Author: jiayi plus one Source: X, @mscryptojiayi

I have been thinking about writing this for a long time. I have a project in the RWA direction, so writing this is a bit of a slap in the face. But this question really deserves a head-on answer.

The national debt on the chain exceeded $4B+, more than three times in one year. BlackRock's BUIDL fund took in hundreds of millions of dollars in a single quarter. Franklin Templeton and HSBC are all entering the market. RWA’s TVL is one of the few data that is still rising in this bear market.

But when you open the tokens of these projects - they are basically all green, the ones going down. Some are down more than 90% from their highs.

Why?

Some people will say: retail investors can’t get in. This answer is half correct, but outdated. There are already projects on the market that are solving this problem - just register, and retail users can also participate in RWA benefits. The door to user access is open. But the currency price is still falling.

I think many RWA projects fail to understand the nature of the project from the beginning

RWA products + TOKEN need to perform their own duties, and the token economic model is wrongly designed.

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

Users deposit TVL and come in to get RWA income → At the same time, tokens are issued as additional rewards → Users continue to sell tokens → Tokens fall → Continue to issue more token subsidies → No one dares to buy tokens

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

If you think about the business logic this way, then people who hold tokens have only one action - sell. No one needs to buy tokens because there are no additional benefits. If you want RWA income, just deposit the assets directly, and there is no need to hold tokens at all. This becomes a market where there is always only selling pressure and no buying.

Many DeFi projects died here. Deposit TVL for income, then airdrop, and then token rewards. Round after round. No one buys, only people sell. There were more and more tokens on the project's account, and the price dropped lower and lower, eventually leading to liquidity exhaustion.

The RWA circuit is now repeating this mistake.

What should be done?

Because I do strategic consulting and growth strategy, it is the business of RWA itself that boils down the problem to the end

RWA projects should focus their resources on one thing – finding really good RWA assets.

Instead of designing an increasingly complex token incentive system.

What makes a good RWA asset? Four standards:

1. Attractive APY. The rate of return must make users feel it is worth it. It must be competitive with TradFi and cannot be lower than bank financial management.

2. Consensus. The assets themselves must have market recognition. Treasury bonds and credit products endorsed by well-known institutions must be understandable and trustworthy by users.

3. Stability. It is not a high-risk, high-yield speculative product. The core value proposition of RWA is stable real income.

4. Security. If the risk control on the asset side is done well, the underlying assets will not be exposed to thunderstorms.

When the underlying assets are good enough, users will naturally come in and get benefits. At this time, the role of token should be: only by holding token can you unlock better assets, higher revenue ratio, and higher priority quotas.

Demand is transmitted from the asset side to the token side, forming a real reason for purchase. Rather than the other way around - using token subsidies to attract users, only to find that no one wants to hold tokens.

The RWA narrative is true, the data is true, and the institutions coming in are also true.

However, no matter how strong the narrative is, it cannot support a token model with design problems.

The next RWA project that really comes out, I predict, will be the one that first solidifies the asset side and then talks about the token value. Instead of relying on token rewards to pull TVL, TVL is used to support tokens. The order is reversed, and no narrative or market guru can save it.

Good assets attract users, and users support tokens. Doing it the other way around is using tokens to subsidize a product that no one really wants.