and contract addresses that can be checked at any time. Otherwise, no matter how fancy you describe the rights to the returns, investors will still have to queue for loans, and there will be no qualitative improvement in financial efficiency.

This is not the future we want.

RWA without stablecoins is just playing rogue

What we need is a truly functional structure: natively on the chain, able to run automatically, able to be redeemed in real time. Once data is generated, it is automatically written to the chain and cannot be tampered with; once funds are triggered, they require no human intervention and reach automatically.

RWA is not a more aesthetically pleasing table, but a set of new operational logic: data must be trustworthy from the source, and funds must be settled on-chain.

To achieve these two points, one needs blockchain technology as the information infrastructure, and the other requires stablecoins as the value carrier.

Many people talk about stablecoins, and they like to say that they can improve the efficiency of cross-border payments, reduce costs, and replace banks. But what really determines its value in RWA is not these macro advantages, but the fact that it allows money to really “run” in the blockchain world. Instead of waiting for monthly or expiration, it can be programmed, can be called, and can be directly executed based on the data on the chain.

The biggest significance of stablecoins is that for the first time, money can be programmed and rules can be enforced. **

You can dictate when it pays, to whom, how much, and even after an on-chain event has occurred. It’s not money that waits for someone to click a button, but like data, it flows automatically.

With the application of stablecoins in RWA, the entire lifecycle of assets—from generation, yield distribution, to exit and recovery—can run on-chain in the form of smart contracts. Otherwise, no matter how many institutions participate or how many audits endorse it, it is merely another form of a centralized platform.

So we say: RWA without stablecoin applications are just playing tricks.