The Advent of RWAs & Their Influence on Crypto Ecosystems | Billy Sebell - XDC Foundation

uh good afternoon my name is Billy Cel I am the executive director of the xdc foundation do that right there that's a little bit better can you hear me okay I know it's not uh okay perfect perfect so uh so as I said I'm the executive director of the xdc foundation the xdc foundation primarily is focused on the supporting the growth and development of the xdc network and if you're not familiar with the xcc network we are an Enterprise grade evm compatible smart contracts platform we are primarily focused on liquefying the trade Finance space through the tokenization of real world assets rwas and today I'm here to talk about mass tokenization in the Advent of rwas and their influence on crypto ecosystems and we're going to take a look at the landscape and also uh really what is reshaping this landscape and how we're doing it here at the XTC Network so the rwa market at a glance uh this information as you see here is provided by rwa doxyz uh they're a leading rwa uh aggregator of information and an excellent resource for uh seeing what is actually happening online or on chain with rwas and you can see here that currently right now they have 1.3 billion uh is what they're tracking of uh real world assets on chains and that's broken up primarily into two areas one is private credit and one is us treasuries they're about 5050 in terms of the value prop for each of those and on that site uh you would see that there's uh eight blockchains that are actually uh listed for rwa on there and the XTC network is one of those and there's been tremendous growth over the last year since uh the on the introduction of a lot of these uh rwas the treasuries as an example were about $100 million in total value this time or in January of last year and it's grown to just under 700 million and that's 600% increase so we're seeing some pretty significant growth going on there and it's also predicted that rwas will be a 16 point uh or16 trillion Doll Market come 2030 and that's a separate that data is separate from rwa XYZ but I think it's important to note here that the private credit Market really is what feeds Capital to businesses in the form of loans and this is really where we operate in the space which ultimately is what we call securitization so if we took a take a little bit closer look at it this right here is the private credit uh tokenized market and you can see that there's a $622 million if you look at it you could see where they have categories broken up here Consumer Auto real estate and ultimately what these are loans to small businesses or Enterprises and there financing the clothes you're wearing on your back the TVs you watch TV with the microphone I'm speaking through you know all the chairs that you know you're sitting on so uh it's a it's a very vibrant market and uh a strong market and there's tremendous opportunities for growth when you consider the estimates for $16 trillion as far as tokenized treasuries this is a good visual to give you a a look at the growth that's happened since early last year and you'll see it's just under $700 million with the maturity or the average yield to maturity being just under 5% so now you can actually on chain invest in a us back security and get 5% yield or you can do that in the private credit market so R rwas bring fuel to defi really r W are are poised to enable the next wave of value coming into blockchain and if you look at what's happening with uh the Bitcoin ETF and you're seeing the value coming into the space I think this is actually a pretty good precursor to what you're going to see with the Advent of real world assets growing on chain but if we want to go back and kind of take a look at where this all began tokenization really first started with a a stable coin the tokenization of a stable coin say taking value of a stable coin one: one and putting it into a digital form and that allowed for the on-ramp of capital into you know from the traditional space into the crypto ecosystems Circle and usdc and the integration of that into ecosystems is a perfect example of how rwas ultimately uh can become cornerstones of tvl onchain and rwa has now Bridge sustainable offchain yield bearing assets to defi ecosystems and this is really uh an essential part of rails for investment into the crypto ecosystems and are really the future fuel for what's going to be happening in D5 moving forward so if we want to look at really what the positive impact of rwas are and the you know they're changing the structure of how value is locked on chain originally tvl was used as a tool to Value the amount of crypto that are locked in defi ecosystems and protocols you know liquid staking brought more tvl uh yields increasing and really it comes down to the question of whether these are sustainable you you have a lot of particular protocols that may be minting tokens in order to pay yields and we don't believe that that's a long-term sustainable model for being able to provide yields to people on defi ecosystems but RW rwas actually provide the opportunity to replace these unsustainable liquid staking models with time- tested yield bearing assets offering an alternative investment to those already in defi and this is partly how we think the attractiveness of this is going to enable new flows into uh the chains and ecosystems so rwas encourage new funds to flow on chain then really how does this really happen so if we want to take a look you know rwas are backed by tangible measurable assets where traditional investors now have an opportunity to invest in blockchain technology without having to concern themselves with the volatility of crypto assets and in addition rwa establishes platforms and processes that are sustainable and encourage legitimacy and of course you know with what we have been through over the last couple of years in this industry having legitimacy legitimacy to what we're doing is very important so protocols that enable kyc and uh on boarding of accredited investors and as crypto strives to achieve or what crypto strives to achieve in many ways rwas provide the potential to investors who otherwise wouldn't have it you know a lot of these rwas are not easy to invest in offchain but when they come onchain they become much more available to investors who are already in that ecosystem and all of these elements are working together to increase tvl on chain so as I mentioned earlier we're uh the xcc network are primarily here to liquefy trade Finance assets and we're really doing this by trying to address and close What's called the trade Finance Gap so if we take a look at really what trade Finance is trade Finance is the flow of goods across the globe and this is is often uh something that or it's the financing sorry it's financing of goods uh and the flow of those goods across the globe and uh this is most often done in the form of invoice financing and it involves bank and non-bank Originators in the trade Finance Gap it represents the collective difference between the demand for Capital and the supply for Capital and the demand for Capital has long been greater than Supply and it currently actually stands at $2.7 trillion in growing and this number has been growing for a long time and if you include micro businesses in that number you're looking at $5 trillion gap between the the money that's available and the money that is needed the tokenization of trade assets creates the opportunity for businesses large and small to have access to fin financing they wouldn't normally have especially in remote places where these small businesses don't really have any bankable opportunities it opens up the doors to them and it also helps small and medium-sized businesses have greater options even in places where that Capital may be available but it may not actually be at favorable rates for them how are rwas then a solution to the trade Finance Gap well rwas have opened up new ways to collateralize and otherwise represent traditional assets by tokenizing a real world asset on chain its rights of ownership can be held it can be traded and now it also becomes collateral for other investment instruments this opens up the opportunity for offchain securitization to drive the growth of rwa days and as I had mentioned before the uh $16 trillion estimated figure as I mentioned uh is is a big part of that so let's dive in a little bit to securization so I mentioned securitization and private credit they're really uh the same thing spoken a little bit differently but they're the real opportunity as far as we view it for our waas so if you look at the definition of securitization it's the conversion of an asset especially a loan into marketable Securities typically for the purposes of raising cash by selling them to other investors so when we look at the trade Finance Gap the way to close this is to make cash available to smmes that don't actually have that available to them and through the the digi through the Dig digitization of documentation in tokenizing these assets we not only create an immutable record but uh we also collapse the time to execute these transactions we eliminate risk because financing in the world today is around the globe is usually done by a piece of paper so if you have a electronic bill of lading that you want to use that's the paper people are financing with and if I hold that and I hand it to somebody else and they give me money they hold it so I can make copies of that in a paper world and I can sell it to many people and that means many people are actually funding uncollateralized loans trade Finance assets are the most inflation proof and risk averse assets available by digitizing this process we create the opportunity to reduce costs through the process bringing more competitive loans to smmes so in other words blockchain's going to save lenders billions and billions of dollars because they're going to have more efficient systems in order to make their loans and that's going to trickle down to Consumers and it's going to allow us to have less expensive loans and as we know we're dealing with quite an inflationary period now and this is something that can actually help resolve that so at the core of the foundation support and development of the xcc network is the work we've done to bring tokenization to the network the journey started 3 years ago when we launched our smart contracts tokenization platform and with this we used it to actually do the first onchain transaction for trade Finance by taking a handful of invoices from a number of different smmes and financing them onchain and that was in 2021 September of 202020 all this work today has led us to the launch of a US Treasury token called us in August of 2023 which is the first rwa on the XTC Network and this gives people the opportunity to hold a digital representation of a black rock ETF and this is made possible through the integration of the platform securitize and as I had mentioned before their abilities for kyc and accredited investors the XTC network is recognized as a premier blockchain in trade Finance it was one of the first and only layer ones to be invited to be a part of the trade Finance distribution initiative and also the international farf fading uh and trade Association uh and in late last year xdc Network won the tads award for web 3 Innovations recognized for the solution oriented work being done on the network in trade finance and tokenization so we're really about playing the long game at the XC Network and that takes uh you know so what it takes from us to be successful in bringing rwas is about doing the process right from the start and this is why we we've integrated with securitize and successful fin texts that are currently disrupting the securitization market and currently Enterprises focused on offchain securitization who are also working with the XTC Network have secured $3 billion worth of trade Finance asset value on a quarterly basis so these are invoices that get turned over every 90 days there's $3 billion of notes currently being uh written those expire and and that money gets reinvested invested into another $3 billion worth of notes that in itself has uh is again 122 billion do a year and it's also uh there have been hundreds of thousands of invoices that have actually been financed through those loans so after putting three years of into this process on chain the network is now poised to launch production level transactions with an rwa that we're introducing or is being introduced on chain this coming uh in Q2 of this year and there's still a lot of work you have to do in order to bring offchain trade onchain and really in a lot of ways this is the dawn of a new day for trade finance and that's really brought to you by the technology built behind the network and as one of the leaders in rwa tokenization the XTC network is is poised to disrupt the trade Finance space and provide solutions to resolve the trade Finance Gap so when we look at reshaping trade Finance as a landscape we look at organizations that are bringing Innovation and value to the process disruption doesn't happen overnight and it takes time to build processes and systems but they're in place and the right Enterprises when they're standing with you side by side that's when Industries transform this is the real benefit to blockchain technology in the trade Finance space and in bringing rwas to the XTC Network and we we really believe that this is our zero to one moment so thank you very much if you're interested in learning more we're in Booth 230 which is down that way near the main stage you're free to scan no cost at all to uh any of these QR codes that we have here for our developer Forum Discord docs or you can check us out at xc. org and learn more about our Network thank you very [Applause] much