Source: HTX Ventures

Since the DeFi Summer of 2020, Automated Market Makers (AMMs), lending protocols, derivative trading, and stablecoins have become the core infrastructure of the cryptocurrency trading space. Over the past four years, numerous entrepreneurs have continuously iterated and innovated on these tracks, propelling projects such as Trader Joe and GMX to new heights. However, as these products gradually mature, the growth of the cryptocurrency trading track has begun to hit a ceiling, making it increasingly difficult for a new batch of top-tier projects to emerge.

After the 2024 US presidential election, the legalization and compliance process of the cryptocurrency industry are expected to bring new development opportunities to the industry. The integration of traditional finance and DeFi is accelerating: Real World Assets (RWAs) such as private credit, US Treasury bonds, and commodities have evolved from early simple tokenized representations to yield-generating stablecoins with capital efficiency. This has provided a new option for crypto users seeking stable returns and has become an additional growth engine for DeFi lending and trading. Meanwhile, the strategic position of stablecoins in international trade is increasingly prominent, and the upstream and downstream infrastructure of the payment track continues to prosper. Traditional financial giants, including the Trump family, Stripe, PayPal, and BlackRock, are all accelerating their efforts to lay out in the industry, injecting more possibilities into the sector.

Following the "old DeFi" players like Uniswap, Curve, dYdX, and Aave, a new batch of cryptocurrency trading unicorn startups 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 being fixated on micro-innovations in traditional DeFi but focusing on building groundbreaking products that meet the demands of the new environment.

This article, written by HTX Ventures, will delve into this trend, exploring the potential opportunities and development directions in the cryptocurrency trading track's new round of transformation, providing insights and references for industry participants.

Changes in the Current Trading Environment

Stablecoin Compliance Approval, Increasing Adoption in Cross-Border Payments

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

This bill could become the first comprehensive cryptocurrency legislation passed by the US Congress, driving widespread adoption of 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" for the crypto market following the Bitcoin ETF.

Although compliant institutional investors cannot directly benefit from the appreciation of stablecoins, they can profit from investing in infrastructure related to stablecoins. For example, mainstream blockchains supporting a large supply of stablecoins (such as Ethereum, Solana, etc.) and various DeFi applications interacting with stablecoins will benefit from stablecoin growth. Currently, stablecoins account for over 50% of blockchain transactions, up from 3% in 2020. Their core value lies in seamless cross-border payments, a feature that is especially rapidly growing in emerging markets. For instance, stablecoin transaction volume accounts for 3.7% of Turkey's GDP, and in Argentina, stablecoin premium reaches as high as 30.5%. Innovative payment platforms like Zarpay and MentoLabs are attracting users to the blockchain ecosystem through local agents and payment systems, further driving the mainstream adoption of stablecoins.

Currently, the cross-border B2B payment market processed through traditional payment channels amounts to around $40 trillion, while the global consumer remittance market generates billions of dollars in revenue annually. Stablecoins provide a new way for this market to achieve efficient cross-border payments through cryptographic channels, with adoption rates rapidly rising. They are poised to enter and disrupt this market segment, becoming a significant force in the global payment landscape.

Ripple's RLUSD stablecoin, designed for enterprise payments, aims to enhance the efficiency, stability, and transparency of cross-border payments to meet the demand for USD-denominated transactions. Meanwhile, Stripe's $1.1 billion acquisition of the stablecoin platform Bridge became the largest acquisition in the history of the cryptocurrency industry. Bridge provides seamless fiat-to-stablecoin conversion for enterprises, further driving 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 conversion of USDT and USDC into 16 fiat currencies and enables direct transfers to bank accounts. Through a streamlined onboarding process and instant conversion, PEXX enables users and businesses to efficiently and cost-effectively conduct cross-border payments, breaking down the barriers between traditional finance and cryptocurrency. This innovation not only offers a faster and more cost-effective cross-border payment solution but also drives the decentralization and seamless connectivity of global fund flows. Stablecoins are gradually becoming a key part of global payments, enhancing the efficiency and ubiquity of the payment system.

Potential Relaxation of Regulation on Perpetual Contract Trading

Due to the high leverage nature of perpetual contract trading, which can easily lead to customer losses, regulatory agencies around the world have always had stringent compliance requirements. In many jurisdictions, including the United States, centralized exchanges (CEXs) are not only prohibited from offering perpetual contract services, but decentralized perpetual contract trading platforms (PerpDEX) also face a similar fate. This directly limits the market space and user base of PerpDEX.

However, as Trump emerged victorious in the election, the compliance process in the crypto industry is expected to accelerate, and PerpDEX is highly likely to usher in a period of development. Two recent landmark events are worth noting: first, Trump's appointed crypto and AI advisor David Sacks has previously invested in the veteran player in this space, dYdX; second, the U.S. Commodity Futures Trading Commission (CFTC) is expected to replace the U.S. Securities and Exchange Commission (SEC) as the primary regulator of the crypto industry. The CFTC has accumulated rich experience from the launch of Bitcoin futures trading on the CME, and compared to the SEC, it has a more crypto-friendly regulatory attitude towards PerpDEX. These positive signals may open up new market opportunities for PerpDEX and create more favorable conditions for its growth under future compliance frameworks.

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

Once, the high-risk, high-reward crypto market environment made the stable yield of RWAs (Real World Assets) unattractive. However, during the past bear market cycle, the RWA market has grown against the trend, with its Total Value Locked (TVL) skyrocketing from less than a million dollars to the current level of hundreds of billions of dollars. Unlike other crypto assets, the value of RWAs is not influenced by crypto market sentiment. This feature is crucial for shaping a robust DeFi ecosystem: RWAs not only effectively enhance portfolio diversification but also provide a solid foundation for various financial derivatives, helping investors hedge risks in extreme market turbulence.

According to data from RWA.xyz, as of December 14th, RWAs have 67,187 holders, with 115 asset issuers, and a total market value of $139.9 billion. Web3 giants, including Binance, expect the RWA market to expand to $16 trillion by 2030. This vast market landscape with its immense potential, along with the investment attractiveness of its stable yield, is gradually becoming an indispensable part of the DeFi ecosystem.

After the Three Arrows Capital incident, the crypto industry has exposed a key issue: assets lack a sustainable revenue scenario. With the Federal Reserve beginning its rate hike process and global market liquidity tightening, so-called high-risk assets like cryptocurrency have been particularly affected. In contrast, real-world assets such as US Treasuries have seen their yields steadily rise since the end of 2021, attracting market attention. From 2022 to 2023, the median DeFi yield dropped from 6% to 2%, below the risk-free return of 5% on US Treasuries during the same period, leading high-net-worth investors to lose interest in on-chain yields. With the depletion of on-chain yields, the industry is beginning to turn to Real World Assets (RWA), hoping to reignite market activity by introducing off-chain stable income.

In August 2023, MakerDAO raised the DAI Savings Rate (DSR) within its lending protocol, Spark Protocol, to 8%, sparking a long-awaited revival in the DeFi market. Within just one week, the protocol's DSR deposits surged by nearly $1 billion, and DAI's circulating supply also increased by $800 million, reaching a new high in three months. The key factor driving this growth is Real World Assets (RWA). Data shows that in 2023, over 80% of MakerDAO's fee income comes from RWA. Since May 2023, MakerDAO has increased its investment in RWA, bulk purchasing US Treasury bonds through entities like Monetalis, Clydesdale, and BlockTower, and deploying funds to RWA lending protocols like Coinbase Prime and Centrifuge. By July 2023, MakerDAO had a nearly $25 billion RWA investment portfolio, with over $10 billion coming from US Treasuries.

MakerDAO's successful exploration has sparked a new wave of RWA enthusiasm. Fueled by the high-yield blue-chip stablecoins, the DeFi ecosystem has rapidly responded. For example, the Aave community proposed adding sDAI as collateral, further expanding RWA's application in DeFi. Similarly, in June 2023, the founder of Compound launched a new company, Superstate, focusing on bringing real-world assets such as bonds to the blockchain, offering users real-world-like stable returns.

RWA has become a crucial bridge connecting real-world assets and on-chain finance. As more innovators explore the potential of RWA, the DeFi ecosystem is gradually finding a new path towards stable returns and diversified growth.

Licensed Institutions Bringing On-Chain to Scale the Market

In March of this year, BlackRock launched the first US Treasury bond tokenization fund, BUIDL, on a public blockchain, attracting market attention. The fund provides accredited investors with an opportunity to earn yields through US Treasuries and was initially deployed on the Ethereum blockchain, later expanding to other blockchains such as Aptos, Optimism, Avalanche, Polygon, and Arbitrum. Currently, BUIDL functions as a tokenized yield certificate without practical utility, but its landmark release marked a significant step forward for tokenized finance.

Simultaneously, Wyoming Governor Mark Gordon announced that the state government plans to issue a US dollar-backed stablecoin by 2025, supported by US Treasury bonds and repurchase agreements. It is expected that the stablecoin will launch in collaboration with trading platforms in the first quarter of 2025, signaling a new spotlight on government-backed stablecoin experiments in the market.

In the traditional financial sector, State Street, as one of the world's top asset management companies, is actively exploring various avenues to integrate into blockchain payment and settlement systems. Apart from considering issuing its own stablecoin, State Street also plans to introduce deposit tokens representing customer deposits on the blockchain. As the world's second-largest custodian bank, managing over $40 trillion in assets, State Street Bank seeks to enhance service efficiency through blockchain technology, marking positive progress for traditional financial institutions in digital transformation.

JPMorgan Chase is also accelerating its blockchain business expansion, planning to launch on-chain foreign exchange capabilities in the first quarter of 2025 to achieve round-the-clock automated multi-currency settlement. Since launching its blockchain payment platform in 2020, JPMorgan Chase has processed over $1.5 trillion in transactions, involving areas such as intraday repurchase and cross-border payments, with platform users including Siemens, BlackRock, and Ant Group. JPMorgan Chase plans to expand its platform, initially supporting automated settlement in USD and EUR, with future expansions into more currencies.

JPM Coin from JPMorgan Chase is a key part of the bank's blockchain strategy, serving as a digital dollar designed for institutional clients, providing global instant payments and settlement. Its launch has expedited the on-chain process of digital assets for financial institutions, gaining an advantage in cross-border payments and fund flows.

Furthermore, Tether's recently launched Hadron platform has also propelled the asset tokenization process, aiming to simplify the digital tokenization of various assets such as stocks, bonds, commodities, and funds. The platform offers tokenization, issuance, and redemption services for institutions, funds, governments, and private companies, supporting functions like KYC compliance, capital market management, and regulatory oversight, further driving the digital transformation of the asset management industry.

Emergence of RWA Tokenization Compliance Tools

Securitize is an innovative platform focused on fund issuance and investment on the blockchain. Its partnership with BlackRock began with a deep dive into Real World Assets (RWA) and has provided professional services to numerous large-scale asset securitization companies, including 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 platform's full suite of compliance tools to ensure that the issued tokenized securities comply strictly with the laws and regulatory requirements of each country.

Since obtaining the Transfer Agent Registration from the U.S. Securities and Exchange Commission (SEC) in 2019, Securitize has rapidly expanded its business scope. In 2021, the company secured a $48 million funding round led by Blockchain Capital and Morgan Stanley. In September 2022, Securitize helped one of the largest investment management firms in the U.S., KKR, tokenize 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 company Mancipi Partners, becoming the first company to issue and trade tokenized securities under the EU's new Digital Asset Pilot Regime.

Recently, leading stablecoin issuer Ethena announced a partnership with Securitize to launch a new type of stablecoin product called USDtb. The stablecoin's reserve funds are invested in BlackRock's USD institutional digital liquidity fund (BUIDL), further solidifying Securitize's position in the blockchain financial ecosystem.

In May 2023, Securitize once again received a $47 million strategic investment led by BlackRock, with the funds being used to accelerate the expansion of partnerships within the financial services ecosystem. As part of this funding round, Joseph Chalom, Global Head of Ecosystem Strategy at BlackRock, was appointed to Securitize's board of directors. This partnership signifies further deepening of Securitize's integration between traditional finance and blockchain technology.

Opportunities and Challenges

Private Credit RWA Enters the Payfi Era – How are Default Issues Addressed

Private credit currently has a total value of approximately $13.5 billion, with active loan value of $8.66 billion and an average current annual interest rate of 9.46%. In the Real World Assets (RWA) market, private credit remains the second largest asset class, with approximately 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 received over $60 million in Series A funding in March this year from institutions like Jump Crypto and Pantera Capital, and currently has a Total Value Locked (TVL) of $13 billion, making it the platform with the highest RWA Market TVL. Unlike traditional non-standard private credit RWAs, Figure Markets primarily focuses on the Home Loan market, which is a standardized market. This gives it a larger market size and growth potential, providing more opportunities in the future.

In addition, private credit includes corporate institutional loans, and projects that emerged in the last cycle mainly include Centrifuge, Maple Finance, and Goldfinch.

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

However, Centrifuge also faces risks from market fluctuations. Although its asset tokenization model is favored by many traditional financial institutions, in cases of significant market volatility, borrowers may struggle to repay on time, leading to default events. For example, assets in highly volatile markets may fail to fulfill loan contracts, especially in bearish market phases, where the borrower's debt repayment capability is severely tested during times of illiquidity.

· Maple Finance focuses on providing high-yield collateralized loans to corporate and institutional borrowers. The platform's loan pools typically have BTC, ETH, SOL, and other crypto assets as overcollateralization. Maple utilizes an on-chain credit rating mechanism, allowing institutional borrowers to create and manage loan pools to provide stable returns to lenders. This model particularly suits institutions within the crypto industry, as it reduces risks and enhances capital returns by offering overcollateralized loans to these institutions.

However, the Maple platform also faced a severe test during the bear market. Multiple significant default events occurred, especially as the overall crypto market experienced a downturn. For example, Orthogonal Trading failed to repay its $36 million loan on Maple Finance, putting significant default pressure on the platform.

· Goldfinch is a platform focused on on-chain credit lending, aiming to provide loans to startups and small businesses that cannot access 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 a fund pool, Goldfinch lends funds to borrowers in need and offers a fixed return to fund providers.

Goldfinch's issues mainly manifest in the selection of loan recipients. Many borrowing companies face a higher risk of default, especially startups and small businesses from high-risk markets. For example, in April 2022, Goldfinch encountered a $10 million loan default event, with the primary losses coming from high-risk small businesses and startups. Despite receiving investment from a16z, these default events exposed its shortcomings in risk control and market demand.

The recently proposed "Payfi" concept by Solana shares some business logic similarities with the private credit sector and further expands its application scenarios to include cross-border financing, lending, and cross-border payment swaps, among other diversified scenarios. 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 borrowing and repayment. Additionally, Huma's subsidiary, Arf, specializes in cross-border payment financing services, greatly optimizing the traditional cross-border remittance process.

For instance, when remitting funds from Singapore or Hong Kong to South Africa, the traditional Swift remittance method is often time-consuming and costly. While many opt for remittance companies like Western Union, these remittance companies need to collaborate with local partners in South Africa and rely on substantial local financing to facilitate same-day settlements. This model places a significant burden on remittance companies as they need to handle financing in various countries worldwide with different fiat currencies, making efficiency hard to maintain. Arf abstracts the financing service by introducing stablecoins, providing rapid fund transfer support to payment companies.

For example, when a user remits $1 million to South Africa, Arf ensures that the funds enter a regulated account and completes cross-border settlement using a stablecoin. Huma conducts due diligence on the payment company before settlement to ensure security. Throughout the entire process, Huma lends and retrieves stablecoins, without involving fiat currency in/out operations, thus achieving fast, secure, and efficient fund transfer.

Huma's main clients come from developed countries such as the UK, US, France, and Singapore, where the default rate is extremely low, the payment term is usually 1 to 3 days, fees are charged per day, the fund chain is transparent, and efficient. Currently, Huma has achieved a $2 billion fund flow with a 0% default rate. Through cooperation with Arf, Huma has achieved substantial double-digit returns, unrelated to tokens.

Furthermore, Huma plans to further integrate into DeFi projects, such as Pendle, to explore token reward mechanisms and a broader range of decentralized finance gameplay to further enhance user returns and market attractiveness. Huma's model may become an innovative way to solve private credit default issues.

How Will Profit-Sharing Stablecoin Leaders Be Positioned

This cycle may see the emergence of stablecoins similar to USDT/USDC that are secure and can provide at least a 5% sustainable return. This market undoubtedly holds huge potential. Currently, Tether, the issuer of USDT, has an annual profit close to tens of billions of dollars, with a team of only about 100 people. If this portion of the profit can be returned to users, can the vision of profit-sharing stablecoins be realized?

Sovereign Debt Underlying Play

Currently, stablecoins built on sovereign debt as the underlying asset are becoming a new trend in the crypto market. These stablecoins tokenize traditional financial assets into blockchain, retaining the stability and low-risk characteristics of sovereign debt, while providing the high liquidity and composability of DeFi. They use various strategies to increase risk premiums, including fixed budget incentives, user fees, volatility arbitrage, and leveraging reserve assets such as collateralization or rehypothecation.

USDY launched by Ondo Finance is a typical example of this trend. USDY is a tokenized note secured by short-term US Treasuries and bank call deposits, designed architecture compliant with US laws and regulations. It can be used as collateral in DeFi protocols and as a transaction medium for Web3 payments. USDY is divided into two types: accumulator (USDY) and rebasing (rUSDY). The former is suitable for long-term holding, while the latter increases token quantity for returns, suitable as a settlement tool. Additionally, Ondo Finance's OUSG token focuses on providing high liquidity investment opportunities pegged to short-term US Treasuries, with underlying assets held in a BlackRock dollar institutional fund, supporting instant minting and redemption.

In addition, OpenTrade offers various Vault products based on government bonds, including the fixed-income US Treasury Vault and the flexible-income USDC Vault, to meet the asset management needs of different users. OpenTrade deeply integrates its tokenized products with DeFi, providing holders with a seamless deposit and yield experience.

USDT Issuer Revenue Distribution vs. Usual Revenue Distribution

Usual Protocol launched the stablecoin USD0, which tokenizes traditional financial assets such as US Treasury bonds. It offers two minting options: users can mint USD0 directly by depositing RWA assets or indirectly by depositing USDC/USDT. Additionally, users can upgrade USD0 to the higher-yield USD0++ and, through partnerships with DeFi platforms like Pendle, receive additional loyalty rewards.

Solayer introduced the sUSD stablecoin on the Solana blockchain, collateralized by US Treasury bonds, providing holders with a 4.33% on-chain yield. It also supports enhancing the stability and security of the Solana network as a staking asset. Through these mechanisms, both projects not only increase the profitability of stablecoins but also enhance the stability and efficiency of the DeFi ecosystem, demonstrating the significant potential of integrating traditional finance with blockchain technology.

Low-Risk On-Chain Arbitrage Strategy

In addition to designs based on government bonds, another yield-bearing stablecoin leverages the volatility of the crypto market, MEV, and other characteristics for arbitrage to earn low-risk returns.

Ethena is the fastest-growing algorithmic stablecoin project since the collapse of Terra Luna. Its native stablecoin, USDe, with a volume of $5.5 billion, surpassed Dai to temporarily rank third in the market. Ethena's core design is based on the Delta Hedging strategy of Ethereum and Bitcoin collaterals. It hedges the impact of collateral price fluctuations on USDe value by opening short positions on CEX equal to the collateral value. This hedging mechanism is achieved through off-chain settlement service providers, with protocol assets custodied by multiple external entities, aiming to maintain USDe stability through the complementary movements between collateral value and short positions.

The project's revenue mainly comes from three sources: Ethereum staking rewards generated by user-staked LST; funding rate or basis difference revenue generated from hedge trading; and Liquid Stables fixed rewards, which are the deposit interest earned by depositing USDC or other stablecoins on Coinbase or other exchanges. Essentially, USDe is a packaged CEX low-risk quantitative hedge fund product that can provide up to a 27% floating annualized yield when the market is favorable and liquidity is ample.

Ethena's risks mainly stem from the potential default of CEX and custodian, as well as the price dislocation and systemic risk that may occur due to insufficient counterparties during a run on the bank. In a bear market scenario where funding rates may remain depressed, the risk is further exacerbated. During this year's mid-year market volatility period, the protocol yield turned negative at -3.3%, but systemic risk did not emerge.

Nevertheless, Ethena provides an innovative on-chain and CEX-integrated design logic by introducing a large amount of LST assets brought by mainnet merging to provide scarce short liquidity for trading platforms, while also bringing in fee income and market vitality. In the future, with the rise of order book DEX and the maturity of chain abstraction technology, there may be an opportunity to achieve fully decentralized stablecoins based on this idea.

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

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

RWA Assets and DEFI Applications Mutual Empowerment

RWA Assets Enhancing DEFI Application Stability

The reserve fund of Ethena's recently issued stablecoin USDtb is mainly invested in the BlackRock Treasury Bond Tokenized Fund BUIDL, where BUIDL accounts for 90% of the total reserve, the highest BUIDL allocation among all stablecoins. This design enables USDtb to effectively support USDe's stability in challenging market conditions, especially during periods of negative funding rates. Ethena's Risk Committee approved a proposal last week to designate USDtb as the supporting asset for USDe. Thus, in times of market uncertainty, Ethena can close USDe's underlying hedge position and reallocate the supporting asset to USDtb, further mitigating market risk.

In addition, CDP stablecoins (such as collateralized debt positions) have also improved their collateral and liquidation mechanisms by introducing RWA assets to enhance peg stability. In the past, CDP stablecoins mainly used cryptocurrency as collateral, but faced scalability and volatility issues. By 2024, CDP stablecoins have started accepting more liquid and stable collateral, such as Curve's crvUSD which recently added USDM (real-world assets), enhancing its risk resilience. The liquidation mechanisms have also been improved, especially the soft liquidation mechanism of crvUSD, providing a buffer for further defaults and effectively reducing risks.

DEFI Mechanism Enhances RWA Token Asset Utilization Efficiency

The newly launched "RWA" tranche by Pendle currently has a TVL of $150 million, covering various yield-bearing assets including USDS, sUSDS, SyrupUSDC, and USD0++.

Among these, USDS is similar to DAI, where users receive SKY token rewards after depositing into the SKY protocol; sUSDS is similar to sDAI, with part of its yield coming from MakerDAO's treasury investments; SyrupUSDC is a yield asset supported by the Maple digital asset lending platform, generating revenue by providing fixed-rate and overcollateralized loans to institutional borrowers; and the yield of USD0++ comes entirely from 1:1 backed treasuries, ensuring a stable return.

Currently, the annualized yield provided by Pendle is quite attractive, with sUSDS LP reaching up to 432.4%, SyrupUSDC LP at 98.88%, USD0++ LP at 43.25%, and USDS LP at 22.96%, attracting users to participate in purchasing RWA stablecoins.

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

Furthermore, purchasing the YT asset of USD0++ on Pendle can also receive a usual airdrop, providing additional potential revenue opportunities for on-chain US treasuries through tokenomics.

Can RWAFI Public Chains Empower Institutional Finance

Plume is a Layer2 ecosystem focused on RWA, dedicated to integrating Traditional Finance (TradFi) with Decentralized Finance (DeFi) to build a financial ecosystem network covering over 180 projects. Through strategic alliances with institutions such as WisdomTree, Arbitrum, J.P. Morgan, a16z, Galaxy Digital, and Centrifuge, among others, Plume has engaged with the Enterprise Ethereum Alliance (EEA) and Tokenized Assets Alliance (TAC) to drive industry standards and institutional-grade RWAfi solutions.

Plume adopts a modular, permissionless compliance architecture, allowing KYC and AML to be autonomously configured at the application layer. It embeds Anti-Money Laundering (AML) protocols and collaborates with blockchain analysis vendors to ensure global security compliance. Plume also partners with regulated brokers/dealers and transfer agents to facilitate securities compliance issuance and trading in markets like the United States. 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.

In terms of functionality, Plume supports users to:

· Borrow stablecoins or crypto assets using tokenized RWAs (such as real estate, private credit) as collateral to provide low-volatility collateral, ensuring security;

· Introduce liquidity staking, where users can stake assets to receive liquidity tokens for participating in other DeFi protocols to increase yield farming returns. The platform offers yield-generating assets such as private credit and infrastructure investments, providing stable returns and supporting reinvestment of yields;

· Support RWA trading on a perpetual DEX, allowing users to long/short assets like real estate or commodities, achieving a fusion of TradFi and DeFi trading;

· Furthermore, Plume offers stable yield-generating assets ranging from 7-15% annual percentage rate, covering areas such as private credit, solar power, and mining, attracting long-term investors. For speculative assets, Cultured provides on-chain speculative opportunities based on sports events and economic indicators, catering to users' demands for short-term high-yield trading.

Avalanche, on the other hand, is the first L1 public chain to fully embrace RWA, initiating high-level exploration of enterprise applications since late 2022. Leveraging its unique subnets architecture, Avalanche assists institutions in deploying custom blockchains optimized for specific use cases and achieving 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 been attentive to developments in asset tokenization in Hong Kong and, in April 2023, launched the Evergreen subnet at the Hong Kong Web3.0 Summit to provide specialized blockchain deployment tools and services for financial institutions, enabling blockchain settlements on private chains with licensed counterparties and maintaining interoperability through the Avalanche Wire Messaging (AWM) protocol, attracting institutions such as WisdomTree and Cumberland to join the Spruce testnet.

In November of the same year, Avalanche partnered with J.P. Morgan's Onyx platform to use LayerZero to connect Onyx and Evergreen, driving WisdomTree Prime to facilitate the subscription and redemption of tokenized assets. This collaboration was included in the Monetary Authority of Singapore's (MAS) "Guardianship Program." Subsequently, Avalanche continued to expand its institutional partnerships, helping the financial services company Republic launch the tokenized investment fund Republic Note in November, conducting a tokenization test of private equity funds with institutions such as Citibank and WisdomTree on the Spruce testnet in February 2024, partnering with ANZ Bank and Chainlink in March to settle assets between Avalanche and Ethereum through CCIP, and integrating with the payment giant Stripe in April.

Additionally, the ecosystem's internal foundation actively promoted the development of RWAs, launching the Avalanche Vista initiative, 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. John Wu, CEO of Ava Labs, stated that Avalanche's mission is to "portray the world's assets on-chain," bringing highly regulated entities from traditional finance into the on-chain space through blockchain advantages such as instant settlement, empowering the rise of RWAs and becoming the best choice for institutions to go on-chain.

Exciting New Directions

On-chain FX

Traditional FX systems are inefficient and face various challenges, including counterparty settlement risks (although CLS has enhanced security, the process is still cumbersome), high coordination costs in a multi-bank system (such as six banks coordinating for an Australian bank to buy yen), global settlement time zone differences (e.g., the Canadian dollar and yen banking system overlap for less than 5 hours per day), and access restrictions in the FX market (retail users pay fees that are 100 times higher than those of large institutions). On-chain FX leverages real-time oracles (such as Redstone and Chainlink) to provide instantaneous price quotes and achieves cost-effectiveness and transparency through decentralized exchanges (DEX), where Uniswap's CLMM reduces transaction costs to 0.15%-0.25%, about 90% lower than traditional FX. On-chain instant settlement (replacing traditional T+2 settlement) also provides arbitrageurs with more opportunities to correct market pricing errors. Furthermore, on-chain FX simplifies corporate treasury management, allowing access to various products without the need for multiple currency-specific bank accounts; retail users can obtain the best exchange rates through wallets embedded with DEX APIs. Additionally, on-chain FX separates currency from jurisdiction, eliminating reliance on domestic banks. While this approach has its pros and cons, it effectively utilizes digital efficiency while maintaining currency sovereignty.

However, on-chain forex still faces challenges such as a scarcity of non-USD-denominated digital assets, oracle security, support for long-tail currencies, regulatory issues, and a unified on/off-chain interface. Nevertheless, its potential is tremendous, with Citibank developing a blockchain-based forex solution under the guidance of the Monetary Authority of Singapore (MAS). The daily trading volume in the forex market exceeds $7.5 trillion, especially in the global South, where individuals often exchange USD through the black market to achieve a more favorable exchange rate. While Binance P2P provides an option, projects like ViFi are developing on-chain automated market maker (AMM) forex solutions to bring new possibilities to the on-chain forex market.

Cross-Border Payment Stack

Cryptocurrency has long been seen as a key tool to solve the trillion-dollar cross-border payment market, especially in the global remittance market, which generates billions of dollars in revenue annually. Stablecoins now offer a new path for cross-border payments, primarily involving three levels: the merchant layer, stablecoin integration, and forex liquidity. At the merchant layer, through applications and interfaces that initiate retail or business transactions, merchants can establish a stablecoin flow, create a moat, upsell other services, control the user experience, and achieve end-to-end customer coverage, similar to Robinhood in the stablecoin space. The stablecoin integration layer offers on/off ramps, virtual accounts, cross-border stablecoin transfers, and stablecoin-to-fiat exchanges; licensure will be a core competency to ensure low costs and global coverage, as demonstrated by Stripe's acquisition of Bridge. The forex and liquidity layer is responsible for the efficient exchange of stablecoins with USD, fiat currency, or regional stablecoins. Furthermore, as cryptocurrency trading platforms continue to emerge to cater to participants worldwide, region-specific cross-border stablecoin payment apps and processors will also gradually rise.

Similar to the traditional financial and payment systems, building a defensible and scalable moat is key at each level to maximize commercial opportunities. Over time, the layers of the stack will gradually integrate, with the merchant layer having the most aggregation potential, able to bundle other layers for users, further enhancing value, increasing revenue streams, and controlling forex transactions, on/off ramps, and partnerships with stablecoin issuers to build a comprehensive, efficient cross-border payment solution.

Multi-Pool Model Stablecoin Aggregation Platform

In a world where most companies issue their own stablecoins, the problem of stablecoin fund fragmentation is becoming increasingly severe. While traditional on/off-chain solutions can provide short-term relief, they have not delivered on the efficiency promised by cryptocurrency. To address this issue, Numéraire on Solana has introduced USD*, providing the Solana ecosystem with an efficient, flexible multi-asset stablecoin exchange platform specifically designed to address the challenge of stablecoin fragmentation.

The platform achieves seamless creation and exchange of different stablecoins through the AMM mechanism. All stablecoins share the same liquidity pool, avoiding fund fragmentation, significantly improving capital efficiency and liquidity management. USD, as the core element of the system, acts as the intermediary unit, simplifying the exchange process between stablecoins, promoting more accurate price discovery, and reflecting real-time market valuation of various stablecoins. Users can not only mint stablecoins through the protocol but also utilize the Layered Collateral Debt Position system to customize risk-return profiles, further enhancing capital efficiency. Additionally, the lending function allows excess stablecoins to circulate efficiently within the system, optimizing capital operation.

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

Looking back at the previous market cycle, stablecoin products using a multi-pool model only succeeded on Ethereum through Curve, gaining acclaim for their efficiency in stablecoin exchanges. Looking ahead, as the issuance 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 scale and maturity of the stablecoin market.

About HTX Ventures

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

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

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