Written by: JiaYi

I thought for a long time whether to write this piece. I have projects in the RWA direction, and writing this feels a bit like hitting myself in the face. But this question really deserves a straightforward answer.

The on-chain national debt exceeds $4B+, having tripled in a year. BlackRock's BUIDL fund has attracted hundreds of millions in a single quarter. Franklin Templeton and HSBC are also joining the fray. The TVL of RWA is one of the few metrics still rising in this round of the bear market.

But when you open the tokens of these projects—they're basically all in the red, and on a downward trend. Some have dropped over 90% from their peak.

Why?

Some will say: Retail investors can't get in. This answer is half correct but outdated. There are already projects in the market solving this issue—just register, and retail users can participate in RWA returns. The entry barrier for users has been lowered. But token prices are still falling.

I believe many RWA projects did not understand the essence of the project from the start.

The RWA product + TOKEN requires each to fulfill its role; the token economic model was designed incorrectly.

The most common death formula for all RWA-related TVL category projects looks like this:

Users deposit TVL to receive RWA returns → simultaneously issue tokens as additional rewards → users continuously sell tokens → tokens fall → continue issuing more tokens to subsidize → no one dares to buy tokens.

The essence of this logic is: tokens have become a subsidy tool, not a value carrier.

If you think about the business logic this way, then the only action for token holders is—sell. No one wants to buy tokens because there's no additional benefit to purchasing them. If you want RWA returns, you can just deposit assets; there’s no need to hold tokens at all. This turns the market into one with perpetual selling pressure and no buying support.

Many DeFi projects die here. Deposit TVL for returns, then give airdrops, then give token rewards. Round after round of issuance. No one buys; only people sell. The number of tokens on the project’s accounts increases, prices drop lower and lower, and it ultimately falls into liquidity exhaustion.

The RWA track is now repeating this mistake.

So what should be done?

Because I work in strategic consulting growth strategies, the issue boils down to the business of RWA itself.

RWA projects should focus their resources on one thing—finding genuinely good RWA assets.

Instead of designing increasingly complex token incentive systems.

What is a good RWA asset? Four standards:

1. Attractive APY. The yield should be appealing to users, competitive with TradFi, and not lower than bank wealth management products.

2. Consensus. The assets themselves need to have market recognition, such as government bonds or credit products backed by reputable institutions that users understand and trust.

3. Stability. Not high-risk, high-return speculative products; the core value proposition of RWA is stable, real returns.

4. Safety. A robust risk control at the asset end, ensuring that the underlying assets will not crash.

When the underlying assets are good enough, users will naturally come in for returns. At this point, the role of the token should be: holding tokens should unlock better assets, higher yield ratios, and priority quotas.

Demand should be transmitted from the asset end to the token end, forming real purchase incentives. Instead of reversing the logic—using token subsidies to attract users, only to find that no one wants to hold the token.

The narrative of RWA is real, the data is real, and institutions are indeed coming in.

But no matter how strong the narrative, it cannot support a token model that is flawed by design.

The next truly successful RWA project, I predict, will be one that solidifies the asset end first before discussing token value. It won’t rely on token rewards to pull in TVL but rather on TVL to support the token. If the order is reversed, no narrative or market expert can save it.

Good assets attract users; users support the token. Doing it the other way around just subsidizes a product that no one truly wants.

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