The Rise of Real World Assets in the Crypto Assets Industry

Real World Assets ( RWA ) as an emerging asset class in the Crypto Assets industry is gradually gaining attention. As of May 2024, the RWA market size has exceeded $6.6 billion, demonstrating investors' strong interest in this innovative financial product. The rise of RWA is closely related to the widespread application of blockchain technology. Through tokenization, physical assets such as real estate, commodities, and intellectual property can be digitally represented on the blockchain. This process brings several key advantages:

• Asset ownership is divisible: previously indivisible assets can now be split into smaller units of tokens, allowing more investors the opportunity to participate.

• Liquidity Improvement: Tokenization simplifies the asset trading process and is expected to enhance the liquidity of traditional illiquid markets.

• Enhanced transparency and security: Blockchain technology ensures the security and transparency of transactions, reducing counterparty risk.

After RWA is tokenized and put on the blockchain, it can serve as a source of income for decentralized finance ( DeFi ). It is expected that by 2030, the market size of asset tokenization will reach 10 trillion dollars.

As investor interest continues to rise, some projects are expected to take a favorable position in this growth process. RWA is gradually becoming the core of the DeFi market based on equity, physical assets, and fixed income, with more and more related projects emerging.

This article will focus on Dusk Network, which is an infrastructure project in the Web3 RWA field that emphasizes compliance. After a long period of development, Dusk's mainnet is scheduled to launch in the second quarter of 2024, which will be an important milestone for the project.

Dusk Network: A Public Chain for RWA that Balances Compliance and Privacy

Dusk Network is a blockchain platform specifically designed for regulatory and decentralized finance. It is dedicated to issuing digital securities, aiming to achieve automated compliance while protecting user data privacy. By integrating privacy and compliance, Dusk Network facilitates secure on-chain transactions for RWA.

Dusk Network adopts a unique consensus mechanism that combines PoS and zero-knowledge encryption technology to ensure privacy and compliance. The platform aims to simplify the regulated market by eliminating high-cost intermediaries while still adhering to regulatory standards.

Main Features

Compliant Blockchain Solutions Dusk Network aims to meet the regulatory needs of institutions. It is an open-source, public, permissionless blockchain that enables businesses of all sizes to utilize.

Built-in Privacy Protection Dusk provides a privacy-focused system for the tokenization, clearing, and settlement of financial instruments. They developed the Citadel protocol, integrating a self-sovereign identity system into the Dusk blockchain, and also created an off-chain version called Shelter for private KYC for institutions. Users can selectively disclose information and protect their data.

Confidential Smart Contract Dusk is one of the first blockchains to support native confidential smart contracts, which can be used to create and issue tokenized securities with privacy enabled. This simplifies business operations by automating audits, reducing administrative and legal costs, and improving overall efficiency. Institutions can also leverage these contracts to utilize the advantages of public networks for financial applications while maintaining compliance.

Zero-Knowledge Proof Technology Dusk uses zero-knowledge proof ( ZKP ) technology, which allows verification without revealing the underlying data. By integrating PLONK - an advanced zero-knowledge encryption technology, Dusk ensures robust privacy protection.

Competitive Landscape

Dusk Network is a unique player in the RWA space, focusing on regulatory compliance and emphasizing privacy protection. Below is a comparison of its main competitors:

• Mantra: A Layer 1 built on the Cosmos SDK, supporting RWA tokenization and decentralized identity systems. Compared to Dusk, it has a broader application scope but lacks privacy-supported blockchains and confidential smart contracts.

• Nexera: Provides tokenization solutions across multiple blockchains. Collaborating with Chainlink and Peaq. Unlike Dusk's Layer 1 positioning, Nexera focuses on multi-chain support.

• Securitize: A digital securities platform that supports blockchain tokenization. Collaborates with BlackRock. In contrast, Dusk places more emphasis on privacy protection.

• Oasis Network: Provides customizable privacy services for dApps, with independent consensus and computation layers. Dusk's privacy protection is more native.

• Secret Network: Provides privacy-protecting smart contracts built on the Cosmos SDK. Dusk differs in regulatory compliance.

• Ondo Finance: Focused on DeFi and institutional-grade products, providing RWA tokenization and structured financial products. Dusk, on the other hand, offers a blockchain with privacy support for RWA and confidential smart contracts.

The advantages of Dusk lie in its privacy-supported blockchain, confidential smart contracts, and regulatory compliance, making it an ideal choice for financial dApps and institutions that require privacy and compliance. However, Dusk also faces some challenges, such as lower visibility, a smaller market cap, and still being in the early stages. Additionally, its focus on privacy and regulatory compliance may limit its application in broader blockchain and DeFi projects.

Token Economics

The DUSK token is the core of the Dusk Network, with the following details:

Market Indicators

• Market Cap: $220.72 million ( based on circulating supply and price )
• Rank: #271
• Fully Diluted Valuation ( FDV ): $237.65 million ( based on total supply and price )
• Rank: #350
• Circulating Supply: 469.62 million DUSK(, 46.96% of the maximum supply )
• Total Supply: 500 million DUSK
• Max Supply: 1 billion DUSK, of which 500 million were issued before the mainnet, and 500 million will be distributed to coin holders during the mainnet period over 18 to 36 months.
• Next unlock: Fully unlocked as of April 11, 2022

Token Utility

• Staking and Rewards: Lock DUSK tokens to earn rewards and enhance network security.
• Transaction and Gas Fees: The transaction costs and Gas expenses for network interactions
• Payment and Collateral: Using DUSK for payments within the network and as collateral for issuing Crypto Assets.

Token Allocation

The vesting period starts from May 2019 and ends in April 2022.

Team, Fundraising, and Ecosystem

The Dusk Network team combines technical and business expertise, led by founders Emanuele Francioni, Fulvio Venturelli, and Jelle Pol. They have extensive experience with top institutions and companies, supported by 17 technical team members and 9 advisory board members.

In terms of fundraising, Dusk Network has raised significant funds: the 2020 ICO raised $1 million, the private sale in 2018 raised $8.08 million, and the seed round raised $1 million.

By collaborating with NPEX, Dusk Network is pioneering the first blockchain-driven securities exchange in Europe. This initiative positions Dusk favorably in the European digital tokenization market, which is expected to reach a scale of $3.7 billion by 2032.

The latest roadmap released on September 7, 2023, outlines the plans for the mainnet launch in 2024. Key milestones include the incentivized testnet (ITN) and a comprehensive audit process.

Development Prospects

Favorable Factors

• The RWA market has broad prospects, and large institutions show strong interest in physical RWAs.
• The opportunities for digital asset in the private market are immense, Dusk supports secure on-chain RWA transactions by combining privacy and compliance.
• The status of Europe's first blockchain stock exchange
• Supports multiple programming languages, including Rust, C, C++, and Go
• The Dusk grant program provides 15 million DUSK to support developers in building applications on the Dusk network.
• The mainnet is about to launch in the second quarter of 2024.

Risk Factors

• Facing competitive pressure from other RWA projects
• Has not yet attracted the attention of a large number of institutional investors.
• A narrow focus on the tokenization infrastructure of physical assets may pose strategic risks.
• Facing complex regulatory challenges in different jurisdictions, especially regarding the enforceability of smart contracts and asset classification.