According to the data of Dune Analytics, RWA has become the only crypto narrative that has achieved an increase in the past 3 months, except for meme. In an environment where the market as a whole is stagnant, this performance has attracted our attention. In fact, since June last year, the voices about RWA have been one after another. After BlackRock launched the BUIDL on-chain fund, this narrative was completely ignited.
Related reading: "RWA's opportunity, do you see it clearly? "
In front of the wind, everyone has a good sense of smell, but not many people can really "step on the right point". In the past six months, countless teams have transformed into RWA, but only a few projects have successfully seized the opportunity and achieved initial results. Whether it is transformation or entry, seeing the opportunity clearly is the key for the team to get a ticket. Among the many competitors, a project called Jiritsu attracted our attention.
The biggest benefit of tokenizing real-world assets is that it can provide faster and more efficient trading and settlement processes for these assets. This is undoubtedly the main reason why all institutions are interested in RWA. Although there is no problem with this idea logically, it will encounter many difficulties at the technical level when it is actually promoted. The fragmentation of liquidity after the assets are on the chain is one of them.
When the chain and transaction of RWA are full of complexity, the decentralized market makes this problem worse. Digital Asset Research emphasized in its report in July last year that among the current RWA institutions, more than 60% are trading through their own tokenized asset markets, which means that after the assets have "gone through hardships" and completed the chain, they can only attract a small number of fixed customers.
According to statistics from The Block, the total financing scale of the RWA track has also reversed the downward trend this year and rebounded to US$300 million. The current trend of recovery in RWA has allowed many entrepreneurs to see new "narrative opportunities", and the number of RWA concept projects on the market is also increasing at a visible rate. However, most of the projects that have received financing tend to focus on particularly small vertical fields, such as natural resources, specific commodities, and artworks, and RWA projects in the real estate sector are particularly evident in this regard.
To what extent can this vertical category be subdivided? For example, platforms such as Balcony and Mnzl provide tokenization processes for regional real estate resources. Often, the assets on the chain and the buyers and sellers who trade through on-chain tools are local institutions or government departments, which can basically be regarded as a semi-closed asset market.
The verticalization and regionalization of RWA projects are indeed understandable. After all, many real-world assets are highly regional, and often require dedicated personnel and specific remedies. However, due to different regulatory restrictions in various places, each RWA project is almost building its own on-chain process and trading platform from scratch. At the same time, there are different choices when choosing the underlying public chain and smart contract development tools and other technology stacks, which brings huge challenges to the interoperability between different RWAs.
Many entrepreneurs saw this liquidity split, so at the same time, RWA asset aggregation platforms such as Midas and Plume began to appear in the market or RWA launch platforms, but when you think about it further, you will find that they are still facing a dilemma: if you want to establish a unified market, you must first have a certain compatibility in tokens and contract standards, which hinders the platform from aggregating RWA assets on a large scale and in multiple categories. If you first aggregate different RWA protocols, you will be limited to the role of "launch platform" due to the differences in the technical stacks between the protocols. Although it brings some liquidity to small projects, the assets on the chain still have to face the problem of market fragmentation.
Even the tokenized U.S. bond market with the best liquidity is the same. Although the scale problem of a single category has been solved under the push of institutions such as BlackRock and Franklin Templeton, you will still find that in order to give future potential investors and cooperation projects more choices, these assets have also been scattered on different public chains such as Ethereum, Stellar, and Avalanche.
This also provides a narrative window for cross-chain interoperability protocols that have been slow to gain momentum, such as Axelar, which started to deploy RWA very early. Last year, it cooperated with Centrifuge and Ondo to launch Centrifuge Everywhere and Ondo Bridge, respectively, to optimize the protocol and inter-chain interoperability and liquidity for RWA tokenized products. In the current market environment where fragmentation is obvious, cross-chain interoperability is a compensatory solution.
In fact, it is not difficult to see that the bottleneck of RWA breaking through the scale limit is the lack of automated processes or technologies such as AMM in the DeFi field. For RWA products, tokenization is often just a beginning. After the product is on the chain, ensuring continuous asset updates and transparency is the key to testing efficiency and cost, which generally includes the following aspects:
1. Financial reports: Asset managers need to regularly publish financial and performance reports of assets. For example, real estate managers need to regularly provide payment dates and amounts of rental income, or details of arrears and vacancies, so that investors can have a clearer understanding of the cash flow dynamics of the property.
2. Debt management: Products such as RWA credit need to regularly update details such as loan collateral, repayments, interest rate adjustments, and refinancing activities to let investors understand their health. This is the basis for such products to maintain investor trust.
3. Change of ownership: If the basic ownership of the underlying asset or the legal entity that owns the asset changes, it is also necessary to make a timely announcement.
4. Market supervision: When the market regulatory environment of the underlying assets changes, the manager also needs to report and make corresponding adjustments to ensure product compliance.
Of course, in addition to this, there are also complicated details such as asset insurance and risk management strategies, asset valuation and inspection, and the legal entity of issuance. From tokenization to information update and maintenance, a real-world asset requires asset managers to devote a lot of energy and attention to various details throughout the investment life cycle. In short, in the current market environment of "infrastructure redundancy", asset chaining is no longer the most difficult part of RWA development. Off-chain continuous verification and legal supervision are the main reasons for slowing down the growth of asset categories and scale and eroding the value of asset chaining. All of this can only be discussed on the premise of putting aside the audit risks of off-chain entities.
The scale and growth rate of RWA assets depend entirely on the strength of the off-chain issuing and management institutions, which is also an important reason why the U.S. Treasury RWA products have grown rapidly after BlackRock entered the market. In contrast, other assets such as real estate and commodities are difficult to achieve scale effects because they have not enhanced automation in the process. Of course, the value wear and tear of on-chain assets also means huge business opportunities, and for now, this part of the potential income has basically flowed into the hands of asset issuers and managers like Securitize.
Is it possible to build a set of automated "asset oracle" systems in the RWA field, just like ChainLink is for DeFi? We found some answers in the Jiritsu project.
Jiritsu is an Avalanche subnet specifically for off-chain asset verification, aiming to achieve automation and trustlessness of off-chain asset registration and verification, while improving the economic efficiency and transparency of RWA tokenization and reducing on-chain wear and cost. By integrating ZK proofs and MPC multi-party computations, Jiritsu is able to ensure secure and private automated verification of asset details while embedding regulatory compliance and asset integrity into tokenized products. Interestingly, the name "Jiritsu" comes from the Japanese word "じりつ", which means self-reliance. In the current RWA field, where the core links are heavily dependent on centralized manpower, this is exactly what it needs most to enhance its crypto-native properties and achieve scale effects.
The Jiritsu ZK-MPC oracle aggregates data from multiple sources and verifies related calculations, and adopts a multi-functional data retrieval mechanism to enhance the integration depth of different types of assets. The oracle includes two main mechanisms: "Push" and "Pull". The former is that data providers (such as asset managers) send information directly to the oracle, and the latter allows the oracle to directly obtain data from the integrated information provider's systems such as supply chain software and bank information through APIs.
In terms of consensus mechanism, Jiritsu introduces the concept of Proof of Workflow (PoWF). The nodes in the network run an operating system driven by a computing engine and a workflow manager, and use the generated ZK proof to ensure the consensus mechanism of verifiable computing and smart contract execution to integrate the consensus mechanism directly into its MPC framework. Compared to existing oracles such as ChainLink or Pyth, Jiritsu does not require the use of cross-chain bridges for information transmission when aggregating information, and also adds information analysis and verification capabilities in addition to simple data feedback.
After users or asset managers register the assets they wish to tokenize and their details on Jiritsu, ZK-MPC validators analyze the information and confirm the value and compliance status of the assets. The analysis process involves two types of validators, one for reviewing business policies and regulatory compliance, and the other for processing financial data, performing tasks such as spot price retrieval and market price assessment. After the information is analyzed and verified, ZK-MPC will generate ZK proofs and store them on the chain, and users can then claim these proofs and embed them into their own smart contracts, thus completing the entire asset tokenization process.
Jiritsu officials used Paxos' tokenized gold product PAXG as an example to demonstrate the complete process of using its products:
First, Paxos purchases gold through a reliable gold exchange and deposits it in a custodial service. Subsequently, Jiritsu users can use the Jiritsu dApp on a supported public chain to create a validator on the ZK-MPC node of the Jiritsu network. After the ZK-MPC node retrieves the gold custody information about Paxos, the validator generates the relevant ZK proof.
During the verification process, the ZK-MPC node is responsible for off-chain verification calculations, and the generated ZK proofs also have different levels of access and confidentiality permissions. For example, auditors can have full access to all information, while asset managers can only see specific information related to their roles. The verification process can update information at preset times or on demand, which is far more efficient and reliable than Paxos' current method of manually verifying inventory every quarter.
After the ZK proof is uploaded to the Jiritsu network, Paxos can move forward with the tokenization of its custodial gold. In this link, Jiritsu also implements the concept of "chain abstraction", allowing asset issuers like Paxos to mint corresponding tokens on ideal target chains such as Solana, Avalanche or BNB Chain.
After the token is generated, Paxos pays fees to nodes and validators through the Jiritsu dApp, a portion of which will be allocated to the Jiritsu network. The PAXG tokens purchased by investors will contain an underlying gold certificate and can use the certificate to access the gold custody status information on the Jiritsu network, while Paxos can pass the cost of fees on to investors at this stage.
The dApps on the Jiritsu network are designed to facilitate the writing of specific data, allowing users to create validators for any business logic, data readers, and smart contract integrations. This adaptability ensures Jiritsu's ability to provide customized solutions for a wide range of business needs. In addition, Jiritsu Proof under its ZK-MPC cloud service has significantly expanded the asset categories for information verification. In addition to traditional financial verification such as bank information and corporate credit, it can also verify the status information of a range of real-world assets, such as equipment, inventory, and transaction and income information in company plants. Jiritsu recently provided inventory proof for an Amazon supply chain company with more than 100,000 SKUs and a total value of approximately US$20 million.
On this basis, Jiritsu also uses two data indicators, "Total Asset Verified" and "Totl Asset Secured", to measure its influence on the on-chain of real-world assets, and uses these data indicators to provide DeFi protocols with more compatible and interoperable underlying asset LEGOs. According to the official Dune dashboard data, Jiritsu has verified more than $18 billion in assets so far, and has more than $60 million in assets waiting to be used by various protocols at any time.
Not long ago, Jiritsu integrated BlackRock's RWA ecosystem to provide automated on-chain proofs for the reserve asset valuation and verification, compliance and KYC platform information of its Bitcoin spot ETF and BUIDL fund, so that other protocols can use these assets on the chain more conveniently and quickly. On the other hand, although iBIT and BUIDL bring huge incremental funds to the crypto market and RWA, their asset verification still relies on self-reporting and only provides annual audits, while Jiritsu brings more transparent and cost-effective solutions to these products.
Jiritsu has also integrated with the Republic platform, which is deeply involved in the RWA field, so that any asset manager can directly implement and use similar solutions, improve compliance and operational efficiency while providing a variety of tokenized products, and asset managers can use the mature infrastructure provided by Republic in tokenization, compliance, marketing and customer service. Through automated and trustless verification and auditing, Jiritsu has moved the work that was previously done by institutions such as Moody's and KPMG to the chain, and the fee income of this part of the traditional market exceeds 150 billion US dollars. Even if calculated at 10%, this is an imaginative business ceiling.
Jacob Guedalia and David Guedalia, the two co-founders of Jiritsu Network, are both prestigious in the academic field. The former holds a bachelor's degree in physics and philosophy from New York University and a graduate degree in applied physics from the Weizmann Institute in Israel, and the latter holds a master's degree in computational geography from Bar-Ilan University and a doctorate in neural computing from the Hebrew University of Jerusalem. In addition, Jacob is also a successful serial entrepreneur who has founded and exited 4 companies. He and David together own more than 100 US patents.
Jiritsu has raised a total of $10.2 million in the past two rounds of financing, led by gumi Cryptos Capital, with participation from Susquehanna Private Equity Investments, LLLP, Republic Capital and other investors, while former BlackRock asset manager Michael Lustig also announced that he has joined the Jiritsu team. The company plans to use the new funds to "accelerate the development and adoption of the UVC platform and Tomei RWA." Founded in 2020, Jiritsu has developed technologies such as Infinite Verifiable Computing (UVC), which aims to provide an easily programmable method that can be applied to any workflow and generate workflow proofs.
欢迎加入律动 BlockBeats 官方社群:
Telegram 订阅群:https://t.me/theblockbeats
Telegram 交流群:https://t.me/BlockBeats_App
Twitter 官方账号:https://twitter.com/BlockBeatsAsia