Further consideration reveals that RWA assets still face a dilemma: establishing a unified market necessitates initial compatibility in token and contract standards, hindering platforms from aggregating RWA assets on a large scale across diverse types. Conversely, aggregating different RWA protocols first limits platforms to the role of “launching platforms” due to technical stack disparities, despite providing liquidity for smaller projects, exacerbating market fragmentation for on-chain assets.
Even the most liquid tokenized US Treasury market faces similar challenges. While efforts by institutions like BlackRock and Franklin Templeton resolve issues of scalability within single asset classes, these assets are dispersed across various public chains such as Ethereum, Stellar, and Avalanche to offer future investors and collaborative projects more choices.
This narrative window also benefits cross-chain interoperability protocols that have struggled with visibility, such as Axelar, which has been early in integrating RWAs. Last year, collaborations with Centrifuge and Ondo led to the launch of Centrifuge Everywhere and the Ondo Bridge, optimizing protocols for RWA tokenized products and interchain interoperability and liquidity. In the current fragmented market environment, cross-chain interoperability appears to be a compensatory solution.
Self-sufficiency in the weakest link
The bottleneck for scaling RWA assets is evident—it lacks automated processes or technologies like DeFi’s AMMs. For RWA products, tokenization is often just the beginning; ensuring continuous asset updates and transparency post-chain are critical tests of efficiency and cost. Typically, this includes:
1. Financial reporting: Asset managers must regularly release financial and performance reports, such as details on rental income payment dates and amounts for real estate managers, to provide investors with a clear understanding of the cash flow dynamics of the property.
2. Debt management: Products like RWA credits require regular updates on loan collateral, repayments, interest rate adjustments, and refinancing activities to maintain investor trust.
3. Ownership changes: Timely announcements are necessary if there are changes in underlying assets or legal entities owning those assets.
4. Market supervision: Managers must report and adjust to changes in the regulatory environment where underlying assets reside to ensure compliance.
Beyond these, other intricate details such as asset insurance, risk management strategies, asset valuation and inspection, and legal entities issuing assets require substantial attention throughout the investment lifecycle. In conclusion, in the current market environment characterized by “infrastructural redundancy,” bringing assets on-chain is no longer the most challenging aspect of RWA development. Instead, ongoing off-chain validation and legal oversight are the primary factors slowing down asset class and scale growth, diminishing the value of on-chain assets without disregarding the audit risks associated with centralized entities.
The scale and growth rate of RWA assets entirely depend on the capabilities of off-chain issuance and management institutions. This is why US Treasury RWA products have rapidly grown since BlackRock’s entry, whereas other assets like real estate and commodities struggle due to the lack of enhanced automation in processes. However, the depreciation of on-chain assets’ value also presents significant business opportunities, most of which currently flow into the hands of asset issuers and managers such as Securitize.
Is it possible to build its own automated “asset oracle” system in the RWA field, akin to ChainLink in DeFi? We found some answers in the Jiritsu project.
Jiritsu is an Avalanche L1 dedicated to validating off-chain assets, aiming to automate and trustlessly register and verify off-chain asset values while reducing on-chain depreciation and costs. By integrating ZK proofs and MPC, Jiritsu ensures secure and private automated validation of asset details, embedding regulatory compliance and asset integrity into tokenized products. Interestingly, “Jiritsu” derives from the Japanese “じりつ,” meaning independence. In the RWA field heavily reliant on centralized human auditing, this enhances its cryptographic native properties and scalability.
[Image]
Jiritsu’s ZK-MPC oracle aggregates data from multiple sources, verifying related calculations, and enhancing integration depth for various asset types. The oracle includes two main mechanisms: “Push” allows data providers (e.g., asset managers) to directly send information to the oracle, while “Pull” permits the oracle to retrieve data directly from integrated information providers like supply chain software and banking systems via APIs.
In terms of consensus mechanisms, Jiritsu introduces the Proof of Workflow (PoWF) concept, where nodes in the network run operations driven by computational engines and workflow managers using ZK proofs to ensure verifiable computations and smart contract execution within its MPC framework. Compared to existing oracles like ChainLink or Pyth, Jiritsu does not require cross-chain bridges for information transmission during data aggregation and adds analysis and verification capabilities beyond simple data feedback.
[Image]
Once users or asset managers register assets for tokenization with detailed information on Jiritsu, ZK-MPC validators analyze and confirm asset values and compliance statuses. The analysis involves two types of validators: one reviews business policies and regulatory compliance, while the other handles financial data tasks such as spot price retrieval and market valuation assessments. After completing analysis and verification, ZK proofs are generated and stored on-chain, allowing users to claim these proofs and embed them into their smart contracts, thereby completing the entire tokenization process of the asset.
Jiritsu showcased its product usage with Paxos’ tokenized gold product PAXG, demonstrating a comprehensive process:
Initially, Paxos purchases gold from reliable gold exchanges and deposits it into custody service providers. Subsequently, Jiritsu users can utilize Jiritsu dApp on supported public chains to create validators on Jiritsu’s ZK-MPC nodes. Upon retrieving information about Paxos’ gold custody from Jiritsu’s network, validators generate relevant ZK proofs.
During verification, ZK-MPC nodes handle off-chain validation calculations, and the generated ZK proofs offer varying levels of access and confidentiality, with auditors having full access to all information and asset managers seeing specific information relevant to their roles. This verification process can update information at preset intervals or on demand, far more efficient and reliable than Paxos’ current quarterly manual inventory verification.
After uploading ZK proofs to the Jiritsu network, Paxos proceeds with the tokenization of its custodial gold. At this stage, 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.
Post token generation, Paxos pays fees to nodes and validators through Jiritsu dApp, with a portion allocated to the Jiritsu network. PAXG tokens purchased by investors include proof of underlying gold and access to gold custody status information on Jiritsu’s network, allowing Paxos to shift cost burdens to investors at this stage.
[Image]
dApps on the Jiritsu network are specifically designed for easy coding of specific data, allowing users to create validators for any business logic, data reader, or smart contract integration. This adaptability ensures that Jiritsu can provide customized solutions for a wide range of business needs. Furthermore, Jiritsu’s Jiritsu Proof under its ZK-MPC cloud service significantly expands the range of assets verified, verifying status information for a variety of real-world assets beyond traditional financial validations like bank information and corporate credit, such as equipment, inventory, transaction, and income details for a large-scale Amazon supply chain company valued at approximately $200 million.
Based on these capabilities, Jiritsu uses data metrics such as “Total Asset Verified” and “Total Asset Secured” to measure its impact on bringing real-world assets onto the blockchain, providing underlying assets LEGO blocks for DeFi protocols to achieve greater compatibility and interoperability. According to official Dune Dashboard data, Jiritsu has verified over $18 billion in assets to date, with over $60 million in assets awaiting use by various protocols.
Recently, Jiritsu integrated with BlackRock’s RWA ecosystem, automating on-chain proof for its Bitcoin spot ETF and BUIDL Fund reserve assets, valuation, verification, compliance, and KYC platform information, facilitating easier and faster usage of these already on-chain assets by other protocols. While iBIT and BUIDL have brought significant incremental funds to the crypto market and RWA, their asset verification still relies on self-reporting and only provides annual audits, whereas Jiritsu offers more transparency and cost-effective solutions for these products.
Jiritsu also integrated with the Republic platform, which focuses on RWA, allowing any asset manager to directly implement and use similar solutions. This integration enhances compliance and operational efficiency while offering a mature infrastructure for tokenization, compliance, marketing, and customer service. By automating trustless validation and auditing previously handled by institutions like Moody’s and KPMG, which have generated over $150 billion in revenue from these traditional markets, even a conservative 10% share represents an imaginative business ceiling.
Separating the wheat from the chaff
From DeFi and GameFi to NFTs, past successes in the crypto industry relied on innovations with native on-chain assets and interaction forms to attract new users and funds. However, RWA’s concept involves bringing external world values onto the chain. Therefore, many native crypto users have always been wary of RWA narratives, viewing bringing real-world assets onto the chain as targeted harvesting of crypto users, squeezing the growth space for native crypto assets. Additionally, crypto users accustomed to high volatility are not interested in the “low returns” of real-world assets. RWA has been tepid largely due to this misalignment between product positioning and user demand.
However, fundamental changes have occurred in the RWA field since the second half of last year. On one hand, native crypto protocols began to demand sustained and stable earning capabilities, and on the other hand, traditional financial institutions, influenced by BlackRock, began actively exploring on-chain financial products. For traditional institutions, blockchain’s instantaneous settlement not only reduces wear and tear but also broadens the investor base for high-threshold financial products, increasing trading volume and fee income for financial products. Product positioning no longer mismatches with user demand, and narrative revival has become inevitable.
For the
