RWA Support Fund: Resolving the Urgent Needs of RWA Project Launch?

Author: Zhang Feng

The global wave of RWA (Real World Assets) tokenization is sweeping through traditional finance and the crypto market at an unprecedented pace. Recently, there have been frequent institutional-level movements: the credit protocol Grove deployed a $250 million tokenized credit product on the Avalanche blockchain, anchored to the U.S. Treasury and CLO markets; Singapore's Giants Protocol successfully transformed the properties of the largest co-living space operator into on-chain assets with the support of the Singapore sovereign wealth fund; a subsidiary of Fosun completed financing in the tens of millions of dollars to enhance RWA infrastructure.

However, behind the prosperity, the lack of startup capital has become a fatal bottleneck for project implementation—project parties are worried about losing their initial investment, while legal, technical, and other professional service institutions cannot bear the risk of advance payment. This contradiction has precisely given rise to a significant business opportunity: the establishment of RWA support funds, which fill the ecological gap through innovative capital supply models.

1. Explosive Growth of RWA and the Dilemma of Initial Funding

The current RWA market is transitioning from the experimental stage to a phase of scaled explosion. According to industry forecasts, the global RWA market size will exceed 40 trillion dollars by 2030, driven by multiple factors:

Asset Class Diversification: Expanded from early dominance of U.S. Treasury bonds and private credit to composite assets such as real estate, art, commercial paper, and commodities. For example, Hong Kong Delin Holdings tokenized the rights to Delin Building valued at HKD 280 million, becoming a benchmark case led by licensed brokers.

Regulatory Breakthrough: Dubai approves the first tokenized currency market fund, while Hong Kong promotes cross-border asset tokenization through a regulatory sandbox mechanism, providing a compliance foundation for RWA.

Technical Maturity: Price feeding by oracle (such as Chainlink), zk-proof verification (such as Rtree platform), and cross-chain settlement solutions have addressed the challenges of asset anchoring and circulation.

However, the project faces a threefold funding dilemma during its cold start. High compliance costs, legal framework design (such as establishing Cayman SPV/Singapore VCC), regulatory filings (SEC, FCA licenses), and the integration of KYC/AML systems take 4-12 weeks and consume over 30% of the budget.

Technical development black hole, smart contract audits (third-party costs such as Quantstamp), asset chain mapping, oracle configuration and other investments often exceed $500,000, and must be paid in advance.

Liquidity preparation pressure, to cope with redemption fluctuations, the project needs to pre-freeze 20% of cash reserves (such as USDC), which exacerbates cash flow tension.

A typical case is the FOSUN FinRWA platform, which has received tens of millions of dollars in financing, but the initial technical development and compliance submission took more than 9 months. Without capital support, it is likely to face failure. Project parties often find themselves in a dilemma: self-funding may lead to total loss, while external financing requires relinquishing core rights.

2. RWA Support Fund Operation Framework and Innovative Model

To address the above pain points, the RWA support fund can be designed as a multi-strategy capital engine, using a flexible combination of tools to meet funding needs at different stages:

Phased debt financing instruments. These provide convertible loans for deterministic expenditures such as legal compliance and technology development. For example, a fund advances $300,000 for smart contract development and Quantstamp auditing, with an agreement to convert 3%-5% of the underlying asset revenue rights upon successful token issuance. If the project fails, the fund has priority liquidation rights over the SPV assets.

Asset Pool Incubation Model. The fund pre-builds a compliance and technical infrastructure platform (such as KYC verification modules, ERC-3643 token standard adapters) for multiple projects to call at low cost. The practice of Giants Protocol validates this model—its AI-driven platform saves The Assembly Place 60% in on-chain costs. The fund charges a 1%-2% equity share based on the project’s tokenization scale.

Equity-linked investment. The fund invests in the Rtree technology platform of Guofu Quantum Investment through equity investment to obtain long-term value. For example, participating in the 3 million CAD private placement of Digital Asset Technologies to support the development of the RWA instant settlement lightning network, capturing cross-project returns through technological dividends.

The fund achieves automated management through smart contracts: deploying fund allocation contracts on low Gas fee chains like Polygon, binding Milestones (e.g., releasing 30% of funds after regulatory approval); using off-chain data from Oracles to trigger token recovery, such as the JTRSY fund of Centrifuge automatically allocating returns based on on-chain T-bills interest rates.

3. RWA Support Fund Profit Path and Risk Hedge Mechanism

The source of the fund's returns must cover high-risk exposures and can be designed as a three-stage rocket:

Basic Yield Layer. Debt financing charges an annual interest rate of 8%-10% (referencing the bond terms of Digital Asset Technologies), combined with a token conversion discount (usually 70%-80% of market price). For example, providing a development loan of 5 million HKD to the Derlin Holdings project, in addition to interest, secures a subscription option for 5% of the total token amount.

Excess Return Layer. Capture value discrepancies through cross-market arbitrage: when the yield of the JAAA fund on Avalanche reaches 6.2%, while the traditional CLO market is only 5.1%, the fund can allocate tokens in the primary market and then market price differences on compliant exchanges like Archax.

Ecological Equity Layer. Equity investment infrastructure (such as Rtree's asset verification platform) creates synergy. The Fosun case shows that the valuation growth of technology platforms is 3-5 times higher than the token premium of single projects.

Risk hedging requires systematic design. In response to regulatory risks, a judicial isolation structure is adopted, placing projects from different jurisdictions into independent SPVs. Referencing Hong Kong's RWA issuance requirements, a foreign exchange control buffer period of 9-12 months is prepared.

For technical risks, mandatory third-party audits (such as OpenZeppelin) and requiring project parties to purchase smart contract insurance (such as Nexus Mutual underwritten products).

Regarding liquidity risk, collaborate with market makers to design an automatic repurchase mechanism that triggers reserve fund purchases when the oracle detects that the token price falls below the threshold.

4. RWA Support Fund: From Capital Pipeline to Value Network

The significance of RWA support funds goes far beyond financial instruments; they will become the liquidity router and standard setter for the entire tokenized ecosystem:

Promote compliant innovation. Funds can collaborate with institutions such as the Hong Kong Monetary Authority to test cross-border settlement solutions (such as the digital Hong Kong dollar wCBDC integration) in the sandbox, clearing regulatory obstacles for projects.

Accelerate the standardization of technology. By investing in multi-oracle projects such as API3 and Chainlink, establish a unified framework for asset pricing to resolve the anchoring disputes faced by Rtree-like platforms.

Cultivating the secondary market. As early market makers, the fund injects liquidity into non-standard assets such as the Delin Building token, attracting traditional giants like BlackRock to enter the market.

As more projects like The Assembly Place tokenize "reinforced concrete" into a revenue engine shared by global investors, RWA support funds have quietly reshaped the nature of value creation—from a one-way blood transfusion of capital to an evolutionary symbiosis of ecosystems.

Conclusion: Restructuring the Capital Gene of the RWA Era

The current explosion of the RWA ecosystem confirms real demand, but the gap in initial funding acts like a deep chasm, separating innovative ideas from large-scale implementation. Grove's $250 million deployment, Giants' AI-driven platform, and Fosun's compliance framework all validate the critical value of capital catalysis for the industry.

The true competitiveness of RWA-supported funds lies not only in their design flexibility (debt-equity linkage, smart contract management) but also in their reconstruction of the risk-return distribution logic: allowing project parties to break free from the fear of "putting all their eggs in one basket," enabling technology service providers to receive reasonable compensation, and ultimately allowing trillion-level real assets to be reborn on the chain. Perhaps RWA-supported funds are temporary and may eventually be replaced by decentralized RWA funds, but as long as they can solve problems, what does it matter if they are replaced? Like a meteor, I have quietly passed by.