Escalation of Geopolitical Tensions in East Asia: Structural Growth Cycle of Stablecoins, RWA, and On-chain Yields

TL;DR:

East Asia will enter a high geopolitical uncertainty cycle in the next 3-5 years: US-China competition, Japan's military buildup, and supply chain relocation may tighten capital flows and increase regional financial risks. This will directly accelerate three developments in Web3:

1. Rising demand for stablecoins
2. Businesses and individuals relying more on "digital dollars" to hedge risks.
3. RWA (on-chain government bonds) becoming a key global asset
4. High liquidity, transparency, and security, suitable for cross-border use.
5. Cross-border funds relying more on on-chain channels
6. Available globally without the constraints of the banking system.

Impact on each type of participant:

• Entrepreneurs: Build cross-regional, risk-resistant, auditable, and compliant products.
• Institutions: Increase on-chain low-risk yield assets (T-Bills / Credit).
• Ordinary users: Moderate allocation of stablecoins and on-chain government bonds to enhance personal financial security.

In such an era, the world needs a neutral, secure, and transparent on-chain yield entry.

This is precisely the role of R2: providing long-term stable RWA real yield for any product and any user.

Preface:

In recent years, the geopolitical landscape in East Asia has undergone profound changes. The restructuring of global supply chains, intensified technological competition, and rising military security tensions have led the region into a more uncertain cycle.

Geopolitical changes will not only affect traditional finance but will also profoundly shape the development paths of Web3, stablecoins, RWA, cross-border payments, and on-chain dollar yield infrastructure in the coming years.

As an infrastructure project focused on "real yield" and "cross-chain dollar asset allocation," R2 aims to provide a systematic analysis of the impact of this trend on the industry from an objective and neutral perspective.

I. The Geopolitical Landscape in East Asia is Entering a "High Sensitivity Cycle"

From the perspective of international relations, changes in East Asia are mainly reflected in three aspects:

1. Long-term US-China Strategic Competition

This is not a short-term conflict but a long-term structural issue:

• Technological decoupling (chips, cloud, AI)
• Supply chain migration (semiconductors, electronics manufacturing)
• Financial sanctions and the spillover effects of the dollar system

This trend will continue for at least 5-10 years.

2. Changes in Military Policies of Japan, South Korea, and Australia

• Increased military spending
• Adjustments to security regulations
• Closer cooperation with the US on regional security

This has raised the "policy uncertainty" in East Asia.

3. Global Supply Chains Begin to "De-Singularize"

Key supply chains in manufacturing, energy, and food are diversifying to:

• Southeast Asia
• India
• The Middle East
• Latin America

This has a significant impact on Web3, as on-chain capital flows will become more active as a result.

II. How Geopolitical Risks Affect the Crypto Industry?

1. Global Demand for Stablecoins Continues to Rise

During periods of economic or geopolitical uncertainty, demand for stablecoins as "digital dollars" often increases in various regions:

• To avoid local currency fluctuations
• For cross-border settlements
• As a store of value
• For corporate treasury management

In particular, East Asian businesses and residents are increasingly reliant on USDT / USDC.

2. RWA and On-chain Government Bonds May Become "Key Assets"

US Treasury bonds remain the safest and most liquid assets globally. However, for many countries, institutions, or individuals, direct access to the US financial system faces:

• Regulatory barriers
• Liquidity restrictions
• Compliance complexities

Therefore, "on-chain forms of government bonds and credit yields" are becoming one of the best choices for global capital:

• High liquidity (T+0 to T+1 redeemable products like VanEck VBILL)
• Transparent risks
• Suitable for cross-border scenarios
• Not reliant on local financial systems

This is the fundamental reason for the explosive growth of the RWA sector in 2024-2025.

3. Cross-border Capital Flows Will Rely More on On-chain Solutions

If regional tensions escalate:

• Bank cross-border settlements slow down
• Exporting companies face settlement risks
• Capital flow regulations increase

At that time, businesses and high-net-worth individuals will rely more on:

• On-chain dollars
• On-chain yield products
• Global financial tools unrelated to specific regions

Web3 here is not speculation but a "cross-border capital pipeline."

4. Web3 Infrastructure Needs "Multi-Regional Redundancy"

Public chains, oracles, CEXs, wallets, and other infrastructures will have to:

• Deploy in multiple regions (to avoid single-country risks)
• Upgrade decentralized architectures
• Operate across multiple jurisdictions

This is beneficial for the long-term healthy development of the industry.

III. Long-term View: Geopolitical Risks Will Drive the Major Development of the Entire RWA & Real Yield Ecosystem

1. Global Assets Will Become Digital, Verifiable, and Cross-chain Transferable

• T-Bills
• Corporate Credit
• MMF
• Potential future expansions: gold, stock shares, bond baskets

This will spur a new generation of on-chain "Yield Layer," helping users globally access the real yield market.

2. Wallets, CEXs, and Fintech Will Become Mainstream Entry Points

In uncertain times, users are more concerned about:

• Safety
• Transparency
• Real yield
• Quick exit options

This will encourage more institutions to connect RWA products with wallets.

3. Regulation Will Gradually Form a Global Consensus

The US, EU, Hong Kong, and Singapore are all promoting:

• Compliant stablecoins
• Compliant RWA
• Transparent custody
• On-chain auditing

In the next 2-3 years, this will become the most important compliance direction for Web3.

IV. Implications for Entrepreneurs, Institutions, and Users

The uncertainty in the geopolitical landscape does not mean pessimism. On the contrary, it will drive the entire Web3 industry from "speculation-driven" to "structural demand-driven." Different participants will thus have different opportunity windows.

1. For Entrepreneurs: Build Cross-Cycle Products and Global Architectures

Future entrepreneurs need to have a stronger "anti-fragile" awareness than ever before.

(1) Products Must Have Cross-Regional Risk Resistance

• Regulatory, financial control, network, or cloud service fluctuations in a single region → may lead to Web3 product disruptions

• Therefore, products must operate normally in multiple regions, including:

• Multi-regional nodes

• Multi-jurisdictional deployment

• Multi-custody, multi-data source design

• A hybrid architecture of decentralization and centralization

(2) Compliance Capability Will Become a Barrier Rather Than an Obstacle

In uncertain times:

• Wallets
• CEXs
• Fintech
• Banks / Custodians

All want to ensure that collaborative projects can survive long-term and avoid compliance risks. Entrepreneurs must achieve:

• Product structures that are auditable and explainable
• Fully verifiable assets
• Transparent custody
• Comprehensive anti-money laundering (AML) processes

(3) Avoid Bundling Business in a Single Country or Narrative

• Do not rely on a single regulatory environment
• Do not rely on a single user group
• Do not rely on a single payment or financial system
• Do not rely on a single political and economic cycle

2. For Institutional Investors: Build a More Diversified, Transparent, and Redeemable Asset Portfolio

Regional uncertainty has a more direct impact on traditional investment institutions.

(1) Geopolitical Risk Hedging Will Become a "Constant" in Institutional Portfolios

Institutions will pay more attention to:

• Stable yields
• Redeemable liquidity
• Regional diversification
• Asset pools not reliant on a single country

On-chain US Treasuries, on-chain MMFs, and on-chain credit assets will thus become new allocation tools.

(2) Increase On-chain Low-Risk Yield Assets (Tokenized T-Bills / Credit)

The appeal of these assets lies in:

• Stable, transparent yields
• Compliant custodians
• Cross-regional transferability
• No need to enter the traditional US account system
• More suitable for investment restrictions in different countries

Compared to crypto-native products, on-chain US Treasuries have lower and more controllable risk exposure.

(3) Multi-Custody and Multi-Source Liquidity Will Become Mainstream Demand

In the future, institutions will not only trust:

• Individual banks
• Individual custodians
• Individual national regulations

They will demand:

• Multi-custody architecture
• Multiple asset managers
• Multi-chain deployment
• Multi-regional availability
• On-chain real-time auditing

The transparent nature of on-chain finance precisely matches this demand.

3. For Ordinary Users: Enhance Personal "Financial Anti-Fragility"

The core goal for ordinary users in times of geopolitical and economic uncertainty is to:

Protect purchasing power, enhance asset liquidity, and reduce risks from a single region.

Here are specific actionable directions:

(1) Hold Some Stablecoins (USDT / USDC / Compliant Stablecoins)

Reasons:

• To combat local currency depreciation
• Convenient for cross-border payments
• Access to global financial markets at any time
• Obtain real yields on-chain
• Not reliant on bank operating hours

This is not "speculation," but "the globalization of personal finance."

(2) Hold Some On-chain Global Assets (e.g., Tokenized T-Bills)

Benefits of on-chain government bonds:

• Stable yields
• Extremely low risks (backed by the US Treasury)
• Redeemable T+0 / T+1
• Closest to cash equivalents
• Suitable as the "base layer" for personal asset portfolios

In uncertain times, the most important thing is "certainty in assets."

(3) Avoid Putting All Assets in a Single Country or Banking System

Including:

• Domestic banks
• Single-region stocks
• Single-chain assets
• Single exchanges
• Single fiat currency deposits

A better strategy is:

• Multi-regional assets
• Multiple asset classes
• Some on-chain, some off-chain
• Liquid, easily movable, and redeemable at any time

The combination of on-chain and traditional systems serves as personal "global financial insurance."

V. R2's Positioning: Providing Certainty in Uncertain Times

R2's mission is to build: a global on-chain yield infrastructure (Yield Layer)

Allowing global users, regardless of their location, to:

• Access global government bonds and institutional credit yield markets
• Enjoy transparent and verifiable on-chain assets
• Obtain stable, secure, and long-term dollar yields
• Easily connect through wallets, CEXs, and Fintech
• Maintain medium to high liquidity

R2 has integrated:

• VanEck VBILL (T-Bills)
• Apollo Acred (Private Credit)
• Institutional products like Securitize, Fasanara, etc.
• Complete on-chain yield closed loop (sR2USD / sR2USD+)

We believe that the more intense the geopolitical changes, the more urgently the world needs a stable, neutral, and transparent on-chain yield entry.

R2 will continue to play this infrastructure role, providing long-term value for both Web3 and Web2 users.