

Aoseala
513 posts




Looping RWAs, Been seeing recent chatter on looping RWAs and how incredible this will be (finally! We been at this for 2 years trying to make this a reality on @plumenetwork ) Reasons why its hard: 1. Access - legit RWAs are still permissioned securities. Whether its on a blockchain or not doesn't change the regulatory rules of even buying these assets. Launching brand name fund #6 with 13% APY literally does not matter if you as a user cannot buy the asset without extensive KYC, onboarding, accreditation status etc. If you don't believe me try buying any RWA today that is not USDC. 2. Asset selection - Looping Tbills is a cool tagline but functionally does not work, if you are borrowing USDC at 8% APY to buy an asset that yields 4% you are losing more money per loop, typically to get these headlines published you see fine print incentives pumped into these markets to make the economic make sense. This simply means any real size into these markets make the profitability 0, and we are back to square one. (However we are working on cool things with @MorphoLabs here to make this a reality!) 3. Liquidity - lets say you do try to loop a private credit fund 5x, cool! This is incredible yield. Now your interest rate spikes on the USDC side suddenly and you need to unwind a portion of your position, but hold on - the redemption time is a month? Yikes! Turns out when money is in a real world asset the money moves at real world speed as well. Without proper secondary liquidity and infrastructure onchain to enable fast and instant liquidations as users are accustomed to in DeFi this type of trade can never reach scale. To make RWAs work at crypto speed is a goal we have been tirelessly pursuing since day 1 simply because we believe better financial products will emerge from this system using crypo as rails. We will continue working with the best of the best in the tokenization/DeFi space to make this happen.















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