Since the DeFi Summer of 2020, AMM (Automated Market Maker), lending protocols, derivatives trading, and stablecoins have become the core infrastructure of the crypto trading field. Over the past four years, numerous entrepreneurs have continuously iterated and innovated in these sectors, pushing projects like Trader Joe and GMX to new heights. However, as these products gradually mature, the growth of the crypto trading sector has begun to hit a ceiling, making the birth of a new batch of top projects increasingly difficult.

After the 2024 U.S. elections, the legalization and compliance process of the crypto industry is expected to bring new development opportunities to the sector. The integration of traditional finance and DeFi is accelerating: real-world assets (RWA) such as private credit, U.S. Treasury bonds, and commodities are evolving from simple tokenized certificates to yield-bearing stablecoins with capital efficiency, providing crypto users seeking stable returns with new options and becoming a new growth engine for DeFi lending and trading. At the same time, the strategic position of stablecoins in international trade is becoming increasingly significant, and the upstream and downstream infrastructure of the payment sector continues to prosper. Traditional financial giants, including the Trump family, Stripe, PayPal, and BlackRock, are accelerating their layouts, injecting more possibilities into the industry.

Following "old DeFi" platforms like Uniswap, Curve, dYdX, and Aave, a new batch of unicorns in the crypto trading field is brewing. They will adapt to changes in the regulatory environment, leverage the integration of traditional finance and technological innovation, explore new markets, and drive the industry into the "new DeFi" era. For newcomers, this means no longer needing to focus on minor innovations in traditional DeFi but rather on building groundbreaking products that meet the new environment and demands.

This article, written by HTX Ventures, will conduct an in-depth analysis of this trend, exploring potential opportunities and development directions in the new round of transformation in the crypto trading sector, providing inspiration and reference for industry participants.

Changes in the Current Trading Environment

Stablecoin Compliance Approved, Adoption Rate in Cross-Border Payments Continues to Rise

Maxine Waters and Chairman Patrick McHenry of the U.S. House Financial Services Committee plan to introduce a stablecoin bill in the short term, marking a rare bipartisan consensus on stablecoin legislation in the U.S. Both parties agree that stablecoins can not only solidify the dollar's status as the global reserve currency but have also become significant buyers of U.S. Treasury bonds, harboring enormous economic potential. For example, Tether generated $6.3 billion in profit last year with just 125 employees, showcasing its profitability.

This bill could become the first comprehensive cryptocurrency legislation passed by Congress in the U.S., promoting widespread engagement with crypto wallets, stablecoins, and blockchain-based payment channels among traditional banks, businesses, and individuals. In the coming years, stablecoin payments are expected to become mainstream, marking another "leap forward" in the crypto market following Bitcoin ETFs.

Although compliant institutional investors cannot directly benefit from the appreciation of stablecoins, they can profit by investing in infrastructure related to stablecoins. For instance, mainstream blockchains supporting a large supply of stablecoins (such as Ethereum, Solana, etc.) and various DeFi applications interacting with stablecoins will benefit from the growth of stablecoins. Currently, the proportion of stablecoins in blockchain transactions has increased from 3% in 2020 to over 50%. Its core value lies in seamless cross-border payments, a function that is growing particularly rapidly in emerging markets. In Turkey, for example, the trading volume of stablecoins accounts for 3.7% of its GDP; in Argentina, the premium on stablecoins reaches as high as 30.5%. Innovative payment platforms like Zarpay and MentoLabs attract users into the blockchain ecosystem through grassroots market strategies via local agents and payment systems, further promoting the adoption of stablecoins.

Currently, the cross-border B2B payment market processed by traditional payment channels is as large as approximately $40 trillion, while the global consumer remittance market generates hundreds of billions of dollars in revenue each year. Stablecoins provide a new means for efficient cross-border payments through crypto channels, with adoption rates rapidly increasing, poised to penetrate and disrupt this market, becoming an important force in the global payment landscape.

https://mirror.xyz/sevenxventures.eth/ovqj0x0RfVAKAKCVtYSePtKYv8YNLrDzAEwjXVRoU

Ripple's RLUSD stablecoin is designed specifically for enterprise payments, aiming to enhance the efficiency, stability, and transparency of cross-border payments to meet the demand for dollar-denominated transactions. Meanwhile, Stripe's $1.1 billion acquisition of the stablecoin platform Bridge marks the largest acquisition in the history of the cryptocurrency industry. Bridge provides seamless conversion between fiat and stablecoins for businesses, further promoting the application of stablecoins in global payments. Bridge's cross-border payment platform processes over $5 billion in payments annually and has provided global fund settlement for high-end clients, including SpaceX, demonstrating the convenience and effectiveness of stablecoins in international transactions.

Additionally, PEXX, as an innovative stablecoin cross-border payment platform, supports the exchange of USDT and USDC into 16 fiat currencies and allows direct remittance to bank accounts. By simplifying the onboarding process and enabling instant conversion, PEXX allows users and businesses to conduct cross-border payments efficiently and at low cost, breaking down barriers between traditional finance and cryptocurrencies. This innovation not only provides a faster and more cost-effective solution for cross-border payments but also promotes the decentralization and seamless connection of global capital flows. Stablecoins are gradually becoming an important component of global payments, enhancing the efficiency and accessibility of payment systems.

Regulatory Relaxation Expected for Perpetual Contract Trading

Due to the high leverage nature of perpetual contract trading, which can easily lead to customer losses, regulatory requirements have been quite stringent in many jurisdictions, including the U.S. Not only are centralized exchanges (CEX) prohibited from offering perpetual contract services, but decentralized perpetual contract exchanges (PerpDEX) also face the same fate. This has directly compressed the market space and user base of PerpDEX.

However, with Trump's complete victory in the elections, the compliance process of the crypto industry is expected to accelerate, and PerpDEX is likely to welcome a spring of development. Recently, two landmark events are worth noting: first, David Sacks, a crypto and AI advisor appointed by Trump, has invested in established players in this sector like dYdX; second, the U.S. Commodity Futures Trading Commission (CFTC) is expected to replace the U.S. Securities and Exchange Commission (SEC) as the main regulator of the crypto industry. The CFTC has accumulated rich experience in launching Bitcoin futures trading on the Chicago Mercantile Exchange (CME) and is more favorable towards regulating PerpDEX compared to the SEC. These positive signals may open new market opportunities for PerpDEX, creating more favorable conditions for its growth under future compliance frameworks.

The Stable Yield Value of RWA is Being Discovered by Crypto Users

Once, the high-risk, high-return environment of the crypto market left RWA (Real-World Assets) stable yields largely ignored. However, during the recent bear market cycle, the RWA market has grown against the trend, with its total value locked (TVL) soaring from less than a million dollars to the current level of hundreds of billions. Unlike other crypto assets, the value fluctuations of RWA are not influenced by crypto market sentiment. This characteristic is crucial for shaping a robust DeFi ecosystem: RWA can effectively enhance the diversification of investment portfolios and provide a solid foundation for various financial derivatives, helping investors hedge risks amid severe market volatility.

According to data from RWA.xyz, as of December 14, RWA has 67,187 holders, with 115 asset issuers and a total market capitalization of $139.9 billion. Web3 giants, including Binance, expect the RWA market size to expand to $16 trillion by 2030. This potentially massive market landscape, along with the investment appeal of its stable yields, is gradually becoming an indispensable part of the DeFi ecosystem.

https://app.rwa.xyz/

After the collapse of Three Arrows Capital, a key issue in the crypto industry was exposed: the lack of sustainable yield scenarios for assets. As the Federal Reserve began its rate hike process, global market liquidity tightened, and cryptocurrencies, defined as high-risk assets, were particularly impacted. In contrast, the yields of real-world assets (such as U.S. Treasury bonds) have steadily risen since the end of 2021, attracting market attention. From 2022 to 2023, the median yield in DeFi dropped from 6% to 2%, below the risk-free yield of 5% from U.S. Treasury bonds during the same period, causing high-net-worth investors to lose interest in on-chain yields. With on-chain yields drying up, the industry has begun to turn to RWA, hoping to reinvigorate market vitality by introducing off-chain stable yields.

https://www.theblockbeats.info/news/54086

In August 2023, MakerDAO raised the DAI Savings Rate (DSR) to 8% in its lending protocol Spark Protocol, sparking a revival in the long-dormant DeFi market. Within just a week, the DSR deposits in the protocol surged by nearly $1 billion, and the circulating supply of DAI increased by $800 million, reaching a three-month high. The key driver behind this growth is RWA (Real-World Assets). Data shows that over 80% of MakerDAO's fee income in 2023 came from RWA. Since May 2023, MakerDAO has intensified its investment in RWA, purchasing U.S. Treasury bonds in bulk through entities like Monetalis, Clydesdale, and BlockTower, and deploying funds to RWA lending protocols such as Coinbase Prime and Centrifuge. As of July 2023, MakerDAO had amassed an RWA portfolio of nearly $2.5 billion, with over $1 billion coming from U.S. Treasury bonds.

MakerDAO's successful exploration has triggered a new wave of RWA enthusiasm. Driven by high yields from blue-chip stablecoins, the DeFi ecosystem has quickly responded. For example, the Aave community proposed listing sDAI as collateral, further expanding the application of RWA in DeFi. Similarly, in June 2023, the new company Superstate, launched by the founder of Compound, focused on bringing real-world assets like bonds onto the blockchain to provide users with stable yields akin to those in the real world.

RWA has become an important bridge connecting real assets with on-chain finance. As more innovators explore the potential of RWA, the DeFi ecosystem is gradually finding a new path toward stable yields and diversified development.

Licensed Institutions Going On-Chain to Expand Market Size

In March of this year, BlackRock launched the first tokenized U.S. Treasury fund on a public blockchain, BUIDL, attracting market attention. This fund provides qualified investors with the opportunity to earn yields through U.S. Treasury bonds and was initially deployed on the Ethereum blockchain, later expanding to multiple blockchains such as Aptos, Optimism, Avalanche, Polygon, and Arbitrum. Currently, $BUIDL serves as a tokenized yield certificate and does not possess actual utility, but its iconic launch marks an important step for tokenized finance.

https://app.rwa.xyz/assets/BUIDL

Meanwhile, Wyoming Governor Mark Gordon announced that the state government plans to issue a stablecoin pegged to the U.S. dollar in 2025, supported by U.S. Treasury bills and repurchase agreements. This stablecoin is expected to launch in the first quarter of 2025 in collaboration with trading platforms, marking a new highlight in government-level stablecoin experiments.

In the traditional finance sector, State Street, one of the world's leading asset management companies, is actively exploring various ways to integrate blockchain payment and settlement systems. In addition to considering the issuance of its own stablecoin, State Street also plans to launch deposit tokens representing customer deposits on the blockchain. As the second-largest fund custodian bank globally, managing over $40 trillion in assets, State Street seeks to enhance service efficiency through blockchain technology, marking significant progress in the digital transformation of traditional financial institutions.

JPMorgan is also accelerating its blockchain business expansion, planning to launch on-chain foreign exchange functionality in the first quarter of 2025 to achieve automated multi-currency settlement around the clock. Since launching its blockchain payment platform in 2020, JPMorgan has completed over $1.5 trillion in transactions across areas such as intraday repurchase and cross-border payments, with platform users including global giants like Siemens, BlackRock, and Ant International. JPMorgan plans to expand its platform, initially supporting automated settlements in U.S. dollars and euros, with future expansions to more currencies.

JPMorgan's JPM Coin is a key component of the bank's blockchain strategy, designed as a digital dollar for institutional clients, providing instant payments and settlements globally. Its launch accelerates the on-chain process of digital assets for financial institutions and gains an advantage in cross-border payments and capital flows.

Additionally, Tether's recently launched Hadron platform is also promoting the asset tokenization process, aiming to simplify the digital token conversion of various assets such as stocks, bonds, commodities, and funds. The platform provides tokenization, issuance, and destruction services for institutions, funds, governments, and private companies, supporting KYC compliance, capital market management, and regulatory functions, further advancing the digital transformation of the asset management industry.

Compliance Tools for RWA Token Issuance Emerging

Securitize is an innovative platform focused on fund issuance and investment on the blockchain. Its collaboration with BlackRock began with deep exploration in the RWA (Real-World Assets) field, providing professional services to numerous large asset securitization companies, including the issuance, management, and trading of tokenized securities. Through Securitize, companies can directly issue bonds, stocks, and other types of securities on the blockchain and utilize the comprehensive compliance tools provided by the platform to ensure that the issued tokenized securities strictly comply with the laws and regulatory requirements of various countries.

Since obtaining registration as a transfer agent from the U.S. Securities and Exchange Commission (SEC) in 2019, Securitize has rapidly expanded its business scale. In 2021, the company secured $48 million in funding led by Blockchain Capital and Morgan Stanley. In September 2022, Securitize assisted one of the largest investment management companies in the U.S., KKR, in tokenizing part of its private equity fund, successfully deploying it on the Avalanche blockchain. The following year, also on Avalanche, Securitize issued equity tokens for the Spanish real estate investment trust Mancipi Partners, becoming the first company to issue and trade tokenized securities under the new digital asset pilot system in the European Union.

Recently, leading stablecoin issuer Ethena announced a partnership with Securitize to launch a new stablecoin product, USDtb. The reserves of this stablecoin are invested in BlackRock's U.S. dollar institutional digital liquidity fund (BUIDL), further solidifying Securitize's position in the blockchain financial ecosystem.

In May 2023, Securitize again secured $47 million in strategic financing led by BlackRock, which will be used to accelerate partnerships within the financial services ecosystem. As part of this financing, Joseph Chalom, BlackRock's Global Head of Strategic Ecosystem Partnerships, was appointed to Securitize's board. This collaboration marks a further deepening of Securitize's integration of traditional finance and blockchain technology.

Opportunities and Challenges

Private Credit RWA Enters the Payfi Era, How to Address Default Issues

Private credit currently totals approximately $13.5 billion, with an active loan value of $8.66 billion and an average annual interest rate of 9.46%. In the RWA (Real-World Assets) market, private credit remains the second-largest asset class, with about 66% of the issuance share provided by Figure Markets.

Figure Markets is a trading platform built on the Provenance blockchain, covering various asset types such as stocks, bonds, and real estate. The platform secured over $60 million in Series A funding from institutions like Jump Crypto and Pantera Capital this year, with a total value locked (TVL) now reaching $13 billion, making it the platform with the highest TVL in the RWA market. Unlike traditional non-standard private credit RWA, Figure Markets primarily focuses on the standardized market of home loans, giving it significant market size and growth potential, with more opportunities expected in the future.

https://app.rwa.xyz/?ref=ournetwork.ghost.io

In addition, private credit also includes loans to corporate institutions, with projects emerging in the last cycle such as Centrifuge, Maple Finance, and Goldfinch.

TVL has rebounded this year https://app.rwa.xyz/?ref=ournetwork.ghost.io

• Centrifuge is a decentralized asset financing protocol that tokenizes real-world assets (such as real estate, bills, invoices, etc.) into NFTs through its Tinlake protocol, which are used as collateral for borrowers. Borrowers can obtain liquidity in decentralized funding pools using these NFTs, while investors provide funds through these pools and earn fixed returns. Centrifuge's core innovation lies in combining blockchain with traditional financial markets, helping businesses and startups obtain financing at lower costs and reducing credit risk and intermediary costs through the transparency and decentralization provided by blockchain.

However, Centrifuge also faces risks from market volatility. Although its asset tokenization model is favored by many traditional financial institutions, borrowers may fail to repay on time during periods of high market volatility, leading to default events. For example, certain assets with high market volatility may be unable to fulfill loan contracts, especially during bear markets when liquidity is insufficient, putting significant strain on borrowers' repayment capabilities.

• Maple Finance focuses on providing high-yield secured loans to corporate and institutional borrowers. The loan pools on the platform are typically over-collateralized with crypto assets such as BTC, ETH, and SOL. Maple employs an on-chain credit scoring mechanism that allows institutional borrowers to create and manage loan pools, providing stable returns for lenders. This model is particularly suitable for institutions within the crypto industry, as it reduces risk and enhances capital returns by offering over-collateralized loans to these entities.

However, the Maple platform has also faced severe challenges during bear markets. Several significant default events have occurred, especially during the overall downturn of the crypto market. For instance, Orthogonal Trading failed to repay a $36 million loan on Maple Finance, putting considerable default pressure on the platform.

• Goldfinch is a platform focused on on-chain credit lending, aimed at providing loans to startups and small businesses that cannot obtain financing through traditional channels. Unlike other RWA lending platforms, Goldfinch adopts an unsecured loan model, relying on the borrower's credit history and third-party assessment agencies to determine their repayment ability. Through funding pools, Goldfinch lends money to borrowers in need and offers fixed returns to fund providers.

Goldfinch's issues primarily lie in the selection of borrowers. Many borrowing enterprises face high default risks, particularly startups and small businesses from high-risk markets. For example, in April 2022, Goldfinch encountered a $10 million loan default event, with major losses stemming from high-risk small businesses and startups. Despite receiving investment from a16z, these default events revealed shortcomings in its risk control and market demand.

https://dune.com/huma-finance/huma-overview

Recently, Solana proposed the "Payfi" concept, which shares certain business logic similarities with the private credit sector and further expands its application scenarios to diversified contexts such as cross-border financing, lending, and cross-border payment swaps. For example, Huma Finance focuses on providing financial services to investors and borrowers, where investors earn returns by providing funds, and borrowers can engage in lending and repayment. Meanwhile, Huma's subsidiary Arf specializes in cross-border payment financing services, significantly optimizing traditional cross-border remittance processes.

For instance, remitting money from Singapore or Hong Kong to South Africa using traditional Swift methods is often time-consuming and costly. While many opt for companies like Western Union, these remittance companies need to collaborate with local partners in South Africa and rely on substantial local financing to complete same-day settlements. This model places a significant burden on remittance companies, as they must handle different fiat currencies across multiple countries, making efficiency hard to guarantee. Arf abstracts the financing service by introducing stablecoins, providing rapid capital flow support for payment companies.

For example, when a user remits $1 million to South Africa, Arf ensures that the funds enter a regulated account and completes the cross-border settlement using stablecoins. Huma conducts due diligence on payment companies before settlement to ensure security. Throughout the process, Huma lends and recovers stablecoins, avoiding the need to engage in fiat currency inflow and outflow operations, thus achieving rapid, secure, and efficient capital flow.

Huma's main clients come from developed countries such as the UK, the US, France, and Singapore, where the bad debt rate is extremely low, and the payment terms typically range from 1 to 3 days, with daily charges and a transparent and efficient capital chain. Currently, Huma has achieved $2 billion in capital flow, maintaining a bad debt rate of 0%. Through its partnership with Arf, Huma has realized substantial double-digit returns, unrelated to tokens.

Additionally, Huma plans to further integrate DeFi projects, such as Pendle, to explore token reward mechanisms and broader decentralized finance strategies to enhance user returns and market appeal. Huma's model may become an innovative way to address private credit default issues.

How Will the Leading Yield-Generating Stablecoins Be Determined

This cycle may see the emergence of stablecoins similar to USDT/USDC that are safe and can provide at least 5% sustainable yields. This market undoubtedly holds immense potential. Currently, Tether, the issuer of USDT, has annual profits nearing $10 billion, with a team of only about 100 people. If this portion of profit could be returned to users, could the vision of yield-generating stablecoins be realized?

Treasury-Backed Mechanism

Currently, stablecoins built on U.S. Treasury bonds as underlying assets are becoming a new trend in the crypto market. These stablecoins introduce traditional financial assets to the blockchain through tokenization, retaining the stability and low-risk characteristics of Treasury bonds while providing the high liquidity and composability of DeFi. They employ various strategies to increase risk premiums, including fixed budget incentives, user fees, volatility arbitrage, and utilizing reserve varieties such as staking or re-staking.

USDY, launched by Ondo Finance, is a typical example of this trend. USDY is a tokenized note backed by short-term U.S. Treasury bonds and bank demand deposits, designed to comply with U.S. laws and regulations. It can be used as collateral in DeFi protocols and as a medium of exchange for Web3 payments. USDY is divided into two types: accumulating (USDY) and rebase (rUSDY). The former is suitable for long-term holding, while the latter achieves returns by increasing the number of tokens, making it suitable as a settlement tool. At the same time, Ondo Finance's OUSG token focuses on providing high liquidity investment opportunities linked to U.S. short-term Treasury bonds, with underlying assets held in BlackRock's dollar institutional fund, supporting instant minting and redemption.

Additionally, OpenTrade offers various Vault products based on Treasury bonds, including fixed-income U.S. Treasury bond Vaults and flexible income USDC Vaults, to meet different users' asset management needs. OpenTrade deeply integrates its tokenized products with DeFi, providing holders with a seamless deposit and yield experience.

Comparison of USDT issuer profit distribution and usual profit distribution https://docs.usual.money/

The stablecoin USD0, launched by Usual Protocol, provides two minting methods by tokenizing traditional financial assets such as U.S. Treasury bonds: users can mint USD0 directly by depositing RWA assets or indirectly by depositing USDC/USDT, and they can also upgrade USD0 to the higher-yielding USD0++ and provide additional loyalty rewards through partnerships with DeFi platforms like Pendle.

The sUSD stablecoin launched on the Solana blockchain by Solayer uses U.S. Treasury bonds as collateral, providing holders with 4.33% on-chain yield and supporting its use as collateral to enhance the stability and security of the Solana network. Through these mechanisms, both not only enhance the yield of stablecoins but also improve the stability and efficiency of the DeFi ecosystem, showcasing the immense potential of integrating traditional finance and blockchain technology.

Low-Risk On-Chain Arbitrage Mechanism

In addition to designs based on Treasury bonds, another type of yield-generating stablecoin utilizes the volatility of the crypto market, MEV, and other characteristics to achieve low-risk arbitrage returns.

Ethena is the fastest-growing non-fiat collateralized stablecoin project since the collapse of Terra Luna, with its native stablecoin USDe surpassing Dai to temporarily rank third in the market with a volume of $5.5 billion. Ethena's core design is based on a Delta Hedging strategy using Ethereum and Bitcoin collateral, hedging the impact of collateral price fluctuations on the value of USDe by opening short positions equivalent to the value of the collateral on centralized exchanges (CEX). This hedging mechanism relies on over-the-counter settlement service providers, with protocol assets held by multiple external entities, aiming to maintain the stability of USDe through the complementary rise and fall between collateral value and short positions.

Project revenue primarily comes from three sources: Ethereum staking yields generated by users pledging LST; funding rates or basis returns generated from hedging trades; and fixed rewards from Liquid Stables, which are the deposit interests earned by storing USDC or other stablecoins on Coinbase or other exchanges. Essentially, USDe is a packaged low-risk quantitative hedging strategy financial product that can provide floating annualized returns of up to 27% when market conditions are favorable and liquidity is abundant.

Ethena's risks mainly stem from potential failures of CEX and custodians, as well as the possibility of price decoupling and systemic risk due to insufficient counterparties during a bank run. During bear markets, when funding rates may remain low, risks are further exacerbated. The protocol's yield turned negative at -3.3% during a period of market volatility earlier this year, but systemic risk did not materialize.

Nevertheless, Ethena offers an innovative design logic that merges on-chain and CEX, providing scarce short liquidity to exchanges through the influx of LST assets brought by the mainnet merge, while also generating fee income and market vitality. In the future, with the rise of order book DEXs and the maturation of chain abstraction technology, there may be opportunities to achieve fully decentralized stablecoins based on this concept.

Meanwhile, other projects are also exploring different yield-generating stablecoin strategies, such as CapLabs, which achieves returns through MEV and arbitrage profit models, while Reservoir employs a diversified high-yield asset basket strategy to optimize asset allocation. Recently, DWF Labs is set to launch a yield-generating synthetic stablecoin, Falcon Finance, which includes two versions: USDf and USDwf.

These innovations bring diversified choices to the stablecoin market and promote further development of DeFi.

RWA Assets and DeFi Applications Support Each Other

RWA Assets Enhance the Stability of DeFi Applications

Ethena's recently issued stablecoin USDtb has its reserve funds primarily invested in the BlackRock U.S. Treasury tokenized fund BUIDL, with BUIDL accounting for 90% of the total reserves, the highest BUIDL allocation among all stablecoins. This design allows USDtb to effectively support the stability of USDe in challenging market conditions, especially during periods of negative funding rates. Last week, Ethena's risk committee approved a proposal to use USDtb as a supporting asset for USDe, enabling Ethena to close the underlying hedging positions of USDe during market uncertainty and reallocate the supporting assets to USDtb, further mitigating market risk.

Additionally, CDP stablecoins (such as collateralized debt positions) have improved their collateral and liquidation mechanisms by introducing RWA assets to enhance peg stability. In the past, CDP stablecoins primarily used cryptocurrencies as collateral but faced scalability and volatility issues. By 2024, CDP stablecoins have increased their resilience by accepting more liquid and stable collateral, such as Curve's crvUSD, which recently added USDM (real-world assets). Some liquidation mechanisms have also been improved, particularly the soft liquidation mechanism of crvUSD, which provides a buffer for further bad debts and effectively reduces risk.

DEFI Mechanisms Enhance RWA Token Asset Utilization Efficiency

Pendle's newly launched "RWA" partition currently has a total value locked (TVL) of $150 million, covering various yield-generating assets, including USDS, sUSDS, SyrupUSDC, and USD0++.

Among them, USDS is similar to DAI, where users can earn SKY token rewards by depositing it into the SKY protocol; sUSDS is akin to sDAI, with part of its yield coming from MakerDAO's Treasury bond investments; SyrupUSDC is a yield asset supported by the Maple digital asset lending platform, generating returns by providing fixed-rate and over-collateralized loans to institutional borrowers; while the yield of USD0++ comes entirely from 1:1 backed Treasury bonds, ensuring stable returns.

Currently, the annualized yields offered by Pendle are quite attractive, with sUSDS LP reaching 432.4%, SyrupUSDC LP at 98.88%, USD0++ LP at 43.25%, and USDS LP at 22.96%, drawing users to purchase RWA stablecoins.

The Syrup project launched by Maple in May this year has also achieved rapid growth through DeFi strategies, helping Maple regain its footing after experiencing loan defaults during the bear market.

https://dune.com/maple-finance/maple-finance

Additionally, purchasing USD0++ YT assets on Pendle also grants users airdrops from usual, providing more potential yield space for on-chain U.S. Treasury bonds through token strategies.

Can RWAFI Public Chains Empower Institutional Finance?

Plume is a Layer 2 ecosystem focused on RWA, dedicated to integrating traditional finance (TradFi) with decentralized finance (DeFi) to create a financial ecosystem network that encompasses over 180 projects. It has established strategic alliances with institutions such as WisdomTree, Arbitrum, JPMorgan, a16z, Galaxy Digital, and Centrifuge through the Enterprise Ethereum Alliance (EEA) and the Tokenized Asset Coalition (TAC) to promote industry standards and institutional-level RWAFi solutions.

Plume adopts a modular, permissionless compliance architecture, allowing KYC and AML to be autonomously configured at the application level, embedding anti-money laundering (AML) protocols and collaborating with blockchain analytics providers to ensure global security compliance. It also partners with regulated brokers/dealers and transfer agents to ensure compliant issuance and trading of securities in markets like the U.S. The platform introduces zero-knowledge proof of reserves (ZK PoR) technology to verify asset reserves while protecting privacy, supporting global securities exemption standards such as Regulation A, D, and S, and serving retail and institutional investors across multiple jurisdictions.

https://www.plumenetwork.xyz/

Functionally, Plume supports users to:

• Borrow stablecoins or crypto assets using tokenized RWA (such as real estate, private credit) as collateral, providing low-volatility collateral to ensure security;
• Introduce liquid staking, allowing users to stake assets to obtain liquidity tokens to participate in other DeFi protocols, increasing compound yields; the platform offers compound yield assets such as private credit and infrastructure investments, generating stable returns and facilitating yield reinvestment;
• Support RWA trading on perpetual DEXs, enabling users to go long/short on assets like real estate or commodities, achieving a combination of TradFi and DeFi trading;
• Additionally, Plume offers stable yield assets with annualized returns of 7-15%, covering areas such as private credit, solar energy, and minerals, attracting long-term investors; in terms of speculative assets, Cultured provides on-chain speculative opportunities based on sports events and economic indicators, meeting users' demand for short-term high-yield trading.

Avalanche is the first L1 public chain to fully embrace RWA, having begun high-frequency exploration of enterprise-level applications since the end of 2022. With its unique subnet architecture, it helps institutions deploy customized blockchains optimized for specific use cases and achieve seamless interoperability with the Avalanche network, offering unrestricted scalability. From late 2022 to early 2023, entertainment giants from South Korea, Japan, and India successively built subnets on Avalanche. Avalanche has also keenly observed developments in asset tokenization in Hong Kong, launching the Evergreen subnet at the Hong Kong Web 3.0 Summit in April 2023, providing financial institutions with dedicated blockchain deployment tools and services, supporting blockchain settlements with permitted counterparties on private chains, and maintaining interoperability through the Avalanche Native Messaging Protocol (AWM), attracting institutions like WisdomTree and Cumberland to join the Spruce testnet.

https://www.avax.network/evergreen

In November of the same year, Avalanche collaborated with JPMorgan's Onyx platform, utilizing LayerZero to connect Onyx and Evergreen, promoting WisdomTree Prime to provide subscriptions and redemptions of tokenized assets, with the collaboration included in the Monetary Authority of Singapore's (MAS) "Guardian Program." Subsequently, Avalanche continued to expand institutional partnerships, helping financial services company Republic launch the tokenized investment fund Republic Note in November, conducting tokenization trials for private equity funds with institutions like Citibank and WisdomTree on the Spruce testnet in February 2024, and collaborating with ANZ and Chainlink in March to connect Avalanche and Ethereum's asset settlements through CCIP, followed by integration with payment giant Stripe in April.

Additionally, the internal foundation of the ecosystem is actively promoting RWA development, launching the Avalanche Vista program, investing $50 million to purchase tokenized assets such as bonds and real estate, and investing in RWA projects like Balcony and Re through the Blizzard Fund. Ava Labs' Executive President John Wu stated that Avalanche's mission is to "present the world's assets on-chain," bringing the strong regulatory entities of traditional finance into the on-chain space through blockchain advantages like instant settlement, empowering the rise of RWA and becoming the best choice for institutions to go on-chain.

Promising New Directions

On-Chain Foreign Exchange

Traditional foreign exchange systems are inefficient and face numerous challenges, including counterparty settlement risks (although CLS has improved security, the process remains cumbersome), high coordination costs in multi-bank systems (for example, Australian banks need six banks to coordinate when purchasing yen), global settlement time zone differences (such as less than 5 hours of overlap between Canadian and Japanese bank systems), and access restrictions in the foreign exchange market (retail users pay fees 100 times that of large institutions). On-chain FX provides real-time price quotes through real-time oracles (such as Redstone and Chainlink) and achieves cost-effectiveness and transparency through decentralized exchanges (DEXs). For example, Uniswap's CLMM reduces trading costs to 0.15%-0.25%, about 90% lower than traditional foreign exchange. On-chain instant settlement (replacing traditional T+2 settlement) also offers more opportunities for arbitrageurs to correct market pricing errors. Furthermore, on-chain foreign exchange simplifies corporate financial management, allowing access to various products without the need for multiple currency-specific bank accounts; retail users can obtain optimal exchange rates through wallets embedded with DEX APIs. Additionally, on-chain foreign exchange separates currency from jurisdiction, freeing it from reliance on domestic banks. While this approach has its pros and cons, it effectively leverages digital efficiency while maintaining currency sovereignty.

However, on-chain foreign exchange still faces challenges such as the scarcity of non-U.S. dollar-denominated digital assets, oracle security, support for long-tail currencies, regulatory issues, and unified interfaces for entering and exiting the chain. Nevertheless, its potential is immense, with Citibank developing blockchain-based foreign exchange solutions under the guidance of the Monetary Authority of Singapore (MAS). The foreign exchange market has a daily trading volume exceeding $7.5 trillion, especially in the Global South, where individuals often exchange dollars through black markets to obtain better rates. While Binance P2P offers options, its order book model lacks flexibility, and projects like ViFi are developing automated market-making (AMM) foreign exchange solutions to bring new possibilities to the on-chain foreign exchange market.

Cross-Border Payment Stack

Cryptocurrencies have long been seen as key tools to address the trillion-dollar cross-border payment market, especially in the global remittance market, which generates hundreds of billions of dollars in revenue each year. Stablecoins now provide new pathways for cross-border payments, primarily consisting of three layers: merchant layer, stablecoin integration, and foreign exchange liquidity. At the merchant layer, merchants can establish stablecoin flows through applications and interfaces that initiate retail or commercial transactions, creating a moat that allows for upselling other services, controlling user experience, and achieving end-to-end customer coverage, similar to Robinhood in the stablecoin space. The stablecoin integration layer provides entry and exit channels, virtual accounts, cross-border stablecoin transfers, and stablecoin-to-fiat currency exchanges, with licensing becoming a core competitive advantage to ensure the lowest costs and maximum global coverage, as demonstrated by Stripe's acquisition of Bridge. The foreign exchange and liquidity layer is responsible for the efficient exchange of stablecoins with the U.S. dollar, fiat currencies, or regional stablecoins. Additionally, as cryptocurrency exchanges continue to emerge to cater to participants worldwide, cross-border stablecoin payment applications and processors targeting specific markets will gradually rise.

Similar to traditional finance and payment systems, building a defensible and scalable moat is key to maximizing business opportunities at all levels. Over time, the various layers of the stack will gradually integrate, with the merchant layer having the greatest aggregation potential, capable of bundling other layers for users, further enhancing value, increasing profit sources, and controlling foreign exchange trading, entry and exit channel choices, and partnerships with stablecoin issuers, thereby constructing a comprehensive and efficient cross-border payment solution.

Multi-Pool Model Stablecoin Aggregation Platform

In a world where most companies issue their own stablecoins, the issue of fragmented stablecoin funding is becoming increasingly severe. While traditional entry and exit chain solutions can provide short-term relief, they fail to achieve the efficiency promised by cryptocurrencies. To address this issue, Numéraire on Solana has introduced USD*, providing an efficient and flexible multi-asset stablecoin exchange platform for the Solana ecosystem, specifically tackling the challenges of stablecoin fragmentation.

The platform achieves seamless creation and exchange between different stablecoins through an AMM mechanism, with all stablecoins sharing the same liquidity pool, avoiding the dispersion of funds, thereby significantly improving capital efficiency and liquidity management. USD serves as the core element of the system, acting as an intermediary unit that simplifies the exchange process between stablecoins, facilitating more accurate price discovery that reflects market valuations of various stablecoins in real-time. Users can not only mint stablecoins through the protocol but also customize risk-return configurations using a layered collateralized debt position system, further enhancing capital utilization. Meanwhile, the lending function allows excess stablecoins to be efficiently recycled within the system, optimizing capital operations.

Although Numéraire still lags behind platforms like Raydium in terms of liquidity, its innovative design addresses the fragmentation issue within the stablecoin ecosystem, proposing a more forward-looking solution that can more effectively meet institutional demands and the real-world liquidity needs for stablecoins.

Looking back at the previous market cycle, stablecoin products adopting a multi-pool model have only successfully landed on Curve on Ethereum, a model that has been widely praised for its efficiency in stablecoin exchanges. Looking ahead, as the issuance scale of stablecoins on other public chains continues to expand, similar multi-pool model products are expected to gradually appear in more blockchain ecosystems, further driving the scaling and maturation of the stablecoin market.

References:

https://foresightnews.pro/article/detail/73859

https://app.rwa.xyz/?ref=ournetwork.ghost.io

https://docs.usual.money/

https://www.plumenetwork.xyz/

https://mirror.xyz/sevenxventures.eth/ovqj0x0RfVAKAKCVtYSePtKYv8YNLrDzAEwjXVRoU

https://www.theblockbeats.info/news/54086

https://cryptoslate.com/the-8-next-big-trends-in-defi/

https://medium.com/ybbcapital/the-strategic-battleground-stablecoins-ab516ee66f66

About HTX Ventures

HTX Ventures is the global investment arm of Huobi HTX, integrating investment, incubation, and research to identify the best and brightest teams worldwide. As an industry pioneer with over a decade of history, HTX Ventures excels at identifying cutting-edge technologies and emerging business models in the field. To drive growth within the blockchain ecosystem, we provide comprehensive support for projects, including financing, resources, and strategic advice.

HTX Ventures currently supports over 300 projects across multiple blockchain domains, with some high-quality projects already trading on Huobi HTX exchange. Additionally, as one of the most active fund-of-funds (FOF), HTX Ventures invests in 30 top global funds and collaborates with leading blockchain funds such as Polychain, Dragonfly, Bankless, Gitcoin, Figment, Nomad, Animoca, and Hack VC to jointly build the blockchain ecosystem.

Website: https://www.htx.com/ventures

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