The Reality and Illusion of RWA: Future Planning Cannot Rely on Current Technological Paths
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The Reality and Illusion of RWA: Future Planning Cannot Rely on Current Technological Paths
The direction of Web3/metaverse/DWeb has no issues—it's only a matter of time before it arrives.
Navigating Web3 tides with focused insightsAuthor | Beichen
The previous article, "Financial History, Legal Systems, and Technology Cycles: The Trillion-Dollar RWA Narrative Doesn't Hold Up," received a strong response. Many friends read it across different platforms and reached out through various channels to discuss their views on RWA and the future of the industry.
Regarding RWA, there is both agreement and disagreement—but in any case, the "shrill Whistle" has sounded its sharp note (not a bland, safe repetition that offends no one), drawing equally sharp responses. Through such discussions, our perspectives continue to be refined toward greater accuracy.
This article compiles and reflects on exchanges (or debates) with two of these friends.
On Securitization vs. Tokenization
This friend comes from traditional finance and spent many years on Wall Street designing, pricing, and trading derivatives—truly an insider deeply familiar with securitization and related instruments.
We’ve known each other for over two years. He often criticizes my financial naivety—and painfully, he's usually right. This time we spoke for about 40 minutes. He has no stake in RWA but challenged my use of the term “securitization” and holds a fundamentally different view on RWA’s prospects.
In the end, I fully accepted his correction regarding the definition of securitization, though I remain skeptical about his outlook for RWA.
His point was that the “securitization” discussed in my article refers only to a narrow concept, unsuitable when placed within the broader historical context of financial securitization. True securitization dates back to 16th-century Holland—the birth of stocks and bonds. These are securitized assets, though we now simply call them stocks, bonds, options, etc.
Only later did non-standard assets begin to be securitized—the kind I discussed: MBS (mortgage-backed securities), ABS (asset-backed securities) for receivables beyond real estate, and CDOs (collateralized debt obligations).
So the securitization I referred to is this newer, narrower class of financial instruments. Let me clarify: The trillion-dollar market currently touted for RWA is mostly just the existing ABS market. Yet proponents seem to have forgotten ABS ever existed.
Beyond clarifying definitions, this friend also expressed optimism about tokenization.
He believes securitization enables trading, while tokenization opens up additional functionalities—with far greater potential.
He felt my criticism of RWA (mainly STO—Security Token Offerings) was too harsh. While today’s tokens are largely just cryptocurrencies, he sees potential for them to evolve into more expressive tokens beyond mere currency.
I completely agree with his vision for tokenization. In fact, when I cited Solv Protocol in the earlier article, it was precisely because they introduced ERC-3525 and invented SFTs (Semi-Fungible Tokens), bridging FTs and NFTs (by the way, FTs and NFTs merely map to pre-existing real-world asset forms). Speaking of which, another friend sent me their EIP-7797 proposal.
Thus, our only divergence lies in our expectations for the future.
I believe most current RWA projects are doomed because they lack crypto-native DNA and operate in unfavorable conditions, so I place hope instead in the few nascent RWA protocols being built according to truly crypto-native logic.
He argues we should stop debating chicken-or-egg questions and just build first—once someone builds an RWA exchange, suitable assets will naturally follow. We shouldn’t dismiss the value of RWA exchanges just because appropriate assets don’t yet exist.
I hold my ground because I think RWA exchanges impact the crypto market less than spot ETFs (which currently have little impact anyway). At least during bull markets, real capital flows into crypto via ETFs. But money invested in RWA goes from traditional finance into the real economy—it has nothing to do with crypto, except that the exchange itself profits.
Many RWA projects today even aim to move crypto capital into the real world—an entirely inverted logic (how big is the crypto market anyway?!).
On Policy and Technology
The second friend is Bruce Zeng, CEO of Bilei Capital & 42teach, who wrote a rebuttal titled “Rebuttal to ‘The Trillion-Dollar RWA Narrative Is a Bubble’”. Though our views clash, in a private group chat among mutual acquaintances, we quickly bonded, exchanged compliments, and agreed to a formal Space debate. This article is essentially “Rebuttal to the Rebuttal.”
Chicken or Egg
Our first disagreement mirrors the one above: the classic chicken-or-egg dilemma. Both support “build the exchange first, assets will come”; I remain unconvinced.
Bruce argues we should get cars on the road first and iterate toward mass production. In his view, my skepticism resembles a conservative mocking early automobiles as inferior to donkey carts.
But I’m not denying automobiles have a future—I’m saying we mustn’t mistake the earliest prototypes for the future standard.
Automotive history often traces back to Benz in 1885, but the French built a steam-powered three-wheeler as early as 1769. Had people at the time treated that three-wheeler as the blueprint for the future auto industry, they’d have been profoundly mistaken.
Back to RWA: I’m highly optimistic about its long-term future, but I don’t believe today’s RWA players will be the winners. Again, because most current RWA projects lack crypto-native fundamentals and face challenging external environments (especially legal system adjustments). Hence, I still favor those few building application-layer protocols based on crypto-native principles—even if they’re still weak today.
Web3 and Hong Kong
The second point of contention is policy support. Bruce believes Hong Kong needs Web3, not the other way around.
From a god’s-eye view, sure. But you must understand actors from their own standpoint to make accurate predictions.
As I noted (though didn’t elaborate) in my prior article, aligning RWA with regulation is extremely difficult—not just because legislation is hard, but especially financial legislation, which is vastly more complex than traffic laws deciding between donkey carts and cars.
To sum up my view: If the Hong Kong government has the courage to overhaul its financial legal system, it should first reinvigorate its core position as Asia’s financial hub. By liquidity metrics, Hong Kong’s stock market is already a swamp. This priority far outweighs supporting a nascent concept like RWA.
Technology Sufficiency
The third divergence concerns the technology cycle.
Bruce believes Ethereum + Layer2 are already sufficient for current STO/RWA tokenization needs. I argue today’s infrastructure is far from adequate.
Painfully speaking, current L2s are cheap copies of Ethereum—no paradigm shift involved. Sure, ZK and cross-chain tech are progressing.
Even using existing infra, RWA requires protocol-level innovation to support customizable tokens. FTs and NFTs merely simulate already-existing real-world asset types.
Most current RWA discussions resemble 1990s conversations about early PDAs—they were cool, but all vanished until the paradigm-shifting iPhone arrived in 2007, truly opening the future.
So my view in one sentence: Either focus on developing protocols atop existing operating systems, or focus on evolving new operating systems altogether.
Conclusion
My disagreements with the above two friends appear stark—but look closer at our common ground, and these differences shrink to details: We all strongly believe in crypto’s future.
Despite AI’s current momentum and breakthroughs past technical tipping points, I remain firmly bullish on crypto. Indeed, several industry peers this year have voiced concerns—given the lack of major tech iterations, plus regulatory and financial risks—that this sector might fade like so many past tech fads.
Yet I still believe the direction of Web3/metaverse/DWeb is sound—it’s only a matter of time before it arrives. The question is which technological path will dominate, leaving room for crypto to seize the opportunity!
The extremely optimistic Bruce has already jumped into the revolution, while the cautiously optimistic me watches others become futile cannon fodder—and keeps searching for better paths.
Of course, there were other exchanges and feedback—I won’t cover them all here.
Over three months have passed since “Whistle” published its first piece, “Who We Are.” The most frequent feedback we’ve received is that our voice is genuinely different—some even mistook us for a short-selling outfit from traditional finance, given how critical we sound…
All this shows we’ve achieved our interim goal: “Start Whistle as a media outlet, spend one quarter making the industry hear our voice.” Whistle will keep sounding clear—even shrill—notes, and publish more constructive content, such as implementation paths for ZK and cross-chain tech.
We firmly believe the secondary market is nearing a bottom (though not yet there) and the primary market is at a turning point where new narratives are brewing. We welcome fellow travelers across domains—whether you agree or disagree—to join the conversation.
As per Whistle’s founding philosophy:
Every bull market brings new narratives, underpinned by the evolution of technology, markets, policy, and other factors. In the fast-moving crypto industry, those who gain deep insight into the underlying logic and trends are often researchers or builders deeply immersed in niche sectors for years (not newcomers encountering these concepts for the first time).
Playing diverse roles in the ecosystem, their long-term tracking, research, and hands-on experience form unique perspectives—yet their authentic voices are drowned in noise and rarely heard by the market.
I believe truth emerges through collision of diverse viewpoints. The two friends mentioned here gained their insights through direct engagement—their experience is highly valuable.
Whether agreement or dissent, resonance finds its frequency.
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