Warning: "Pseudo-Innovation" and "Real Harvest" in the RWA Boom

Once upon a time, online lending platforms sprang up like mushrooms after a rain, and the slogan "Making financial management accessible" resounded throughout the streets. However, in just a few years, a nationwide P2P crash left countless investors penniless. From Ezubao to Qianbao, from Fanya to Tuandai, one once-prosperous platform after another collapsed, leaving behind hundreds of billions in bad debts and countless broken families. The aftermath of this storm continues to this day.

Today, the wave of financial innovation continues to surge. The tokenization of real-world assets (RWA), with its ability to transform physical assets into on-chain, liquid tokens, has reignited market enthusiasm. The logic behind this RWA is that it can break the shackles of traditional asset liquidity and revitalize "dormant" assets such as real estate and commodities. However, as the light of innovation shines, are the shadows that once cost us dearly during the P2P crisis—arbitrage mentality, lagging regulation, ambiguous laws, and the fragility and enthusiasm of the masses—quietly clinging to this emerging model? I. The Deeper Logic and Bitter Lessons of the P2P Crisis The rise of P2P online lending is essentially an attempt to bypass traditional financial intermediaries by leveraging internet technology to enable peer-to-peer lending. Its initial logic had some rationality, satisfying the financing needs of small and micro businesses and the investment aspirations of the general public. However, distortions quickly occurred: Unbridled growth in a regulatory vacuum. The absence of early regulation left the nature of platforms unclear (due to the ongoing debate over whether they were information intermediaries or credit intermediaries), and entry barriers virtually nonexistent. Numerous platforms expanded recklessly without clear rules. Capital pools and the trap of self-financing. Numerous platforms, despite their role as information intermediaries, illegally pooled funds to form vast capital pools. Even worse, platforms like "Ezubao" fabricated loan targets and directly used the funds for affiliated businesses or squandered them by the platform's actual controllers, effectively devolving into a complete Ponzi scheme. The allure of high interest rates and the illusion of guaranteed redemption. To attract massive amounts of capital, platforms generally promise "guaranteed high returns" far exceeding market levels, exploiting information asymmetry to create the illusion of "risk-free arbitrage" and induce an irrational influx of ordinary people. Risk control is ineffective and assets are deteriorating. Driven by the drive for scale, asset reviews become perfunctory, and large amounts of capital are invested in high-risk, low-quality, and even fraudulent projects. During an economic downturn, widespread defaults on underlying assets are inevitable. A concentrated outbreak of criminal risks. When the funding chain breaks, illegal fundraising (illegally absorbing public deposits and fundraising fraud) becomes a crime that the platform's controlling shareholder cannot escape. At the same time, chaotic debt collection practices have also led to a large number of secondary crimes such as illegal detention and provoking disturbances. The collapse of P2P lending was no accident; it was a systemic failure driven by lagging regulation, platform dysfunction, and investor irrationality. II. Undercurrents Beneath the Halo of RWA Innovation The core of RWA lies in leveraging blockchain technology to digitize and fragment real-world tangible and intangible assets (such as real estate, commodities, accounts receivable, artwork, bonds/stocks, etc.), transforming them into tokens that can be circulated and traded on the blockchain. Its core value lies in the following aspects. Improving liquidity: Breaking through the liquidity constraints of traditional non-standard assets (such as real estate and art) and reducing transaction friction. Lowering barriers to entry: Through fragmentation, small investors can participate in high-value asset investments. Improving efficiency and transparency: Leveraging the immutable and traceable nature of blockchain, the asset registration and transaction settlement processes can be optimized, theoretically increasing transparency. However, the practical implementation of RWAs is not an easy journey. Its inherent logic and implementation are fraught with multiple risks, bearing alarming similarities to some of the pre-P2P crisis indicators. First, legal title confirmation and compliance risks (core pain points) include at least the following aspects. The mapping challenge between on-chain tokens and off-chain assets: How can blockchain tokens be clearly recognized by the legal system as representing ownership or income rights to underlying physical assets (such as a specific room in a building) or financial assets (such as the right to income from a bond)? The existing legal framework is generally lagging behind in this regard, and title confirmation faces significant uncertainty. Can smart contracts replace the enforcement of traditional legal contracts? The challenge of penetrating supervision: RWA project structures are often complex, involving multiple parties such as special purpose vehicles (SPVs), custodians, appraisers, legal advisors, and blockchain technology providers, and often utilize offshore structures. How can regulators effectively ensure the authenticity of underlying assets, clear ownership, and legality of transactions? Could platforms or project owners exploit this complexity to conceal risks or even commit fraud? Regarding securitization, many RWA tokens possess substantial securities attributes (e.g., representing income and dividend rights). Are they subject to strict securities issuance, disclosure, and trading regulations in different jurisdictions? Do project owners proactively seek compliance (e.g., through exemptions like Reg D/S and Reg A+, or by applying for licenses) or engage in regulatory arbitrage in gray areas? Regarding cross-border legal conflicts, the global circulation of RWAs presents significant differences and conflicts across jurisdictions regarding property rights, contract law, securities law, and tax law, making it extremely difficult for investors to protect their rights. Second, there are risks related to asset quality and transparency (the foundation of trust), which is a common challenge. The authenticity of the underlying assets is questionable. How can we ensure that the assets mapped on-chain actually exist, their ownership is flawless, and their valuations are fair? Are there fictitious assets, duplicate mortgages (multiple "generations" for one property), or overvaluations? How can the custody (e.g., gold bars), maintenance (e.g., real estate), and operational status (e.g., the solvency of corporate debtors) of off-chain assets be effectively monitored and accurately reflected on-chain in real time? There are also risks related to the centralization and reliability of oracles. The value of on-chain tokens depends on oracle input of off-chain asset data (e.g., price, rental income, and default status). If the oracle is manipulated or malfunctions, it will lead to severe distortion of token prices and even be exploited for fraud. Is the oracle itself decentralized, secure, and resistant to attacks? The adequacy and comprehensibility of information disclosure. The RWA project involves complex financial, legal, and technical terminology. Is the information disclosed by the project party true, accurate, complete, and timely? Can ordinary investors fully understand the substantial risks of their investment targets? Third, technical security and operational risks may be commonly overlooked. Smart contract vulnerabilities. Vulnerabilities in the smart contracts that govern the core logic of RWA issuance, circulation, dividends, and redemption can lead to asset theft, incorrect locking, or misallocation.

Private key management risk: Loss or theft of a user's or custodian's private key means permanent loss of token assets.

Underlying blockchain risks: The performance, security, and degree of decentralization of the underlying public/consortium chains directly impact the stability and security of the RWA system.

Fourth, liquidity risk and market manipulation may be new takes on old tactics.

Insufficient secondary market depth: Not all RWA tokens can be traded on established exchanges. This lack of market depth can easily lead to volatile prices and difficulty in cashing out (especially for large amounts). Valuation challenges: Token valuation models for non-standard assets are complex and immature, susceptible to market sentiment and manipulation. Redemption mechanism risks: If a token has redemption provisions (for underlying physical assets/fiat currency), are the redemption window, price, and capacity reasonable? In extreme cases, could this trigger a run? Fifth, the arbitrage mentality and the risk of mass speculation (a breeding ground for history repeating itself) are many people willing to venture into the dangerous terrain despite knowing it's there. Hype about "new concepts" and fear of displacement (FOMO) fuels the perception that RWAs, as cutting-edge concepts, are easily packaged as "disruptive revolutions," attracting speculators seeking short-term profits. Promotions may overemphasize profit prospects, deliberately downplaying or obscuring complex legal, technical, and asset risks. The allure of "high returns" resurfaces. Some RWA projects exploit information asymmetry through complex structures or promises of unrealistically high returns (such as claiming stable returns while anchored to highly volatile assets), attracting ordinary people with mismatched risk tolerances. The misunderstanding of "decentralization" creates a false sense of security. Some investors mistakenly believe that "on-chain security" and "code is law," underestimating the risks of off-chain assets, legal risks, and centralized control points (such as oracles and project authority). If the blockchain's immutable records are lies, then the lies will be more solid than ever. The key risk differences between RWA and P2P lie in their technological foundation (blockchain) and asset anchoring (theoretically backed by real assets). However, this could become an even more deceptive "advanced scheme"—if off-chain assets are fake, legal ownership is ambiguous, oracle data is manipulable, and oversight is lacking, then the so-called "transparency" and "immutability" of on-chain tokens are nothing more than a record of a carefully designed scam. Third, the only way to prevent the "RWA Storm" The scars of history continue to warn us that innovation and risk always go hand in hand. Faced with the enormous potential and potential risks of RWA, all parties need to work together, maintain high vigilance, and collaborate to build a solid line of defense.

For regulators, it is important to strengthen active management, clearly define the nature, and penetrate the underlying assets to draw clear red lines. Clearly define the legal attributes of different types of RWA tokens (security, utility, hybrid, etc.) and the corresponding regulatory framework (Securities Law, Payment and Clearing Regulations, etc.). Clarify the entry requirements and prohibited behaviors in the issuance, trading, custody, information disclosure and other links.

Promote the "regulatory sandbox" to encourage compliance innovation, test RWA applications in a controlled environment, accumulate regulatory experience, and balance innovation and risk.

Strengthen cross-border regulatory collaboration. Given the global nature of RWAs, strengthen international regulatory communication and collaboration to jointly combat cross-border violations and fraud.

Require mandatory information disclosure and penetrating audits.

Require RWA project parties to provide full, standardized, and ongoing information disclosure (including details of underlying assets, legal structure, key risks, audit reports, etc.). Regulators must be able to verify the authenticity and ownership of underlying assets.

For the industry, it is important to strengthen self-discipline, prioritize standards and norms, build a solid technical foundation, and maintain the industry's reputation.

Develop industry standards and best practices. Industry associations should take the lead in formulating RWA industry standards and self-discipline conventions in asset selection, legal structure, technical security, information disclosure, governance mechanisms, and other aspects.

Build a trusted infrastructure and promote the development of a secure, reliable, and transparent RWA-specific technology stack, especially decentralized, attack-resistant oracle solutions, as well as on-chain and off-chain collaborative governance mechanisms. Establish a third-party certification and audit system, bringing in authoritative third-party institutions to independently audit and certify the underlying assets, legal compliance, technical security, and financial status of RWA projects. Investors should enhance their risk awareness, restrain their greed, and strengthen self-protection. A deep understanding of the principle of "assuming your own risk" and abandoning the illusion of "guaranteed redemption" are crucial. Investing in RWAs (especially non-standard assets and early-stage projects) carries an extremely high risk, and the potential for total loss of principal is unavoidable. See through the fog and see the underlying layer. Never invest in projects where you don't have a clear and complete understanding of the underlying assets, their location, who holds them, and how they are secured. Independently verify proof of asset ownership, valuation reports, and audit reports (if available). The glitter of on-chain code can never replace the weight of a piece of paper proof of ownership. Examine legal structure and compliance. Understand the project's legal structure (SPV establishment location, applicable law) and whether it has proactively sought and obtained necessary regulatory approvals or exemptions. Assess technical risks and management teams. Understand the project's technical solution (especially the oracle source and security mechanisms), audit reports, team background, and reputation. Act within your means, diversify your investments, and participate with caution. Invest only with idle funds and strictly control the proportion allocated to high-risk alternative assets (including RWAs). Avoid betting on a single project or asset class. Be wary of the allure of high returns and excessive hype, and remain extremely cautious of projects promising "low risk, high returns." View market enthusiasm rationally and avoid decisions driven by FOMO. Financial innovation continues to advance, but human weaknesses remain. The bright future of RWAs is undeniable. They are like a sharp tool that can cut through the barriers of the traditional financial system. However, the value of a tool always depends on the hands of its users. When this tool is hijacked by the desire for arbitrage, indulged by regulatory gaps, and driven by blind public obedience, the P2P storm scenario may well be repeated with the new guise of RWA. Only with the guiding light of regulation illuminating the way forward, industry self-discipline building a strong dam, and investor rationality safeguarding its core values, can the innovative power of RWA truly serve the real economy and benefit the public, rather than becoming the prelude to the next wave of wealth disillusionment. True financial progress is never born from a revelry in the gray area, but is rooted in the soil of rules and respect.