OKG Research: Revitalizing RWA — Unlocking the Value of Undervalued Assets
During the recent Hong Kong Web3 Festival, OKG Research was invited to participate in a closed-door seminar hosted by the *China Data Asset Management 50+ Forum*, where we shared insights on trends in Real World Asset (RWA) tokenization and the value of on-chain data.
A key observation emerged from the discussions: the RWA ecosystem exhibits a clear East-West divergence. While the U.S. prioritizes tokenizing traditional financial assets (e.g., Treasury bonds) to reinforce its existing financial hegemony, regions like Hong Kong are exploring ways to integrate non-standardized assets into RWA frameworks, thereby injecting blockchain-driven liquidity into the real economy.
Yet this divergence reflects a deeper ideological split: Should RWA primarily serve as a compliant Web3 asset system, or should it expand financial inclusivity through tokenization?
Tokenizing Mainstream Assets: The Necessary First Step for RWA
From BlackRock’s BUIDL Fund and Franklin Templeton’s FOBXX to tokenized Treasury products by Coinbase and Ondo Finance, RWA adoption is advancing along a “standardized assets first” trajectory. Data from Rwa.xyz shows that as of April 2024, the total market capitalization of tokenized RWAs (excluding stablecoins) has reached approximately $21 billion, with over 25% tied to U.S. Treasury assets.
Regulatory compatibility, risk tolerance, and market acceptance make standardized assets like Treasuries the ideal foundation for RWA. These assets combine low risk, high liquidity, and mature pricing mechanisms while seamlessly aligning with existing regulations — critical for institutional adoption. Amid today’s high-interest-rate environment, tokenized “money-market-like” products offer a rare balance of yield and safety, bridging Web3 and traditional finance while bolstering the credibility of stablecoins and DeFi protocols.
However, these assets already benefit from robust liquidity and financial infrastructure. Their tokenization primarily serves as a “digital wrapper” to broaden distribution channels, rather than fundamentally transforming their value proposition. Challenges like centralized issuance, high entry barriers, and fragmented liquidity persist, limiting participation from retail and long-tail users. In essence, this approach repackages traditional finance in blockchain veneer without redefining its core.
Moreover, tokenized versions of these assets fail to offer higher yields or enhanced liquidity compared to their off-chain counterparts, resulting in weak market demand. Token Terminal reports that over 65% of RWA tokens see daily trading volumes below $100,000 — practically illiquid. Most buyers are institutions or whales, with minimal retail engagement. Without stronger incentives, even aggressive tokenization risks creating a market of “dormant on-chain assets.”
Unlocking Undervalued Assets: Building RWA’s Second Growth Curve
The true breakthrough for RWA lies not in tokenizing more mainstream assets but in activating the vast pool of “silent assets” — those sidelined by traditional finance due to valuation complexity, illiquidity, or regulatory opacity. By enabling these assets to express and trade their value on-chain, RWA can catalyze entirely new market dynamics.
In this light, RWA should transcend its role as an asset allocation tool and evolve into a discovery platform for undervalued assets. Globally, over 90% of assets remain non-securitized, including SME receivables, revenue-sharing rights of pre-IPO firms, carbon credits, green energy certificates, and IP royalties. These assets inhabit the blind spots of traditional finance — precisely where RWA’s disruptive potential shines.
Their undervaluation stems not from inherent worthlessness but from the lack of suitable financial infrastructure. Blockchain’s innate properties — fractionalizability, traceability, and verifiability — make it the perfect medium for their expression. Coupled with tools like zero-knowledge proofs, oracles, and AI pricing models, these assets can be decomposed into standardized modules, then reassembled into tradable on-chain instruments.
Pioneering projects are already demonstrating this:
• DBS Bank & Helicap (Singapore): Tokenized SME loans in Southeast Asia reduced financing costs by 40% and slashed settlement from T+2 to T+0.
• Untangled Finance (Ethereum): Tokenized African agricultural loans, carbon credits, and telecom receivables attracted crossover interest from crypto and ESG funds.
These assets’ original illiquidity becomes their on-chain advantage — their “unattainability” creates scarcity premiums. By pricing and standardizing them, RWA unlocks risk-adjusted returns that appeal to new capital. The lesson is clear: Only by minting new asset classes can RWA attract fresh capital and users.
Hong Kong’s Strategic Opportunity
Hong Kong’s regulatory clarity positions it as a global hub for compliant RWA issuance. But to avoid becoming a mere “distribution relay,” it must innovate on the supply side. The city’s advantages are tangible:
• Policy Support: Tokenized bond pilots for Chinese enterprises and gold tokenization in the policy agenda.
• Regulatory Sandbox: HKMA’s flexible framework for testing novel assets.
• Infrastructure: Local blockchain firms and licensed exchanges with proven technical capabilities.
By scaling tokenized traditional assets while piloting non-standard RWAs — green energy royalties, Greater Bay Area SME receivables, or public utility rights — Hong Kong could fuse these efforts with its e-HKD and stablecoin initiatives to emerge as the global lab for *multi-asset structured RWA*.
Conclusion
RWA’s mission extends beyond democratizing access to Treasury bonds. It must illuminate, price, and mobilize assets traditionally excluded from finance.
Tokenizing mainstream assets builds the necessary infrastructure and trust anchors. But to drive systemic change, RWA must activate its second growth curve: granting undervalued assets the mechanisms for valuation, liquidity, and connectivity. Only then can it unlock new value pools, attract broader capital, and deliver genuine financial inclusivity.
This article is part of the “On-chain Wall Street” research series by OKG Research. For more insights, visit: https://medium.com/@OKGResearch/list/onchain-wall-street-1f23e60586b3
OKG Research: Revitalizing RWA — Unlocking the Value of Undervalued Assets |#06 was originally published in The Capital on Medium, where people are continuing the conversation by highlighting and responding to this story.