Many customers and project parties are concerned about how RWA products are designed. Around the core of RWA: "controllable assets, trusted asset management", we have designed a general framework of RWA trusted asset management products, which can be used as a reference for Hong Kong compliant RWA product design, as well as for offshore's RWA tokenization design.
The general framework of the whole product, as shown in the figure, is divided into six links: asset pool, structure, asset monetization and mezzanine, monetized assets and management.
(figure 1)RWAGeneral product framework
Among them, the sandwich structure is generally Fund or Trust SPV, which is the core of RWA trusted management. Whether the requirements for Hong Kong Compliance RWA are in the form of Fund, or trusted SPV is coded by intelligent contracts and protocols in offshore tokenization.
This mezzanine, the O2O department offchain2onchain, is both an isolation and a link. The significance of mezzanine is to isolate assets. When direct monetization of physical assets can not solve the problem of 100% mapping between physical assets and virtual assets, the existence of mezzanine is very meaningful. RWA is to make this mezzanine financial product, while direct monetization Web3.0 is to code and contract the mezzanine. The trustee of the mezzanine, under the licensed supervision and industry norms, carries on the asset management and operation through the traditional way, and realizes the asset O2O management with the credit and regulatory constraints of financial institutions.
Several core elements of this RWA product framework, such as basic asset pool, cash flow analysis, programmable SPV (cash flow, credit enhancement, trusteeship), trusted asset management manager, liquidity incentive, etc., form the prototype of RWA product design.
Basic assets
The primary element of RWA is the underlying asset of the asset package. The basic assets of RWA are no longer traditional physical assets such as real estate, but trusted assets of digital and blockchain, and can also be native assets further generated on the blockchain. These digital assets are real-world physical assets based on atomic reconstruction and can also be further combined. Physical assets in the real world can become the basic assets on the chain and enter into the RWA asset pool through infrastructure conditions such as asset transfer and confirmation, data winding, and assets entering the pool, and the basic assets in these asset pools can or can produce sustained and stable cash flow.
The data of physical assets and the pool of assets need a series of asset agreements. Based on the RWA asset agreement on the chain, physical assets in the real world are transformed into all kinds of RWA basic assets in the chain, thus further becoming the basic assets of digital financial scenarios in the chain, such as asset monetization, loans, insurance, income products and so on.
Basic assets must have clear property rights, which is one of the most basic prerequisites for capitalization evaluation. Whether it's "ownership" or "UsufructAnd the further independent separation of "management right", "lease right", "mortgage", "income right" and "disposal right" all need to have sufficient and legal authorization procedures. Second, the underlying assets must be transferable. Through the trusted management of RWA assets, sponsors may need to transfer clear basic assets to SPV, either explicitly or implicitly, which can not be flawed in law, so it is necessary to confirm whether there are restrictions such as the rights of third parties.
Cash flow analysis
The equity structure of RWA products is essentially expected cash flow, and its structure design mainly comes from cash flow analysis. We need to make a detailed analysis of the business scene and transaction payment of the basic assets from the transaction structure, income cycle and cash flow nodes of the current basic assets, including the level and efficiency cost of the transaction structure, the time axis separation of the original income cycle, the process node and time node analysis of generating cash flow, and the way of cash flow collection.
The transaction structure of many physical assets in the real world is very complex and intermediary. RWA product design needs to optimize and de-mediate the transaction structure, or it can be subversive design, such as client reverse trading.
And the income cycle will affect the income structure. For example, the income cycle of agriculture and animal husbandry is 6-9 months. It is necessary to design a new income structure and whether the income cycle can be pre-designed. Can it be sold or received in advance? Moreover, we need to further design new cash flow nodes and cash flow collection methods, cash flow nodes in front, in addition, we can combine RWA trusted capital management to design token payment settlement, clearing and automatic collection to achieve cash flow on the chain.
Cash flow must be stable to some extent. Due to the unstable cash flow, the sales income of general commodities, the income from land transfer and the income from mineral resources development are not suitable to be used as the basic assets of RWA trusted management. However, if the products sold are water, electricity, gas, heat or other types of daily necessities, the demand of downstream users is strong and very stable, or long-term supply contracts have been signed, securitization can be carried out as basic assets.
Second, cash flow must be predictable. RWA trusted asset management is essentially the discount of future cash flow income of assets. Therefore, in the securitization operation, it is necessary for professional institutions to predict the cash flow that can be generated by the underlying assets in the future, in order to help investors establish reasonable expectations for future income, and through the trust channel, the uncustomizable cash flow assets are transformed into specializable trust income rights, so that the basic assets meet the requirements of capitalization.
Income right of basic assets
The most common income right is the lease interest of the real estate. The owner of the real estate transfers the lease income of the real estate to the investor and can be divided into 1m when it is divided.2The daily or weekly rental income is simple and straightforward. Lease income includes simple lease income, that is, rent or annuity; it can also be designed as complex lease income, such as subprime lease equity, including a low-risk fixed income and a high-risk floating income. Through asset securitization to achieve different interest rates and different priorities of future cash flow. In the complex lease equity design, part of the lease equity (such as fixed income) can be allocated to investors, while part of the remaining asset equity (such as floating income) can be retained or conditionally allocated to other investors.
As mentioned earlier, on the basis of predicting the lease income, a mezzanine of the trust channel can be set up to separate the lease income from the fluctuation of the value of the underlying assets, and only the uncustomizable lease cash flow assets can be transformed into specializable trust lease income rights (a simple T-REITs).
Interlayer and Programmable SPV
The biggest difference between the design pattern of RWA and asset securitization and REITs is that it should make full use of the technological innovation and intelligent contract of block chain to realize the programmable SPV of mezzanine, that is, programmable based on block chain.Special purpose entity.
Just like realizing a financial business combination of "mortgage-loan-liquidity income" of Defi in a Block, in the value chain of RWA monetization, through programmable SPV (Block+ intelligent contract + consensus code) to realize the combination of "asset + cash flow + income mode + human" chain of real world assets, the code "SPV" can achieve intelligent credit enhancement (such as hierarchical classification, mortgage, insurance, etc.).
The mezzanine and priority of a Fund can basically be realized through one or a group of Ricardian contracts. The core design idea of programmable SPV is to realize the aggregation and reorganization of the monetized asset elements after the RWA asset share through the block of the block chain, so as to replace the SPV under the chain and realize the real original monetization structure on the chain. Another core of programmable SPV is combinability, and SPV of different RWA assets can be combined to implement Lego Finance (Lego Money).
Trusted asset management manager
The design model of RWA asset monetization needs to have a core of asset management: token asset manager, which is also the managed pool of RWA asset monetization. It governs different RWA token assets, SPV and allocation mechanism, information disclosure and so on through consensus algorithm, platform pass, intelligent contract and programmable code, and may gradually realize DAO distributed autonomy in the future. Only in the early stage, it may be necessary to entrust management and operation through the traditional financial manager (GP), trustee (Trust), etc.; in the mature stage, trusted and codeable management is achieved.
The token asset manager is an one-stop trusteeship of RWA token assets. The issuance, pricing, investment, trading and clearing of RWA assets are all done in one manager and a combination agreement. It can also manage the combinability of RWA assets, so as to realize the coordination of basic assets and programmable development, achieve the consistency of risk control, and realize the combination coordination from different angles of system, asset, protocol and so on.
Liquidity incentive
Different from the traditional asset securitization design, RWA asset monetization can make full use of the characteristics of tokenization to enhance liquidity, and through the new Token incentives for investors to continue to invest or trade RWA asset tokens in the secondary market, so as to promote more secondary market liquidity, which is a unique liquidity incentive for RWA asset monetization based on blockchain and intelligent contracts.
Liquidity incentive, similar to the "liquidity mining" in Defi, is essentially a multi-level distribution. On the basis of not affecting the income of the original RWA asset monetization, it further exchanges the value of the liquidity participation in the secondary market, so that investors can not only continue to enjoy the original income dividend of the real estate permit, but also obtain a new liquidity permit, thus realizing multi-level distribution and liquidity value exchange.
The division and classification of some basic assets after share sharing will not only promote liquidity, but also increase price volatility, and the price spread caused by price fluctuations will lead to more liquidity, resulting in arbitrage space. For example, take real estate as an example. As real estate RWA assets are no longer large assets with high fullness, but fragmented small assets, a complex liquidity market is formed among investors, buyers, sellers and market makers. Long-term investors will consider stable and sustained returns rather than prices, while short-term investors will be concerned about price spreads and arbitrage. However, the relatively stable income characteristics of real estate will gradually turn short-term investors out.
Of course, it needs to be used flexibly in the actual RWA project. at present, the securities exchanges in cooperation, the general project consultation starts from the perspective of issuing encrypted bonds to look at the main credit of the project or issuer. What is the rate of return on the asset package? How is the cash flow? What are the guarantee or credit enhancement measures? First simply judge whether it is feasible, if OK, then further analysis. A RWA product framework, only used to do some reference and guidance, in order to better promote the orderly development of RWA!
# ARAW Always RWA Always Win! On the 16th / 17th of this month, the RWA keynote speech and round table forum and RWA high-end closed-door meeting of the main venue of Shanghai Block Link Festival. I look forward to friends meeting in Shanghai!
RWA gangs based in Shenzhen and Hong KongR01Labs、RWA investment bankThe company has been established, interested institutions and potential partners are welcome to participate in the construction; Wechat YekaiMeta is also welcome to join the RWA practice discussion group to participate in specific RWA projects and product discussions.
