I've been thinking for a long time whether to write this. I have projects in the RWA direction, so writing this feels a bit like slapping myself in the face. But this question really deserves a direct answer.
On-chain treasuries exceed $4B+, having more than tripled in a year. BlackRock's BUIDL fund attracted hundreds of millions of dollars in a single quarter. Franklin Templeton, HSBC are all entering. RWA TVL is one of the few metrics still growing in this bear market.
But you open the charts for these project tokens—almost all green, the downward kind. Some have fallen over 90% from their highs.
Why?
Some would say: retail can't get in. This answer is half right, but it's outdated. There are already projects on the market solving this—just register, and retail users can also participate in RWA yields. The door for user access has opened. But the token prices are still falling.
I think many RWA projects failed to understand the essence of the project from the very beginning
RWA product + TOKEN each need to fulfill their respective roles. The token economic model was designed incorrectly.
The most common death formula for all RWA-related TVL category projects looks like this:
Users deposit TVL to get RWA yield → simultaneously issue token as an extra reward → users continuously sell the token → token falls → issue even more tokens as subsidies → no one dares to buy the token
The essence of this logic is: the token becomes a subsidy tool, not a value carrier.
If you think about the logic of the business this way, then token holders have only one action—to sell. No one needs to buy the token because there's no extra benefit to holding it. If you want RWA yield, you can just deposit assets directly; you don't need to hold the token at all. This becomes a market with only selling pressure and no buying interest.
Many DeFi projects died here. Deposit TVL for yield, then get an airdrop, then get token rewards. Issuing round after round. No one buys, only sells. The project's treasury holds more and more tokens, the price gets driven lower and lower, and finally it falls into illiquidity.
The RWA sector is now repeating this mistake.
So what should be done?
Because I work in strategic consulting and growth strategy, stripping the problem down to its core reveals the RWA business itself.
RWA projects should focus their resources on one thing—finding truly good RWA assets.
Not designing increasingly complex token incentive systems.
What is a good RWA asset? Four criteria:
- Attractive APY. The yield must be worthwhile for users, competitive compared to TradFi, and not lower than bank wealth management products.
- Consensus. The asset itself must have market recognition—treasuries, credit products backed by well-known institutions—something users understand and trust.
- Stability. It's not a high-risk, high-reward speculative product; the core value proposition of RWA is stable real yield.
- Security. The risk control on the asset side is solid; the underlying assets won't blow up.
When the underlying assets are good enough, users will naturally come for the yield. At this point, the token's role should be: holding the token unlocks access to better assets, higher yield rates, and priority allocation.
Demand transmits from the asset side to the token side, creating a real reason to buy. Not the other way around—using token subsidies to attract users, only to find that no one actually wants to hold the token.
The RWA narrative is real, the data is real, and institutions entering is also real.
But no matter how strong the narrative is, it can't support a token model that is flawed by design.
The next truly successful RWA project, I predict, will be the one that first solidifies the asset side before talking about token value. It won't rely on token rewards to pull TVL, but rather use TVL to support the token. Get the order wrong, and no narrative or market guru can save it.
Good assets attract users, users support the token. Doing it the other way around is using the token to subsidize a product that no one truly wants.
