Avalanche started as early as 2018, why has it recently been frequently targeted by giants and experienced a renaissance? This may be related to the current global RWA craze.
Author: Jade Shi
Avalanche's old coin is rejuvenated. On August 28th, HashKey Exchange, the largest licensed cryptocurrency exchange in Hong Kong, launched the AVAX/USD and LINK/USD trading pairs. It is reported that this is the first time in the Hong Kong market, since the opening of retail user trading in August 2023, that new trading currencies have been added for retail investors, in addition to Bitcoin and Ethereum trading pairs, highlighting its significance.
Not only HashKey, but since August, many major institutions have been actively positioning the long-dormant old token AVAX (Avalanche's native token), with its price soaring to nearly 50% at its peak. On August 22nd, Franklin Templeton, a globally renowned investment company managing $1.6 trillion in assets, expanded its pioneering on-chain currency market fund FOBXX to the Avalanche network. On the same day, Grayscale launched the AVAX Trust Fund, allowing investors to directly purchase AVAX like stocks.
Avalanche, which was launched as early as 2018, why has it recently been frequently targeted by giants and experienced a renaissance? This may be related to the current global RWA craze. As a platform very suitable for developing RWA applications, Avalanche has returned to the public eye as a leading concept for RWA.
RWA (Real World Assets) moves traditional assets such as real estate, bonds, and stocks to the blockchain, allowing them to circulate freely in the DeFi ecosystem like cryptocurrencies. This not only breaks down the barriers between traditional finance and blockchain, but also greatly increases the liquidity of these assets and expands their market coverage.
RWA acts as a bridge, connecting traditional finance and blockchain. For blockchain, RWA can bring massive funds from traditional finance into DeFi. For traditional finance, RWA uses blockchain technology to reduce transaction costs and can transform heavy assets like real estate into tokens and NFTs, making trading more convenient.
In recent years, the popularity of RWA has been on the rise, with major giants also getting involved. For example, in 2022, the well-known asset management company BlockTower Capital and the decentralized stablecoin leader MakerDAO collaborated to launch a $220 million RWA investment fund focused on asset tokenization. In 2023, the traditional investment giant Goldman Sachs launched its own digital asset platform, helping Europe issue a €100 million two-year digital bond; Siemens also issued a €60 million digital bond on the chain.
According to a report by BCG, the global RWA market is expected to reach $16 trillion by 2030, while the current market value of the entire crypto industry is only about $2 trillion.
The future of RWA is very promising, attracting the attention of many major institutions. Avalanche's technical architecture is very compatible with the development of RWA, naturally making it a coveted asset in everyone's eyes.
Avalanche's Four Advantages - An Excellent Choice for RWA Development
Different public chains have their own characteristics and are suitable for different business areas. Avalanche's features aim to reduce transaction costs and improve network scalability, making it a very suitable platform for developing RWA applications. Specifically, Avalanche excels in the following areas:
Faster: Avalanche adopts the innovative consensus mechanism "Avalanche Consensus," which, through a series of technologies, can achieve extremely fast transaction confirmation and high throughput. Compared to the largest blockchain network, Ethereum, Avalanche processes a transaction at a speed several hundred times faster than Ethereum. RWA transactions involve complex flows of a large number of assets, making fast transaction confirmation extremely urgent.
Cheaper: Compared to other public chains, Avalanche's transaction fees are very low, which is crucial for the operation of RWA assets, as one of the goals of RWA is to "break apart" large assets in the real world, allowing them to be traded frequently. If the cost of each transaction is too high, it will greatly increase the overall cost. Comparing with Ethereum, for example, an operation on Avalanche costs approximately $0.01 to $0.1, while on Ethereum, the average cost for the same operation is around $20, a difference of hundreds or thousands of times. When compared in this way, it is clear that Avalanche is more cost-effective, especially for scenarios like RWA that require a large number of transactions.
Wider Reach: Avalanche is an EVM (Ethereum Virtual Machine) compatible public chain, which means that you can easily participate in Avalanche's ecosystem using an Ethereum wallet. This greatly accelerates the popularization of RWA, making it accessible on most blockchains through Avalanche, contributing to the "blockchain going mainstream."
Suitable for Regulation and Compliance: Avalanche also has a unique feature that allows developers or companies to create their own independent subnets, which is the biggest advantage for Avalanche in developing RWA. Because most blockchains do not consider regulatory compliance issues, but RWA is directly linked to the real world and cannot avoid these issues. On Avalanche, RWA projects can create exclusive subnets according to the legal requirements of different countries or regions, ensuring compliance with local KYC, AML (anti-money laundering), and tax reporting regulations. This flexibility is difficult for most other blockchain platforms to provide.
In summary, Avalanche is faster, cheaper, has wider cross-chain operability, and shows great potential in terms of compliance, making it very suitable for RWA projects. Therefore, numerous RWA projects have emerged in the current Avalanche ecosystem. For example, the securities management company Intain launched the RWA platform IntainMarkets on the Avalanche subnet; in addition, Securitize also collaborated with the global asset management company KKR to tokenize KKR's Healthcare Strategic Growth Fund II (HCSG II) on Avalanche.
RWA - The Next Trend in Hong Kong Finance
Hong Kong's finance has gained a reputation for innovation and has been actively embracing blockchain technology in recent years, with a strong market foundation and flexible financial regulatory environment, providing unique advantages for the development of the RWA market. Conversely, the further development of the Hong Kong economy also has an urgent need for assistance from emerging financial technologies such as RWA.
First, the traditional financial asset trading process is complex and costly, especially in cross-border transactions where time and cost often become limiting factors, a problem particularly prominent in Hong Kong's open economic environment. RWA significantly simplifies the trading process, allowing investors to trade at lower costs and higher transparency. Taking the cross-border real estate market as an example, RWA's tokenization of real estate will solve many problems in traditional transactions, such as foreign exchange and reliance on intermediaries.
Second, as a bridge connecting mainland China and global markets, Hong Kong has a natural advantage in attracting international capital. Through RWA tokenization, international investors can more easily enter the Hong Kong market.
Hong Kong's regulatory agencies, such as the Securities and Futures Commission (SFC), have maintained a positive attitude towards blockchain and cryptocurrencies. This year, Hong Kong launched its first batch of cryptocurrency ETFs, marking an important step for the Hong Kong market in financial innovation and digital assets.
In addition, there have been many initiatives in Hong Kong recently to promote the development of various RWA applications, such as Project Ensemble Sandbox, which tests the tokenization of RWA applications in a sandbox environment in Hong Kong, especially in the areas of fixed income, investment funds, and supply chain. In addition, in the trial of the Central Bank Digital Currency (CBDC) in Hong Kong, RWA assets, including real estate, were used as collateral. Furthermore, JD-HKD, a stablecoin pegged to the Hong Kong dollar (HKD) at a 1:1 ratio, issued by JD.com in Hong Kong, has attracted significant market attention.
Against this backdrop, HashKey Exchange, as a representative compliant cryptocurrency exchange in Hong Kong, plays a crucial role as a bridge between crypto assets and real assets in the development of RWA in Hong Kong. The prospects for RWA are highly anticipated globally, and tokens with strong RWA attributes, such as AVAX, have been favored by well-known institutions such as Franklin Templeton and Grayscale. To promote the development of RWA in Hong Kong, HashKey Exchange has also listed AVAX, making it the first batch of new cryptocurrencies to be listed for retail investors in the Hong Kong market after BTC and ETH. With this move, HashKey Exchange has provided investors in the Hong Kong market with more diversified choices, further expanding the application scenarios of cryptocurrencies.
As a compliant cryptocurrency trading platform holding a license from the Hong Kong Securities and Futures Commission (SFC), HashKey Exchange is able to legally provide cryptocurrency trading services to investors, and may become a key force driving the digital transformation of the RWA market in Hong Kong.
Just as the global crypto industry's development relies on the promotion of large compliant institutions such as Coinbase and Grayscale, HashKey Exchange will also play a pivotal role in the development of the crypto industry and financial innovation in Hong Kong.
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