In 2020, MakerDAO officially included RWA in its strategic priorities and released guidelines and plans for the introduction of RWA. In addition to issuing stablecoin DAI, Maker has also expanded the types of collateral in addition to ETH, including tokenized real estate, invoices, and accounts receivable. The main source of income for the Maker protocol is the lending interest and liquidation penalties of the stablecoin DAI.

Current status of the protocol: From the perspective of TVL, Maker is one of the top three DeFi protocols, ranking after Lido and AAVE, and is the first CDP (Collateralized Debt Position) protocol. Currently, it only runs on Ethereum. According to defillama on 2023-06-02, the TVL is $6.29b, the 30-day protocol revenue is $23.53m, the treasury amount is $68.4m, and the governance token $MKR has been listed on mainstream exchanges such as Coinbase, Binance, Kucoin, Kraken, OKX, Huobi, Bybit, Gate, etc., with a 24h trading volume of $13.58m and a 30-day average trading volume of nearly $20m.

Token function: As the governance token of MakerDAO, $MKR has performed poorly in price, mainly because the value capture ability of the protocol is too weak, but it has played an important role in governance. The utility of $MKR tokens includes the following 4 aspects,

Governance rights: MKR token holders have the governance rights of the MakerDAO system. They can participate in voting and make decisions on important matters such as system parameters, risk management measures and protocol changes. The voting results of token holders have an important impact on the development and operation of MakerDAO.

Collateral stabilization: MKR tokens can be used as collateral in the MakerDAO system. When users generate stablecoins (such as DAI) by locking a certain amount of crypto assets (such as Ethereum), they need to pay a certain amount of MKR as collateral. This mechanism is designed to ensure the stability and security of the system.

System stability buyback: MKR tokens used as collateral are also used in the system stability buyback mechanism. When the value of the stablecoin DAI in the MakerDAO system drops and deviates from the anchor value with the US dollar, the system will automatically initiate a buyback of MKR tokens and destroy them to stabilize the system.

Risk sharing: MKR token holders bear the risks in the MakerDAO system. If the system's debts cannot be repaid or other problems occur, the value of MKR tokens may be affected. This gives MKR token holders an incentive to participate in and supervise the operation of the system to ensure the security and stability of the system.

Protocol advantages: 1. Based on EVM and L2 ecology, the RWA protocol has a more loyal user group and stable and secure network support than other public chains; 2. The institutional advantages have experienced the test of bull and bear cycles, including strict entry thresholds for collateral, plus over-collateralization and a complete auction system, which can ensure that DAI is pegged to the US dollar at a 1:1 ratio in most cases. In extreme cases, the protocol also sets emergency shutdown measures.

Protocol risks: 1. Governance attacks. The short-term large-scale convergence of MKR tokens may lead to the concentration of governance power, resulting in a series of governance attacks such as the addition of junk collateral, emergency shutdowns, and malicious modification of risk parameters. With the increase in MKR value and the protocol's own risk control measures, such risks can be prevented in most cases; 2. Market price risks. In the case of increased volatility of mainstream tokens, serial protocol auction liquidations will actively increase the supply of tokens on the market and worsen market liquidity problems. This has happened from time to time when mainstream tokens have fallen on a large scale in the past two years, but the protocol itself has not suffered large-scale losses.

Ondo Finance is one of the most popular RWA projects in the first half of this year. In April, it received a $20 million Series A financing led by Founders Fund and Pantera Capital. Ondo Finance is a decentralized investment bank. It mainly invests in US listed money market funds off-chain and conducts on-chain stablecoin lending business in cooperation with Flux Finance, including USDC, FRAX, DAI, and USDT. The current average lending rate is around 5%. The protocol income comes from an annualized management fee of 0.15%.

Users need to go through the KYC/AML process before they can trade fund tokens and use these fund tokens in licensed DeFi protocols. Ondo Finance has launched four tokenized bond products for investors to choose from, including:

US Money Market Fund (OMMF): Ondo Money Market Funds, which invests in high-credit-rated US government bonds, short-term bonds and other debt instruments. The biggest goal is to protect principal, and the current annualized return is 4.5%.

US Treasury Bonds (OUSG): Ondo Short-Term US Government Bond Fund, investing in US short-term notes ETF, currently has an annualized yield of 4.85%, $100.87M TVL.

Short-term Bonds (OSTB): Ondo Short-Term Investment Grade Bond Fund, this actively managed exchange-traded fund (ETF) seeks to maximize current income while ensuring capital preservation and daily liquidity. The ETF mainly invests in short-term investment-grade debt securities, and its average portfolio duration is generally no more than one year, with an annualized yield of 5.77%.

High Yield Bonds (OHYG): Ondo High Yield Corporate Bond Fund, mainly investing in high-yield corporate debt, currently has an annualized yield of 7.9%.

Status of the protocol: TVL $100.5m on ETH, first in the defillama RWA classification. OUSG has the largest scale of use, and OUSG holders can also deposit in Flux Finance, a decentralized lending protocol developed by Ondo Finance, to earn income. Tioga Capital investor Tzedonn mentioned in the latest report that the current market value of bond tokens is $168 million, and Ondo (OUSG) has a 61% market share, of which 28% is deposited in Flux Finance. At present, the total supply of Flux Finance has exceeded $40 million, and the market value of OUSG has exceeded $100 million. The lending protocol FLUX has been sold to Neptune Foundation.

Token functions: The functions of the governance token $ONDO include the following 4,

Platform fee payment: When users conduct transactions, loans or other financial activities on the Ondo Finance platform, they may need to pay certain fees, which can be paid using Ondo Finance tokens.

Voting rights and governance: Holders of Ondo Finance tokens can participate in the governance and decision-making process of the platform. They can vote on matters such as platform upgrades, parameter adjustments, proposal approval, etc., and express opinions and suggestions on the direction of platform development.

Rewards and incentives: The Ondo Finance platform may attract users to participate in the platform's activities and ecological construction by issuing token rewards and incentives. These rewards can be issued in the form of Ondo Finance tokens to encourage users to contribute and support the development of the platform.

Lending and collateral: On the Ondo Finance platform, users can use Ondo Finance tokens as collateral to obtain lending services. Users holding Ondo Finance tokens can use them as collateral to obtain more lending quotas or lower interest rates.

Protocol advantages: Compliance, products are either low-risk US government-related debt instruments or high-risk ETFs, both of which are compliant products with third-party accounting disclosures. At the same time, users also need to go through the KYC/AML process.

Protocol risks: 1. Out-of-circle risks, the main products are off-chain ETFs, US government debt instruments, etc., compliance can be guaranteed but will also bring market risks and credit risks outside the circle, especially high-risk corporate credit bonds such as OHYG; 2. Out-of-circle risks, the current personal opinion of the project is that it is stripping off decentralized products and turning to centralized + compliance operations. The use of governance tokens may be stripped and marginalized. In the future, only blockchain technology will be used as item profit sharing + bookkeeping + sale share purposes instead of developing in the overall decentralized direction of the project, which is contrary to the purpose of most projects in the currency circle.

The Maple Finance protocol has been developed for 3 years, and its mainstream business is lending/institutional credit lending. The on-chain business is to provide lending services for USDC and wETH, but the lending business is managed by independent centralized pool managers, including lending objects, quotas, interest rates, strategies, etc. It seems that Maple Finance is not a qualified RWA project, but in April it announced plans to launch a lending pool that invests in US Treasury bonds, supporting non-US DAOs, offshore companies, etc., which will limit the amount of funds invested in the fund pool set up by Maple Finance.

Protocol income: Maple Finance's income mainly comes from the following aspects:

Borrowing fees: Maple Finance charges a certain amount of borrowing fees by providing funds to borrowers. These fees are calculated based on the loan amount and loan term, and are determined according to the interest rate setting of the borrowing pool.

Loan handling fees: As a platform provider, Maple Finance can charge fees related to loan transactions. These fees can include loan application fees, loan disbursement fees, and loan settlement fees.

Token mining rewards: Maple Finance may issue rewards to participants through the token mining mechanism. Users holding Maple tokens can earn rewards by providing liquidity or participating in lending pools.

Platform governance fees: As the manager of lending and borrowing pools, Maple Finance may charge a certain percentage of platform governance fees. These fees are used to support and maintain the operation of the platform, including developing new features, conducting security audits, and maintaining community governance.

Status of the protocol: From the perspective of TVL, Maple Finance ranks 145 on defillama, but it ranks first among unsecured loan protocols, with a total TVL of $48.56m, a total debt of $32.22m in transit, a cumulative income of $45.6m, 18 debts in transit (because it is a centralized credit-backed debt, the lending objects are all large institutions, and the number is small), and 8 cash pools (7USDC+1ETH, with an average 30d income of 7% annualized). In addition, Maple Finance also has a small part of TVL on Solana, but with the decrease in Solana chain activities, it currently has only about $16.4k TVL, and most (99%) of the TVL comes from the ETH mainnet.

Token Function: MPL token is the native token of Maple Finance platform, with the following functions,

Payment of handling fees: MPL token can be used to pay handling fees when conducting lending transactions on Maple Finance platform. Users holding MPL token can enjoy discounts or other benefits to encourage them to use and hold the token.

Community Governance: MPL token holders can participate in the governance decision-making of Maple Finance platform. They can propose, vote and express their opinions to influence the development direction and important decisions of the platform.

Voting Rights: MPL token holders have certain rights in voting on the platform and can participate in voting on protocol parameters, protocol upgrades and other important matters.

Share Dividends: Users holding MPL tokens are eligible to share the profits of the lending pool on Maple Finance platform. These profits may come from interest paid by borrowers or other sources of income, which are distributed proportionally to users holding MPL tokens.

Incentive Mechanism: Maple Finance platform may promote the development of its ecosystem by providing incentives to MPL token holders. These incentives may include airdrops, rewards or other forms of returns to encourage users to participate and support the growth of the platform.

Protocol advantages: There is a certain degree of security. The lending risk is borne by the pool manager and a certain management fee is charged in return. Liquidity providers can enjoy the lending interest rate while bearing a smaller default risk.

Protocol risks: 1. Credit risk. The lending pool manager and the lending object are reviewed by centralized institutions, and the debt mainly relies on credit mortgage rather than asset mortgage (the mortgaged assets come from the pool manager). Therefore, once a large-scale institutional default occurs, the assets may be insolvent; 2. The threshold is too high. In order to ensure the security of the debt, the lending threshold is high, which is not suitable for most users, so the community is not popular.