Government Bonds RWA: An Important Anchor in the Short to Medium Term Crypto Market

Government bond-related RWAs are rapidly developing in the crypto market. Currently, the asset scale of government bond-related RWAs has approached 700 million USD, a growth of 240% compared to the beginning of the year. MakerDAO's government bond RWAs have also quickly grown to a scale of several billion USD. The overall growth rate of government bond-related RWAs is quite fast.

The significance of sovereign debt RWA mainly lies in two aspects:

1. Provide a relatively safe and stable income-generating place for U-based investors, especially during bear markets.

2. Promote innovation in the DeFi asset management sector and launch more hybrid financial products.

Currently, there are 5 main business models for government bond RWA: agency model, platform model, infrastructure model, self-operated model, and hybrid model.

In terms of underlying assets, there are mainly US Treasury ETFs, US Treasury bonds, as well as a combination of Treasury bonds, government agency bonds, and reverse repos. Different underlying assets result in different cost structures.

The asset business architecture mainly includes several models such as trust architecture, SPV architecture, lending platform + SPV architecture, and on-chain fund share. As the industry develops, the scalability of the architecture will become increasingly important.

On the user side, different projects have varying requirements for KYC, minimum investment amounts, and other aspects. Projects with no KYC and low thresholds are more in line with the current habits of DeFi users.

There are two main profit distribution strategies: one is to directly allocate the earnings from the underlying assets, and the other is to adjust through deposit interest rates. The former is more user-friendly.

In terms of composability, projects that do not require KYC have a natural advantage. However, projects with strict KYC can also gain more support by expanding their scale.

Overall, projects that use government bond ETFs as the underlying asset, have no KYC requirements, low thresholds, direct income distribution, and strong combinability may have more advantages. However, in the long run, after regulatory intervention, projects with lightweight KYC may have greater opportunities.