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The concept of real-world assets (RWAs) presents an exciting development in blockchain technology involving the digitization of off-chain financial assets such as real estate, credit, and commodities. This advancement bridges the gap between traditional finance and DeFi, paving the way for a truly global, programmable financial ecosystem. 

In pursuit of that future, Jiritsu Network aims to innovate the process of tokenizing real-world assets (RWA) by simplifying off-chain asset registration, verification, and tokenization. This approach is designed to drive wider adoption of blockchain technology by lowering transaction costs, enhancing economic efficiency, boosting transparency, and delivering top-tier security using advanced cryptographic methods. The platform's main goal is to mirror and verify assets, thereby improving visibility and transparency. It supports real-time automation and updates, fostering a resilient environment for decentralized finance (DeFi) and tokenization initiatives.

A core component of the Jiritsu technology stack is the zkMPC Cloud, an innovative platform that offers Proof of Workflow (PoWF) driven by advanced computational engines and a sophisticated workflow manager. The zkMPC Cloud ensures secure and efficient orchestration and verification of computational processes. Jiritsu's technology provides optimal security through proprietary and patent-pending innovations designed to protect user data and transactions.

The zkMPC Cloud encompasses various offerings, including Jiritsu RWA, Jiritsu zkMPC, Jiritsu AI, and Jiritsu Proof, addressing diverse needs within the blockchain and financial technology sectors. The flexibility of the Jiritsu platform allows for the creation of provers tailored to any business logic, data readers, and smart contract integration. Jiritsu Network's zkMPC Cloud has been effectively utilized across multiple industries, including provenance, finance, Proof of Reserves, RWAs, and more. The platform's ability to provide tailored solutions underscores its potential to support a diverse range of applications and industries, showcasing its versatility and commitment to innovation in the blockchain space.

The Evolution of Finance Towards RWAs

RWAs have long captured the interest of investors due to their vast total addressable market (TAM). The potential for growth within the blockchain ecosystem is immense when tapping into multi-trillion-dollar sectors such as treasuries, bonds, private debt, and real estate. The impetus behind tokenizing these assets stems from the constraints inherent in traditional asset management systems. Primarily, traditional frameworks limit the use cases and value-creation potential of original assets, confining them within existing structures and systems that restrict their applications and avenues for generating value.

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Tokenizing assets on a blockchain like Ethereum, Avalanche, or Solana ensures global accessibility. This enables individuals worldwide to access and trade these assets, thereby dismantling geographical and institutional barriers. Unlike traditional markets, which operate within specific hours, blockchain platforms function 24/7, facilitating continuous trading and liquidity. Furthermore, tokenized assets can simultaneously engage with multiple DeFi protocols, enhancing the flexibility and efficiency of financial strategies.

Tokenizing traditionally low-velocity items, such as houses or artwork, increases their liquidity through the interoperability benefits introduced by blockchain technology. Crypto tokens' inherent programmability, combined with smart contracts, offers unique features that can transform the market dynamics of the underlying assets. 

Empirical evidence from the performance of exchange-traded funds (ETFs) provides insights into the potential benefits of tokenization and RWAs. ETFs, which represent other assets similarly to tokenized assets, demonstrate a strong positive correlation between their liquidity and that of the underlying securities. Increased trading activity in ETFs enhances the informational efficiency of the underlying assets' markets. Applying this dynamic to tokenization suggests that higher liquidity in crypto markets can lead to more accurate pricing in the reference markets of the tokenized assets.

The tokenization process also unlocks new opportunities by creating additional use cases and distribution channels, significantly enhancing the potential for scaling and increasing the value of the original assets for both issuers and end-users. 

Overall, the shift towards asset tokenization marks a significant evolution in asset management. It offers a more dynamic, accessible, and efficient framework that addresses the limitations of traditional systems, paving the way for a more inclusive and versatile financial ecosystem.

The Role of Verification in Asset Tokenization

Asset tokenization turns the rights to assets – real estate, art, or commodities – into digital tokens on a blockchain, making ownership and trading easier. This process significantly impacts modern finance by enhancing liquidity in markets traditionally characterized by high entry barriers and limited accessibility, thereby democratizing investment opportunities and wealth access.

The process of tokenizing assets typically involves four steps:

1. Identification and Valuation: The first step is to select the asset to be tokenized, which can be physical, like real estate or art, or intangible, like revenue streams from music publishing. Once selected, the asset is valued, which can be at a fixed or variable price, depending on the asset and market conditions.
2. Legal and Compliance: This step is crucial to ensure the tokenization process is legal and compliant. It involves setting up legal frameworks that define the ownership, revenue sharing, and other contractual terms of the tokenized asset. These agreements are often written into smart contracts on the blockchain, so they are transparent and automatic. KYC and AML compliance is also key, as there are different legal landscapes across different countries.

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3. Token and Smart Contract: At this stage, smart contracts are built on the destination blockchain. These contracts are programmed to represent ownership and manage the distribution and governance of the tokenized assets. The smart contracts are the backbone of the tokens, so all transactions and interactions with the tokens are secure and follow the rules set.

Verification is key at this stage. It ensures that each token represents the underlying physical asset, so authenticity and security are guaranteed. Verification processes confirm the existence, ownership, and status of the asset, making the token a reliable and tradable digital entity. Strong verification mechanisms are important to prevent fraud and maintain trust among investors and participants in the blockchain ecosystem, so the system remains intact and investor confidence is maintained.

4. Distribution and Trading: Finally, the tokens are distributed to investors or interested parties, who can then trade them on secondary markets, such as decentralized exchanges or DeFi platforms. This step is important as it brings liquidity to illiquid assets, makes ownership transfer easier, and more participants to participate. Ongoing management and governance of these assets are facilitated through blockchain-based systems where token holders can exercise their rights and vote through mechanisms embedded in the smart contracts.

The Significance of Verification in RWAs

Jiritsu’s verification layer is arguably the most valuable part of the RWA value chain. Without verification, tokenized assets are just spec instruments like meme coins. Real-world assets must back tokens for provenance and trust.

The economic rationale for Jiritsu is similar to fund administrators in traditional finance. Fund administrators manage financial records, investor comms, legal compliance, and reporting. Jiritsu does the same on-chain for tokenized assets. Jiritsu is also the settlement layer for RWAs for precise valuations.

To illustrate, think of the Big Four accounting firms like KPMG and rating agencies like Moody’s. They provide financial reporting, compliance, and attestation services. Jiritsu does the same on-chain with zkMPC technology. This gives transparency and trust in the digital asset space like KPMG and Moody’s do in traditional finance.

Jiritsu’s Solution

Jiritsu’s mission is to ensure that the tokens/derivative products on the blockchain correspond to the real-world assets they represent. The blockchain industry has seen many failures over the years – FTX, Mt. Gox, Luna, Celsius – often due to a lack of proof of reserves and opacity. Jiritsu wants to prevent those failures by making sure real-world assets are actually backed so we can have more trust and reliability in the ecosystem.

Jiritsu uses its proprietary Zero-Knowledge Multi-Party Computation (zkMPC) to verify assets within blockchain ecosystems. This technology allows multiple parties to perform secure computations on private data without revealing the underlying data, keeping it confidential during the verification process. This is crucial for privacy and trust among stakeholders who need to verify data together without exposing sensitive info.

zkMPC in Jiritsu provides tamper proof, trustless verification across multiple blockchain platforms. This is crucial for tokenizing assets accurately and securely. Jiritsu’s decentralized verification system distributes control across many contributors, using zkMPC nodes for cryptographic calculations and service providers for software management. This reduces fraud risk and supports everything from simple asset tokenization to complex financial derivatives, which are transparent and secure in all transactions.

zkMPC Oracles

zkMPC oracles improve reliability by aggregating data from multiple parties and verifying the computations involved, such as valuation models. This capability ensures that both the data and the processes used to compute values are secure and accurate. By distributing the trust required to validate data across multiple parties, zkMPC oracles reduce the risk of single points of failure or manipulation.

zkMPC oracles can gather data through either a "push" or "pull" mechanism:

1. Push System: In this setup, the data provider sends information directly to the oracle. While this method can be efficient, it introduces risks if the provider's integrity or security is compromised. The push system relies heavily on the trustworthiness of the data source, making it vulnerable to inaccuracies or malicious manipulation.
2. Pull System: Alternatively, the pull system allows the oracle to fetch data directly from integrated systems through APIs, such as supply chain software or banking information systems. This method typically offers deeper integration and reduces risks, as compromising the data would require breaching these robust systems. By directly interfacing with established and secure data sources, the pull system enhances the reliability and accuracy of the data collected.

Additionally, zkMPC ensures data is secure while it is aggregated and used to make decisions; individual inputs remain private. This is super useful for sensitive information, which is key in RWAs. For example, financial institutions can contribute to the oracle without exposing their proprietary information, so they can be private while still being part of the broader ecosystem.

zkMPC oracles in RWA tokenization are multi-faceted:

• Valuation Models: zkMPC oracles can verify complex valuation models so the tokenized asset values are accurate and based on real data. This is key for investor confidence and the tokenized asset market.
• Compliance and Reporting: By aggregating data from multiple sources securely, zkMPC oracles can facilitate compliance and reporting. So, tokenized assets will adhere to the relevant laws and standards that institutional investors and regulators must accept.
• Transaction Security: zkMPC oracles secure transactions by verifying the data involved in tokenized asset trades and transfers. This reduces fraud risk, and all parties involved in a transaction can trust the underlying data.

Programmable Framework and Verifier Scripts

A key differentiator of Jiritsu's approach is its highly programmable framework that employs ZK and MPC technologies to create a verifier. This verifier script not only parses and acquires off-chain information but also meticulously controls access to this information once it’s on-chain. Auditors can be granted full visibility, while different investors may see varying levels of detail based on permissions. This technology enables a nuanced, secure, and efficient system for digitizing and transacting complex assets, dramatically reducing traditional barriers and opening new opportunities for asset management.

Jiritsu's integration of Zero-Knowledge (ZK) and Multi-Party Computation (MPC) technologies into the blockchain framework represents a transformative approach that has caught the attention of numerous traditional companies. In the domains of compliance, tokenization, and marketplaces, companies like Securitize, Republic, and Oasis Pro lead the way. These companies can partner with Jiritsu for verification, integrating its capabilities within their tokens on any blockchain. This partnership functions as a ledger, holding and updating essential data to ensure transparency and trust. Through these strategic alliances, Jiritsu strengthens its position in the market, contributing to a more secure and efficient blockchain ecosystem.

Top RWA Layer 1 Smart Contract Protocols

Ethereum

Ethereum is currently the smart contract platform of choice for most dApps and RWA projects. Its wide adoption and robust infrastructure make it the go-to for investors and developers in the RWA space. The network has a huge lead in user base, total value locked (TVL), and a number of dApps, creating a moat that can’t be replicated by others in the near term.

Ethereum’s advantages can be summarized as:

1. Mature and Established Ecosystem: Ethereum is the oldest smart contract chain and has a “Lindy effect,” where its future life is proportional to its current age. The network’s proven durability and longevity give it credibility and attract long-term investments.
2. Regulatory Acceptance: Ethereum is the only smart contract platform that has passed the regulatory gauntlet, which gives it the legitimacy and stability required for institutional adoption.
3. Strategic Alliances: Ethereum is aligned with major exchanges like Coinbase. This makes it easier to integrate and adopt Ethereum-based projects into the broader financial system.
4. Yield Generation: Ethereum has yield generation opportunities, making it attractive for institutional investors who want security and returns on their investments.

Avalanche

Avalanche provides a robust framework for creating and managing tokenized Real-World Assets (RWAs), offering high throughput and near-instant finality. Its subnets (rebranding to “Avalanche L1s), known as Evergreen subnets, are tailored for institutional use, allowing companies to maintain control over their blockchain environment while enabling seamless inter-company communication. These subnets function as highly customizable, application-specific blockchains, addressing scalability issues faced by many blockchain networks. The P-Chain oversees all validator and subnet-level operations, including the creation of new subnets, validator addition, staking operations, and other platform-level tasks. Akin to layer-2 solutions in Bitcoin and Ethereum, Avalanche's subnets provide a flexible and scalable solution tailored to a variety of use cases

Subnets offer developers the flexibility to support diverse use cases through various Virtual Machines (VMs) such as Ava-VM, EVM, WASM, and more, in addition to supporting multiple programming languages. The process of creating a subnet involves burning one AVAX token and paying minor additional fees, making it an accessible yet powerful tool for blockchain development.

In 2023, Ava Labs introduced Avalanche Spruce, a subnet specifically designed for institutional players in the buy- and sell-side markets to explore the practical applications of on-chain finance. This initiative saw participation from major financial institutions, including Citi and DTCC Digital Assets, alongside key asset managers like Wellington Management and WisdomTree, who began testing private market tokenization within this new ecosystem. The integration of Avalanche's blockchain infrastructure by institutions signifies a broader trend of digital transformation in the financial industry. 

Solana

Solana offers notable advantages for hosting real-world assets (RWAs), primarily due to its low gas fees and high transaction speeds, which facilitate the frequent trading of tokenized assets like forex and stocks. Essential infrastructure components bolster its RWA capabilities, including RWA-specific tools like Bridgesplit, efficient decentralized exchanges (DEXs) such as Jupiter and Raydium, and reliable oracle services from Pyth and Switchboard. Additionally, seamless fiat-crypto conversions and cross-chain interactions via tools like Wormhole are critical for widespread RWA adoption. 

The SPL Token standard on Solana, which includes the Token and Token-2022 programs, ensures safe and straightforward token transactions by managing minting, burning, and transfers without preapproval flows, reducing risks associated with DeFi smart contracts. Metaplex standards for NFTs support the representation of unique assets like real estate or art. In 2024, Solana introduced token extensions under Token-2022, featuring confidential transfers and programmable restrictions tailored to RWA needs. To further enhance RWA support, Solana could develop a dedicated RWA standard incorporating asset-level tokenization, best practices from other blockchains, and flexible business development strategies, promoting broader adoption and integration within the blockchain ecosystem.

The RWA Ecosystem

The value chain for real-world assets encompasses several key components:

1. Assets: Fundamental elements like BUIDL and BENJI form the base layer.
2. Asset Managers: Entities such as Hashnote or Ondo manage these assets.
3. Custodians: Firms like Coinbase or those leveraging Fireblocks ensure secure custody of assets.
4. Verification: Jiritsu’s pivotal role ensures the authenticity and backing of the tokenized assets.
5. Compliance, Tokenization, and Marketplace: Subsequent processes that bring these assets to the market.

RWA Sub-sectors 

Interest Accruing, Debt-Based Instruments

The integration of traditional instruments like Treasury Bills and yield-bearing stablecoins is a big deal in the deepest markets. Yield-bearing RWA protocols are at the forefront of combining offchain yield sources with onchain benefits of DeFi. All yield-bearing assets aim to bring offchain yields to onchain platforms, but their operational approach and design principles are very different. The differences are mainly seen in how yields are generated and to what extent users are debt holders or equity investors. The asset types that dominate these protocols are US Treasuries, which are known for their stability and reliability as yield sources.

US Treasuries are a big opportunity for projects that want to integrate this instrument. The increase in Treasury Bill yields to 5% in 2022 provided a new stable source of yield when DeFi yields were declining. While crypto yields can be higher, they come with more volatility and inconsistency. Tokenized Treasuries have lower volatility and are more robust against counterparty risks making them very attractive for decentralized autonomous organizations (DAOs) and startups that manage treasury.

Maple, Centrifuge, Backed, Ondo, and TrueFi have already launched tokenized Treasury products. These DeFi native platforms have harnessed the growing demand for secure yield-generating alternatives. This demand is driven by the lack of returns in traditional stablecoins and the not-so-compelling risk-adjusted returns of DeFi yields.

Key Players in the Tokenized T-Bill Space

MakerDAO: As a decentralized autonomous organization on the Ethereum blockchain, MakerDAO aims to minimize the price volatility of its stablecoin, Dai, while maximizing its adoption across DeFi. By integrating T-Bills, MakerDAO can enhance Dai's stability and reliability.

Frax: Known for being the first fractional-algorithmic stablecoin system, Frax introduces a hybrid approach to stablecoins, potentially incorporating T-Bills to stabilize its value further.

Mountain Protocol: Specializing in tokenized treasury bills and other financial products, Mountain Protocol brings traditional financial instruments to the blockchain, making them more accessible and liquid.

Ondo Finance: Ondo Finance offers institutional-grade structured products for DeFi, including tokenized securities backed by traditional assets like T-Bills. Its flagship product, OUSG, provides users with exposure to short-duration U.S. Treasuries, functioning similarly to an ETF. OUSG is a permissioned token, meaning only whitelisted addresses can mint, transfer, or receive it. Since its launch in January 2023, Ondo Finance has become a major player in the tokenized treasuries market.

Like many asset managers, Ondo Finance relies on self-reports and annual audits for verification. However, this method has limitations. To address these challenges, advanced technologies like Jiritsu's zkMPC Layer 1 offer improved verification and transparency capabilities. Unlike manual processes, Jiritsu’s automated verification can be scheduled from daily to minute-by-minute intervals, providing a more robust and reliable system. This enhanced transparency is crucial for maintaining trust and security in tokenized assets.

Equity-based, Tokenized Funds

Tokenized funds bring traditional investment funds into the DeFi ecosystem, offering increased efficiency and liquidity. Other key advantages include:

1. Increased Accessibility: Tokenized funds can be fractionalized, allowing investors to purchase smaller portions of high-value assets, thereby lowering the barrier to entry.
2. Enhanced Transparency: Blockchain's immutable ledger ensures transparent and tamper-proof record-keeping, which enhances trust and reduces the risk of fraud.

Key Players in the Tokenized Funds Space

BlackRock: As one of the world's leading asset management firms, BlackRock is exploring the potential of tokenization to enhance the efficiency and accessibility of its investment products. By leveraging blockchain technology, BlackRock aims to offer more flexible and transparent investment options.

In 2024, BlackRock launched its first tokenized fund, the BUIDL USD Institutional Digital Liquidity Fund. Operating on the Ethereum blockchain, BUIDL provides a secure and transparent platform for earning yields in US dollars through tokenization. The fund's launch features strategic partnerships, notably with Coinbase, to merge traditional finance and blockchain expertise. Aimed at institutional investors, BUIDL requires a minimum investment of $5 million, ensuring it caters to those with significant capital. Emphasizing regulatory compliance and security, BUIDL issues shares under SEC rules and focuses on safe assets like US Treasury bills. The fund aims for stable token value and immediate settlement, managed by BlackRock Financial Management, Inc., with BNY Mellon as custodian.

Franklin Templeton: This established investment firm has embraced tokenization by offering a variety of tokenized funds, including peer-to-peer token transfers for its $380 million tokenized money market fund. Investors in the Franklin OnChain U.S. Government Money Fund (FOBXX) can now transfer the fund's BENJI token among themselves without intermediaries. The BENJI token represents shares in the fund, which comprises government securities, cash, and repurchase agreements, providing a consistent yield to token holders.

Superstate: Superstate focuses on developing tokenized investment strategies, making sophisticated investment products accessible to a broader audience. By tokenizing these strategies, Superstate aims to democratize access to high-quality investment opportunities.

Hashnote: Specializing in tokenized asset management solutions, Hashnote brings traditional asset management practices into the blockchain era. Its tokenized funds offer enhanced transparency and efficiency, making it easier for investors to manage their portfolios.

Arca: Known for its focus on digital asset investments, Arca leverages blockchain technology to offer a range of tokenized funds. Arca's expertise in digital assets positions it as a leader in the tokenization of traditional investment products.

WisdomTree: This firm offers a variety of tokenized funds, providing investors with diverse options to invest in blockchain-based assets. WisdomTree's tokenized funds aim to combine the benefits of traditional finance with the innovative features of blockchain technology.

Non-interest bearing Stablecoins

Stablecoins are a special kind of RWA that has become so dominant compared to the rest of the sector that they are usually categorized separately. The stablecoin market is now ~$140 billion, and ensuring these financial instruments are fully backed by real assets is essential for maintaining their stability and the trust of investors. In 2023, the total value transferred via stablecoins surpassed that of established payment giants like PayPal and Mastercard. This milestone underscores their growing popularity and utility. 

Stablecoins have gained traction across various applications due to their versatility and stability. They are increasingly being used for:

1. Payments: Facilitating transactions with merchants and individuals globally.
2. Investing: Serving as a medium to invest in other cryptocurrencies or earn interest through yield farming.
3. Remittances: Enabling quick and cost-effective cross-border money transfers.
4. Financial Services: Underpinning new financial services such as decentralized lending and borrowing platforms.

The stablecoin ecosystem is predominantly dominated by Ethereum and Tron, which collectively host around 90% of the total value locked (TVL) in stablecoins within the crypto space. Despite this concentration, stablecoins are critical for the adoption of any DeFi protocol. Major blockchain networks like Binance, Arbitrum, Solana, and Polygon are actively expanding their stablecoin economies. 

Fiat-collateralized stablecoins, such as those pegged to the U.S. dollar, are backed by fiat currencies and bonds maintained by centralized entities. These digital currencies are tied to the value of an underlying asset (e.g., U.S. dollars, euros, yuan, gold) and are redeemable on a 1-for-1 basis with the underlying currency. 

The assurance of full backing and rigorous verification processes for stablecoins and commodities is paramount. Platforms like Jiritsu ensure that the underlying assets are adequately backed, providing a solid foundation for these financial instruments. As the DeFi ecosystem continues to evolve, the role of stablecoins and commodities will likely expand, driven by their utility in facilitating payments, investments, remittances, and the development of new financial services.

Commodities

The integration of commodities into the blockchain economy marks a significant advancement in how tangible assets can be managed, traded, and verified. Key players in this space, such as Tether Gold, Paxos, and Aurus, have introduced stablecoins backed by gold, ensuring that each token is backed by an equivalent amount of the precious metal. Platforms like Jiritsu play a critical role by verifying the authenticity and secure storage of these high-value goods. This process ensures the accuracy and security of their digital representations, fostering trust in platforms like Aurus and BlockBar, which facilitate the trading of tokenized commodities.

Tokenized Commodities: Gold and Beyond

In the world of tokenized commodities, various projects have emerged to provide investors with fractional ownership and trading opportunities for tangible assets:

• Tether Gold: Offers a stablecoin backed by gold, ensuring a secure and stable investment option.
• Paxos: Issues the PAXG gold-backed token, combining the stability of gold with the flexibility of blockchain technology.
• Aurus: Provides tokenized gold and other precious metals, making them accessible for trading and investment.

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Non-yield-bearing RWAs represent a unique segment within the blockchain economy, focusing on the tokenization of tangible assets or shares in institutional funds that do not offer inherent returns. These tokens are classified under equity RWAs, providing investors with equity-like positions in a digital format. Jiritsu's verification processes are crucial in commodities trading, particularly for high-value goods like precious metals, diamonds, and spirits. This verification ensures the secure storage and authenticity of these items, thereby enhancing the reliability of their digital representations on blockchain platforms.

Collectibles

Tokenizing collectibles and art involves creating digital representations of these assets, which can then be traded on blockchain platforms. This process democratizes access to high-value items, allowing investors to own fractions of assets that were previously inaccessible. Key platforms facilitating this include:

• ArenaClub: Focuses on trading tokenized sports and collectible cards, providing a marketplace for fractional ownership of high-value sports memorabilia and collectible cards. This platform opens up new investment opportunities in the sports collectibles market.
• Freeport: Specializes in tokenizing fine art, enabling investors to own fractions of expensive artworks. This approach makes art investment more accessible, allowing a broader range of investors to participate in the art market.

The tokenization of these assets relies heavily on the verification of their authenticity and provenance. Jiritsu's verification processes ensure that each tokenized item is backed by a real, verifiable asset, which is critical for maintaining investor confidence and ensuring the legitimacy of the digital asset market.

Real Estate and Other Real-World Assets

Real estate is the biggest asset class globally and requires big money due to high property prices. Blockchain and tokenization are looking to disrupt this norm by making real estate more accessible, efficient, and transparent onchain.

The biggest benefit of tokenizing real estate is to lower the barrier to entry for property investments. By allowing fractional ownership, these platforms allow more investors to get into the real estate market. This will lead to more liquidity in the market as properties can be bought and sold in smaller pieces rather than big chunks.

Also, tokenization brings transparency and security to real estate transactions. Blockchain ensures that all transactions are recorded on an immutable ledger, reduces the risk of fraud, and builds trust among investors. This transparency can also speed up the due diligence process, making real estate investments more efficient and less time consuming.

Despite the potential, the transition of real estate to blockchain has its own set of challenges, primarily due to the sector’s illiquidity. Real estate transactions are long, complex, and involve multiple intermediaries and legal processes. The limited pool of buyers further complicates the matching of buyers and sellers onchain, as the sector is still largely traditional and legacy. This tradition makes it harder to integrate blockchain solutions and slows down the adoption of tokenized real estate.

New Solutions and Emerging Platforms

To address these challenges, new projects are emerging to simplify property fractionalization and make the market more efficient. These projects will allow property owners to easily divide and sell parts of their assets and allow buyers to buy shares in tokenized form. By solving the complexity of real estate transactions, these platforms will increase liquidity and make real estate more accessible to a wider audience.

Key platforms that are pioneering these are:

• Parcl, Upside, Homebase: These platforms allow speculation and fractional ownership of real estate values across different locations, such as different US cities and onchain. Investors can diversify their real estate portfolio and get into property markets without needing big money.

Other platforms are also part of this ecosystem:

• RealT: Tokenizes real estate assets, allows investors to buy fractional shares of properties, and get rental income in cryptocurrency.
• BackedFi: Offers investment opportunities in real-world assets, including real estate, a gateway for investors to get into traditional asset classes through blockchain.
• Lofty: Tokenized real estate investments, fractional ownership, and liquidity in the real estate market.
• Propy: Uses blockchain for real estate transactions, simplifies the process, and reduces intermediaries.

Challenges with RWAs

The progression towards tokenization, despite its broad acceptance, presents unique challenges that must be addressed to ensure reliable and efficient adoption. While even staunch anti-blockchain advocates concede that tokenization will play a crucial role in the future, the complexities inherent in tokenizing real-world assets (RWAs) demand careful navigation and robust solutions.

Regulatory Compliance

Navigating the regulatory environment is paramount, particularly when tokenizing assets like U.S. stocks or private credit. Regulatory uncertainties and complexities, especially when operating across multiple jurisdictions, pose significant challenges. This has largely kept major regulated institutional players on the sidelines or confined to private blockchains. While private blockchains might grow alongside public chains, they risk fragmenting liquidity due to interoperability issues, complicating the realization of tokenization’s full benefits.

Internationally, regulatory developments are noteworthy. Singapore's "Project Guardian" has facilitated numerous tokenized proof-of-concept projects involving tier-1 global financial institutions on both public and private blockchains. The EU's DLT Pilot regime is pioneering frameworks that allow multilateral trading facilities to use blockchain for trade execution and settlement. Meanwhile, the UK is exploring even more advanced frameworks for public network tokenization. These initiatives reflect a robust commitment to advancing the regulatory landscape to support tokenization.

Enforceability

The inherent value of blockchains lies in their ability to enable trustless commerce in a self-custodial manner. This means that transactions can occur without needing to trust the other party, relying solely on the underlying protocol. However, introducing RWAs onto a blockchain diminishes many of these advantages. RWAs are inherently tied to traditional financial systems, bringing in counterparty, custodial, and regulatory risks. Consequently, any issues that arise with RWAs require social or community-level interventions, undermining the principles of "code as law" and the immutable nature of blockchain technology.

For instance, ensuring that the sale of an NFT representing a physical asset results in the actual transfer of the item remains problematic. If Alice converts her $1 million estate into an NFT and sells it to James, James expects to receive the keys to the home upon purchase. If Alice refuses, there is no robust mechanism to enforce the transfer of the physical property. This gap highlights the lack of legal enforcement linking the token to the tangible asset. However, while solutions like Jiritsu cannot solve this problem entirely, its ability to provide tamper-proof verification and evidence onchain helps minimize any confusion or debates about the onchain aspect.

Reliance on Oracles and Value Retention

Oracle solutions like Chainlink's Proof of Reserves and the Pyth Network attempt to address the “Oracle Problem” associated with RWAs, but this adds complexity. Users must trust that RWA custodians accurately represent their assets and that oracles relay this information correctly. To build trust and prevent fraud, the industry needs to establish new standards, such as Proof of Reserves or third-party audits. Without these safeguards, the integration of RWAs into the crypto ecosystem could be at risk from dishonest actors.

While price feeds effectively maintain the value of tokenized RWAs, determining a fair value for NFTs, such as houses, remains difficult. The value of such unique assets is highly subjective and depends on what someone is willing to pay for them, complicating the process of establishing a consistent and fair price.

Jiritsu’s Technological Solutions

The implementation of zkMPC in Jiritsu provides tamper-proof, trustless verification across various blockchain platforms. This feature is essential for the accurate and secure tokenization of assets, particularly in scenarios where stakeholders must verify data without mutual trust. Jiritsu’s decentralized verification system distributes control across numerous contributors, utilizing zkMPC nodes for cryptographic calculations and service providers for software management. This setup significantly reduces the risk of fraud and supports applications ranging from simple asset tokenization to complex financial derivatives, ensuring transparency and security in all transactions.

Additionally, via JiriMint, the Jiritsu platform guarantees that tokens are only minted or burned when there are sufficient assets to support them, thereby preserving their value and integrity. This robust system is driven by advanced smart contracts, which are integrated with the modular zkMPC node infrastructure. This integration ensures both privacy and verifiability, making Jiritsu a dependable choice for secure and efficient asset tokenization.

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Conclusion

The rise of real-world assets (RWAs) on blockchain platforms signifies a transformative shift in the financial landscape, integrating traditional finance with decentralized systems. Jiritsu Network's efforts in this domain, particularly through its innovative zkMPC Cloud technology, showcase the immense potential of tokenization. By enhancing security, transparency, and efficiency, Jiritsu not only simplifies the process of asset tokenization but also addresses critical challenges such as verification and compliance. As the ecosystem evolves, the convergence of blockchain with RWAs promises a more inclusive, liquid, and programmable financial environment, poised to redefine asset management and investment opportunities on a global scale.

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Disclaimer: This report was commissioned by Jiritsu. This research report is exactly that — a research report. It is not intended to serve as financial advice, nor should you blindly assume that any of the information is accurate without confirming through your own research. Bitcoin, cryptocurrencies, and other digital assets are incredibly risky and nothing in this report should be considered an endorsement to buy or sell any asset. Never invest more than you are willing to lose and understand the risk that you are taking. Do your own research. All information in this report is for educational purposes only and should not be the basis for any investment decisions that you make.