Understanding what RWA is in one article?Why BeArt focuses on this

As is well known, blockchain operates independently of the real world, with data generated and used within the encrypted world. However, real-world assets cannot be directly used on the blockchain, creating a certain barrier to entry between the two.

So, while BeArt focuses on RWA asset issuance, which broadly establishes a connection between encrypted assets and the real world, it essentially requires linkage with real-world assets. This is the definition of Real World Assets (RWA) itself, providing more precise encryption technology empowerment for real assets.

This article will introduce and explain the definition and use cases of RWA, as well as how BeArt integrates and develops it with encryption technology.

What is RWA?

RWA stands for Real World Assets, which are encrypted assets that can represent real assets for trading on the blockchain, including conventional tokens and NFTs. Real assets include assets such as real estate (housing and lease flows), loans, contracts, collateral, and any high-value items used in transactions. The field of art, which BeArt focuses on, falls into this category as well.

Traditionally defined in the context of finance, RWA is akin to asset securitization, anchoring certain types of real assets on the blockchain.

The concept of asset securitization in the financial field dates back to ancient times, with rudimentary forms emerging even during the Renaissance. The success of various types of asset securitization has profoundly changed the operation of modern financial capital.

Securitization is essentially a financial system for creating, aggregating, storing, and dispersing risks. By proposing benchmarks that assets must meet (such as deadlines, risks, etc.), the liquidity and sources of funds for the assets themselves will increase. Deploying various high-value assets through securitization can effectively reduce the barriers to market participation for users and facilitate the growth of capital and the liquidity of assets.

A simple example is mortgage-backed securities, where high property prices are often beyond the reach of ordinary people, but can be afforded through mortgage loans. This is a common example of asset securitization.

The logic of securitization in the crypto field is fundamentally the same.

However, in the real world, the development of financial markets is often constrained by various practical factors. Although the development of the Internet has brought about structural innovations in society, allowing intermediaries such as investment banks, custodians, rating agencies, and service providers to advance asset securitization at lower costs, the reality is that in many areas, the costs and conditions required for securitization are stringent.

Taking the art field as an example, due to the complexity of the international art circulation market, it is often difficult for people to assess the value-added issuance of art collections outside of valuation, and the scope of circulation is limited to narrow spaces. With few exceptions, most investors cannot effectively participate in the art market. This raises a question: How can the blockchain financial market solve the dilemmas faced by traditional financial systems?

Therefore, building effective connections between the crypto field and real-world assets has always been a problem that many practitioners are committed to solving. This includes why BTC and ETH spot ETFs, which have been highly popular in recent years, receive so much attention, which is also based on these inherent reasons.

The estimated market value of the global art market, which BeArt focuses on, is expected to be in the range of hundreds of billions of dollars. Since this field has not undergone extensive assetization operations (due to participation thresholds and market acceptance), combining it with the current $3 trillion crypto market would create a RWA track worth trillions of dollars.

However, before this can happen, BeArt must address the issue of value transfer in the art industry. That is, how to realize the circulation of art values in the crypto field through the operation of RWA.

So, we need to understand how RWA operates in the crypto world.

How does RWA operate in the crypto world?

As BeArt mainly focuses on the issuance of art RWA assets, this article will predominantly highlight the role of RWA in the art market.

• Asset custody

The essential prerequisite for real assets to function in the crypto space is the presence of reliable custodial services provided by specific crypto asset institutions. Over the past few years, the DeFi sector has seen the emergence of numerous custody services, with some credit protocols and collateral protocols offering such assurance services to crypto users.

All transactions and payments are conducted directly between borrowers, special purpose entities, and investors, occurring on-chain. This is one of the prerequisites for RWA token generation in blockchain. BeArt’s advancement in art custody also targets decentralized users for protocol integration, enabling market-oriented operations for asset issuance on the platform. Throughout this process, a significant involvement of underwriters will be incorporated, which will be consolidated into third-party risk assessment agencies rather than relying on existing oracle systems. After all, custody of real artworks and blockchain financial operations require a high level of risk resistance and centralized assurance, which distinguishes BeArt from other RWA issuers.

• Liquidity

Specific encrypted assets may lack liquidity, such as real estate contracts and non-consensus assets. High-value artworks also face this issue, as many renowned pieces have high consensus value, yet their prices remain elevated.

Therefore, establishing a fund pool with RWA as the certificate is crucial. This is related to the concept that RWAs can be considered derivatives of real artworks. Similarly, as encrypted assets anchored to artworks, RWAs also have derivative playability.

Thus, RWADs will become an important source of funds for the pool, providing corresponding liquidity, depending on the asset terms of the RWA and investor inflows and outflows.

Certainly, BeArt adopts an income-based incentive model, which includes future token issuance and the construction of a diversified scenario, effectively stimulating liquidity generation.

Additionally, RWAs can be integrated with mainstream DEXes or DeFi and CeFi applications to create more liquidity.

• Credit Agreements

Actually, unlike DeFi, the art industry has always had a high-value nature, which means both clients and auction houses themselves have a significant reputation effect. One of the longstanding criticisms of the crypto field by various institutions is the lack of a standardized credit system. A typical example is credit scoring; most DeFi protocols use liquidity tokens as collateral to ensure security, which, although eliminating credit risk, also limits the potential development of financial derivatives.

The art industry, on the other hand, can complement DeFi credit agreements by leveraging the asset valuation standards and access thresholds practiced by traditional auction houses. This allows both buyers and sellers to have better credit components. This integration of the reputation characteristics of real art with the activity of on-chain finance is what makes art RWA one of the solutions for general RWA.

While specific instances of RWA in different fields may differ, establishing a clear credit system is a common goal for all parties involved.

The measures taken by BeArt

After understanding the core use cases of RWA in the cryptocurrency field, we can further explore how BeArt implements these fundamental logics in the art sector it focuses on.

Technical benchmarks

CATALOGUE Authentication System

The CATALOGUE Authentication System is a patented technology introduced by BeArt, which enables a 100% genuine on-chain mapping of artwork. It can be understood as the “casting system” for artwork RWA assets.

The CATALOGUE Authentication System comprises two basic functionalities: “Authentication” and “Artwork Gene Card.”

Authentication: Based on blockchain and interdisciplinary science, it provides an information recording system for identity authentication and authenticity verification of artworks.

Artwork Gene Card: It is the data credential and visual presentation result of the CATALOGUE Authentication System, a unique identifier for RWA asset genealogy (archives). It helps collectors quickly understand or share the “past and present” and “DNA information” of an artwork and its derivatives.

BeArt’s Art RWA Asset Standards

The RWA asset standards advocated by BeArt employ a series of advanced technological methods, including optical scanning, image recognition, 3D modeling, photogrammetry, and more detailed techniques such as material analysis and color analysis. These technologies work together with the goal of constructing an accurate three-dimensional genetic image and data at the micron level. This not only records the basic sequence information of the artwork but also includes a detailed presentation of its three-dimensional structure.

Meta Space

In addition to the basic issuance of RWA assets, BeArt has launched a modular integrated product called the RWA Collection Bank to address the circulation and economic addition of RWAD. Its core aim is to improve the efficiency of funds and transactions for both buyers and sellers, expand business scenarios, create more value, and provide value-added financial services to users in line with the platform’s basic business model, focusing on art collections.

The RWA Collection Bank includes the following sections:

• RWA Collection: meticulously crafted by BeArt using advanced Tianlu certification technology, this section aims to provide a unique collection series based on the genetic identity of physical artworks. This authentication not only ensures the uniqueness of the artwork but also overcomes the barriers of physical space, allowing collections to circulate freely globally.
• RWA Derivatives (RWAD): The RWAD series includes two main product lines: RWA Option and RWA Fractions. Based on the underlying value assets of the RWA Collection, they offer options and fractional ownership investment opportunities.
• RWA Option inherits the characteristics of traditional financial options, allowing investors to buy or sell artworks at a predetermined price in the future, thereby hedging market volatility risks and driving value discovery in the NFT market.
• RWA Fractions is a unique innovation in the blockchain field, allowing users to participate in high-value art investments with minimal investment by combining and splitting ownership of one or a group of artworks, enjoying high returns and low risks in art investment.
• Art RWA Insurance: By providing comprehensive insurance coverage based on accurate art valuation, it reduces investment risks for collectors. This not only protects users’ investments but also brings more stability and prosperity to the entire art market.

Incentive mechanism

BeArt has constructed a comprehensive ecosystem economic model, carefully designed based on principles of macroeconomics, aimed at creating a self-sustaining and highly interactive system. In BeArt’s economic ecosystem, we introduce two complementary cycles: the external cycle and the internal cycle. These two cycles interact with each other through precise design, jointly driving the prosperity and sustainable development of the entire ecosystem.

BeArt Token

In the platform’s fundamental model, the BeArt Token plays a crucial role, serving as both a medium of exchange within and outside the ecosystem and a bridge connecting various participants and activities. The BeArt Token has dual functionality:

• Utility: The token provides users with the means to participate in ecosystem activities such as art transactions, accessing services, and community voting. It is the primary tool for value circulation within the ecosystem.
• Governance: Token holders can participate in the governance process of the BeArt ecosystem, voting on key decisions regarding ecosystem development direction, rule changes, and more, ensuring democracy and transparency of the ecosystem.

Through this carefully designed economic model, BeArt aims to establish a platform that not only promotes the circulation of art and cultural assets, but also ensures the healthy and stable development of the ecosystem. Serving as the link connecting the entire ecosystem, the BeArt Token enhances interaction and collaboration among participants and brings new vitality and opportunities to the entire art and culture sector.

Token Distribute

BeArt Token has a total supply of 1,000,000,000 (1 billion tokens). The distribution of BeArt Token is primarily divided into three major categories:

1. Community Ecosystem Incentives: This allocation is designated for various incentives within the BeArt community ecosystem, including the Ecosystem Mining Pool (MP), Community Public Offering (PO), and Strategic Investments. Its purpose is to reward all roles participating in ecosystem development.
2. Project Operation (OC): This portion is reserved for the initial development stages of the project, covering areas such as research and development, product development, operations, marketing, and community management.
3. Ecosystem Incentives: This segment comprises regular dividend rewards (DRP) and the Governance Vault (GV). It converts the profit generated during the continuous operation of the ecosystem into rewards for all users, facilitating a positive feedback loop. The dividend reward pool will continuously receive 10% to 15% of BeArt Tokens as supplementary rewards from ecosystem repurchases (not exceeding the initial limit).

We recognize that any Web3 project or blockchain project (including Bitcoin) must first have a complete economic model and business logic, followed by a robust incentive mechanism (to encourage continuous resource inflow) and the ability to form an economic loop.

Therefore, BeArt Token serves as a general equivalent within the ecosystem, not only facilitating the circulation and accumulation of ecological value but also serving as an excellent incentive tool.

In the BeArt project, we support multi-chain, multi-currency trading, and payment methods (even supporting legal and compliant exchange between fiat and cryptocurrencies). BeArt Token can circulate on any blockchain network. Therefore, the evaluation of BeArt project value can be seen as the total value of BeArt Token.

This also means that as the NFTs, RWA collections, and financial derivatives hosted by BeArt become more diverse, the overall value generated by the ecosystem will also increase, leading to a corresponding increase in the total value of BeArt Token. For a trillion-dollar market, this process will be exponential, and all users within the BeArt ecosystem will benefit from it.

Conclusion

The traditional financial system is on the verge of transformation, while the crypto sector is constantly seeking new expansion opportunities. RWA epitomizes this expansion process, as the crypto world interacts with the real world. With more and more assets being tokenized, traditional capital markets will rapidly converge towards blockchain.

However, in this process, finding clearer delineations of market segments is crucial for the eventual implementation.

The real art market targeted by BeArt is based on the potential asset volume inherent in this sector. Art RWA can provide a unique new opportunity for the crypto market, allowing art and its derivatives to circulate and add value more effectively.

It can also be foreseen that as this process advances, the capital flow efficiency related to art will significantly improve. In the future, the art market, with its stable long-term investment returns, will become a more widely accepted investment hotspot.