Opportunities for Retail Investors in RWA (Part 2)

In yesterday's article, I shared my views on retail opportunities in the RWA ecosystem from the perspective of asset classes.

Overall, I believe that at least for retail investors like myself, the opportunities to gain excess returns from RWA assets are quite limited in the foreseeable future.

Today, I will share the opportunities for retail investors in the RWA ecosystem from an operational perspective.

The operational methods I am referring to mainly consist of two types:

One is to operate based on fundamental analysis, and the other is to operate based on technical indicators.

The essence of these two operational methods is the same; both aim to profit by capturing the price differences of assets, with the only distinction being the criteria used to judge the timing of buying and selling.

First, let's look at operating based on fundamental analysis.

This is the method I have written about the most in my articles and the one I adopt.

With this method, I do not monitor prices daily or frequently check technical indicators; I only focus on aspects such as the project team, construction progress, product updates, and so on.

When investing this way, I generally look at the medium to long-term yield of the asset.

From this perspective, at least given the current situation, I believe the attractiveness of RWA assets is relatively limited compared to purely on-chain assets.

Now, let's look at operating based on technical indicators.

This is a method widely adopted by quantitative investors both domestically and internationally. These investors primarily capture price differences to earn profits through sophisticated equipment, optimized algorithms, and intricate systems.

Most of those who can reap substantial benefits in this field are institutional investors, as meeting the aforementioned conditions requires substantial capital and a strong technical team.

The recently emerged large model DeepSeek, whose parent company is Huansheng Quantitative, is a company that started with quantitative trading.

In this regard, while retail players cannot be completely ruled out, I believe that due to various limitations and requirements, it is becoming increasingly difficult for retail investors to compete with institutional investors for excess profits.

With the rapid rise and fast iteration of AI technology, we can all imagine that future quantitative trading will heavily rely on AI agents, allowing them to monitor various global financial markets and continuously find price difference opportunities to earn profits.

In this situation, although retail investors also have the opportunity to use their own AI agents, I find it hard to imagine how the AI agents used by retail investors could compete with those built by companies like Huansheng Quantitative.

The main players who will truly participate in this game in the future will definitely come from traditional large financial institutions and startups supported by various venture capital, rather than retail investors with no background and limited resources.

In my previous articles, why did I specifically quote Xiao Peng's words, saying that the RWA market will establish a global, 24/7 trading platform?

The fundamental reason is that such a global, non-stop trading market can provide the greatest profit space for users engaged in quantitative trading.

In addition to the expansion in time and space, on-chain trading of RWA has another advantage that traditional financial markets cannot match:

On a unified on-chain platform (such as a certain layer-2 extension of Ethereum), precious metals, foreign exchange, stocks, bonds, etc., are all tokenized into standardized ERC-20 tokens, which will grant these assets liquidity and scalability that cannot be achieved in the off-chain world.

In off-chain trading, we can only trade a certain financial asset using limited fiat currency and that asset, for example, when trading gold, we can only buy and sell gold using US dollars or Chinese yuan, and the trading between US dollars and Chinese yuan requires another market.

Thus, the off-chain trading market is a series of fragmented, isolated markets.

However, on-chain, when all RWA assets are unified as ERC-20 tokens, we can directly trade between any two financial assets, such as buying and selling ERC-20 tokenized gold directly for ERC-20 tokenized US stocks, or using ERC-20 tokenized stocks to purchase ERC-20 tokenized bonds, and even generate financial derivatives that do not exist or cannot be imagined in the off-chain world.

This will greatly extend the liquidity and scalability of assets.

I believe this might even be another important reason why large financial institutions, led by BlackRock, are so actively promoting the RWA sector.

With significant extensions in time and space, liquidity, and scalability, the potential profit space for these financial institutions will be unimaginably large.

Therefore, compared to retail investors, the allure of RWA for financial institutions is much greater.