Edgy - The DeFi Edge 🗡️ Profile picture
Mar 30 31 tweets 10 min read Twitter logo Read on Twitter
One crypto sector is estimated to reach $16 Trillion by 2030:

Real World Assets.

This will be the CATALYST for mainstream Crypto adoption.

Here's your 2023 guide to RWAs (and the top protocols): Image

• Amazon's new NFTs are rumored to be tied to RWAs

• Goldman Sachs launched GS Dap to tokenize traditional assets.

• Monetary Authority of Singapore is testing asset tokenization via Project Guardian

• Siemens issues a €60m bond on Polygon

Guys, it's happening Image
The Problems /w DeFi

Crypto's market cap has reached $1.2 trillion, but some still question its usefulness.

Critics view it as financial wizardry, speculative games, and high-risk PVP casino.

However, Circle's CEO sees tokenization as inevitable.

Inconsistent Yields

DeFi yields are great during bull markets but tank in bear markets due to lower activity.

(T-bills are 4.75% risk-free!)

Imagine getting stable yields in DeFi without being affected by crypto's volatility.


That's where Real World Assets come in. ImageImage
What are RWAs?

Real World Assets (RWAs) are physical assets that can be tokenized and represented on-chain.

An example is fiat-backed stablecoins: $1 is held in a bank and then tokenized on a blockchain.

It has DeFi superpowers once it's on the chain.
Any Asset Can be Tokenized

Some Examples:

• Precious metals
• Carbon Credits
• Commodities
• Real estate
• Equities
• Cars

The traditional finance systems has >$600T worth of assets. Imagine if we tokenize these assets and bring their yield on chain.
The Benefits of RWAs

• Save money - cut out the middlemen & rent seekers.

• Smaller investments - can't buy a whole property? Buy a small piece with a token.

• Loan Access - it's tough for emerging-market businesses to get funds, but RWAs can help Image
Additional Benefits

• Can enhance liquidation in traditionally illiquid assets like real estate, fine art, & private equity.

• Transparency - you can see the economic value and history of ownership.

RWAs are the bridge between Crypto and TradFi world.
The Top RWA Protocols

RWAs are ALREADY here.

So which protocols are the market leaders?

I'll focus on popular ones. They tend to involve undercollateralized lending in various sectors.

Then, I'll mention some others that caught my eye. Image

GoldFinch provides undercollateralized loans to companies in emerging markets such as Africa, SE Asia, & LATAM.

Their business isn't reliant on the crypto markets and makes consistent revenue.

As of now, they have over $100M in active loans. Image

Using their dApp, Tinlake, companies can mint NFTs representing real-world assets.

These NFTs can be used as collateral to take out loans.

Defi protocols & institutions can lend crypto by using these NFTs as collateral.

They have originated over $300M. Image

Uncollateralized Lending Marketplace

They've originated $1.7b in loans and have paid out $40m in interest to protocol participants.

Founded by the same team as the TrueUSD stablecoin. Image
Maple Finance

Uncollateralized Lending focused on institutional lenders and corporate borrowers.

Basically, you can lend your assets to institutional traders. Image
Bad Debt

One risk with undercollateralized lending is bad debt & defaults (aka bums).

A few happened after FTX's collapse.

1) Auros owed $18m. They've paid back 55%, and restructured the rest

2) Orthogonal Trading are deadbeats and still owe $31m

Maple 2.0

Maple Finance learned from this and upgraded to Maple 2.0.

• Lenders can withdraw anytime (vs. 30-day lock-up)

• Pool delegates can declare early defaults

• They want to diversify into more real-world lending such as treasury & insurance. Image
Swarm Markets

Tokenizing traditional financial assets.

They've brought TSLA, AAPL, & U.S. treasury bills on-chain via Polygon.

Benefit? Trade tokens 24/7, even when the Traditional markets are closed.

Plus, it's legit and follows German regulations. Image
Ondo Finance

Institutional-grade finance on Chain. BlackRock manages the funds.

Your USDC can give you access to yields to:

• U.S. Treasuries

• Short Term Bonds

• High-Yield Income via corporate bonds.

You can further lend/borrow stables via Flux Finance Image

RealT allows you to buy fractional and tokenized ownership in real estate in the U.S.

The problems it solves:

• Fractional - you can own real estate starting at ~$50

• Liquidity - Digital tokens mean liquidity increases

They built a marketplace off of Aave. Image

The OG DeFi protocol behind the $DAI stablecoin.

MakerDAO started getting into real-world assets to diversify the collateral types that back its stablecoin, DAI.

• There are ~$680m in RWAs
• The RWAs currently contribute 58% of their revenue. ImageImage
MakerDao is Limiting RWAs to become more Decentralized.

"Decentralization means limiting our attack surface to physical threats, specifically our RWA collateral as a percentage of the total portfolio. In the Endgame Plan, I put this limit at 25%,” - Rune, MakerDao's founder
Other Interesting RWA Protocols to Watch For:

• Realio - EVM compatible, L1 blockchain for RWAs

• Clearpool - uncollateralized liquidity to institutions

• HomeCoin - Stablecoin backed by U.S. homes

• Agrotoken / LandX- tokenizing agriculture
RWA Protocols

• Mattereum - verifies that RWAs are legit + have legal contracts

• Helois ReFi - fund solar projects

• Consol Freight - Shipping freight invoices

• Toucan Protocol - Carbon credit market
Challenges with RWA Adoption

Despite RWA's potential, MANY challenges exist:

• Not Decentralized. Uncollateralized loans rely on centralized parties for underwriting and determining credit.

• Heavy reliance on USDC - most RWA protocols use USDC, which is centralized.
• Time-Consuming - Tokenizing physical assets involves legal, technical, and operational challenges.

• Hacks - It's a risk with anything on-chain

• Assets can be seized.

MakerDao's EndGame plan notes this. Image
• Limited regulatory frameworks for crypto & RWAs.

• Americans face restrictions due to securities/investor laws + KYC / AML procedures.

• Bad Debt - Crypto collateral can be liquidated fast. RWAs can't.
Slowly At First, And Then All At Once

RWA innovation lags behind DeFi since you can't just fork code & start printing.

The feedback loop is slower (regulations), and everything's still an experiment.

It takes time to build infrastructure and make sure everything's compliant.
I Have 0 RWA Exposure

I'm optimistic about RWAs, but the risk-reward ratio isn't there yet for me.

Regulation risks & an overreliance on USDC.

It doesn't make sense for me to take on those risks for ~8% APR, esp with undercollateralized lending.
Long Term Bullish

1) Adoption is happening.

2) It solves problems with TradFi & brings more stable Yields to DeFi

3) All narratives need a SIMPLE story to take off.

This can capture a new audience into DeFi who have been skeptical of "real use" cases.
Narrative / Timing / Product Fit

Some may wonder, "Why are you writing a thread on RWA and not investing?"

1. I think of long-term theses
2. Stay updated on trends
3. Wait for the right timing / protocols before getting exposure.

So I'm sharing my personal research with you.
Further Resources

Check out Binance's detailed RWA report that inspired this thread.

It's a great read if you want to dive deeper.

RWA Thought Leaders:

@tokenomacs (wrote the Binance report)

And if you enjoyed this thread, then:

1) Give me a follow → @thedefiedge

2) Retweet the 1st tweet linked below if you think your audience would find this valuable. (I think they would)

• • •

Missing some Tweet in this thread? You can try to force a refresh

Keep Current with Edgy - The DeFi Edge 🗡️

Edgy - The DeFi Edge 🗡️ Profile picture

Stay in touch and get notified when new unrolls are available from this author!

Read all threads

This Thread may be Removed Anytime!


Twitter may remove this content at anytime! Save it as PDF for later use!

Try unrolling a thread yourself!

how to unroll video
  1. Follow @ThreadReaderApp to mention us!

  2. From a Twitter thread mention us with a keyword "unroll"
@threadreaderapp unroll

Practice here first or read more on our help page!

More from @thedefiedge

Mar 18
Balaji is betting $1m that 1 BTC is > $1 million in less than 90 days

It's a $1m marketing stunt - everyone's talking about it, and he'll go on a huge media/podcast tour.

• Raises alarm for hyperinflation
• Makes $ back from price appreciation
• Eyeballs to his new podcast
The media will love him.

He has the credibility of getting the COVID call right and is the former CTO of Coinbase.

No chance his prediction will come true. But my fucking god, we have someone insane enough to want to be this cycle's main character.

I've seen some comments dismissing him as going crazy.

1 thing I've learned since the Pandemic is to be more open-minded.

The $1m bet is just the "hook" for us to think about what happens if the banks fail, and if hyperinflation happens.

Read 9 tweets
Mar 17
A lesson I learned from Chess is to go for small, consistent gains. I've lost many games going for the big, aggressive plays.

What are the big plays in Crypto? Using leverage or high-risk portfolios chasing "100x."

Don't underestimate the power of small wins + compounding.
This reminds me of my Starcraft days.

I was obsessed with "big plays" like rushing my opponent and quitting if it failed.

It was because I didn't trust my skills. So I learned to slow down, focus on my macro, and win the small skirmishes.
Remember, it's never black and white like DCA only vs. 100x leverage.

I break MY portfolio into different sections.

• I have a low-risk basket that I DCA into monthly
• I have a section for narrative trading
• I have a section for high-risk plays
Read 4 tweets
Mar 16
21 must-know DeFiLlama features you should be using:
DeFiLlama is the most popular tool in DeFi.

But most people are probably using around 10% of its features.

They've been continuously shipping this past year, and some of their best updates have flown under the radar.

I've gathered some of my favorites.

Here's your Edge 🗡️:
Borrowing Aggregator

According to the head llama, the borrow aggregator is most underused.

Back then, I had to use spreadsheets & manual labor to compare rates.

This feature automates finding the best rates for you. Think Google Flights for DeFi lending rates.
Read 28 tweets
Feb 25
Want to find the next 10x gems?

You can easily do it on your own using DeFiLlama - for free.

Here's a step-by-step guide to finding your own gems in 2023:

(includes little-known features)
Finding Your Own Alpha

If you keep relying on other people for alpha, you'll become their exit liquidity.

Don't be stuck at the bottom of the food chain.

I'm going to share a few techniques that you can apply using DeFiLlama.

Here's your Edge 🗡️ :
Chain Traction

Imagine you're buying real estate - you'd 1st check to see which cities are hot.

That's how you should view each ecosystem.

BNB was hot at one point, and there was a Solunavax rotation.

It's constantly changing & you want to be where the money is.
Read 26 tweets
Feb 12
Being too smart can hold you back.

You overthink everything and mindfuck yourself out of taking action.

If you can relate, the secret's not in another book - start even if you don't have all the answers.

Have the courage you'll figure it out along the way.
Less books and podcasts.

When people call you smart your whole life, the cost of failure is high. You're scared of not living up to that image.

Average people? No one expects greatness from them. So they can take plenty of swings and misses.

But it's those swings and misses that lead to success.
Read 4 tweets
Feb 11
Here's the free mini-course I wish I had when I started...

How to evaluate crypto protocols in 2023:

(so you don't have to rely on influencers)
What I'll be Covering:

1. Product
2. People
3. Financials
4. Tokenomics
5. Risk Management
5. Catalysts
6. Pumpnomics
7. Profit Strategies

Length - 35 concise tweets
Reading time - 10 minutes

Here's your edge 🗡️
The Process

Your process of evaluating investments is more important than the outcome.

Anyone can get lucky with a few good trades - being consistently profitable (and keeping it) is by design.

You won't have ANY edge if you rely on the analysis of other people.
Read 35 tweets

Did Thread Reader help you today?

Support us! We are indie developers!

This site is made by just two indie developers on a laptop doing marketing, support and development! Read more about the story.

Become a Premium Member ($3/month or $30/year) and get exclusive features!

Become Premium

Don't want to be a Premium member but still want to support us?

Make a small donation by buying us coffee ($5) or help with server cost ($10)

Donate via Paypal

Or Donate anonymously using crypto!


0xfe58350B80634f60Fa6Dc149a72b4DFbc17D341E copy


3ATGMxNzCUFzxpMCHL5sWSt4DVtS8UqXpi copy

Thank you for your support!

Follow Us on Twitter!