Venture Trotter Weekly Review: Bringing Real World Assets On-Chain

There has been much fanfare recently over signs that crypto assets are gradually making their way into TradFi financial products (see: Fidelity’s spot ETF filing for Bitcoin, and HSBC allowing Hong Kong Customers to trade Bitcoin and Ethereum futures ETFs). While moves like these may bring a substantial amount of new capital into crypto assets, a separate exciting development that may boost Web3 adoption is the onboarding of Real-World Assets (“RWAs”) on-chain. Related to this, Robert Leshner, founder of Superstate (covered below) tweeted, “The primary limiting factor to DeFi is that crypto-native assets are the only interoperable assets. But eventually, hundreds of trillions of ‘offline’ assets will find their way onto blockchains.” A few crypto projects that are working to onboard non-crypto assets onto DeFi announced capital raises last week.

Superstate, a company that is creating a short-term government bond mutual fund on the Ethereum blockchain (to be extended to more blockchains later), raised a $4 million Seed Round. If the project receives government approval, investments will include “ultra-short duration government securities (meaning that bond prices will have low sensitivity to moves in interest rates).” Although this is not a pure crypto play, as evidenced by the fact that an off-chain Wall Street transfer agent will be the primary recordkeeper for the fund, the company said in their filing that “blockchain-integrated recordkeeping system may provide operational efficiencies and enhance shareholder experience without negatively impacting the quality of the services provided by the Fund’s transfer agent.”

PWN, a peer-to-peer lending protocol, raised $2 million in an equity raise. The company enables the tokenization of asset transfer rights (“ATR”) so the ATR token can serve as collateral in the lending protocol instead of the asset itself. The company lists a number of potential use cases here, and while they reference multiple crypto-native uses, they also include the tokenization of real-world assets  (“RWAs”) such as real estate and collectibles. PWN says that their initial vision is to bring home mortgages to DeFi be enabling borrowers to post their digital assets as collateral. PWN will update this page when there is news about a future governance token.

AlloyX, a company that brings RWAs to lending protocols, raised $2 million in a Pre-Seed Round led by Hack VC. Beginning in Q3’23, the company will enable DAOs and protocols to build a diversified portfolio of private credit and T-bill backed tokens that are backed by vaults of on-chain RWAs. As of this writing, the company integrated into 9 credit protocols and has just under $5 million value locked.

Expect Ruceto to spend significant time on the topic of tokenization of RWAs. Another promising use case for blockchain technology is the Decentralized Physical Infrastructure Network (“DePIN”), which among other things, can enable AI developers to access affordable compute power without investing in prohibitively expensive hardware or access to an expensive Web2 cloud like AWS. Part 1 of our series on DePINs will be released this week, so keep an eye on our website, Twitter page, and Discord. Also, if you are not a current subscriber, you can access this report and the rest of our existing library with a free 7-day trial included in our Founding Members campaign.

VC Investments into Crypto Projects

The full list of the institutional investments that Ruceto tracked last week is below. Links to the target company website, investment announcement, and token info are provided via hyperlinks on the Target Name, $ Raised, and Token columns respectively.