The Rise of Real World Assets in the Crypto Assets Industry

Real-world assets ( RWA ) are becoming a highly regarded emerging asset class in the Crypto Assets industry. As of May 2024, the RWA market has surpassed $6.6 billion, reflecting strong interest and growing demand from investors for this innovative financial product.

The rise of RWA is closely linked to the widespread application of blockchain technology. Through tokenization, physical assets such as real estate, commodities, and intellectual property can be represented on the blockchain in the form of digital tokens. This process brings several key advantages:

1. Asset ownership fragmentation: Previously indivisible assets can now be divided into smaller token units, allowing more investors the opportunity to participate.

2. Liquidity Enhancement: Tokenization simplifies the asset trading process and is expected to increase the liquidity of traditional illiquid markets.

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

RWA can serve as a source of income in decentralized finance ( DeFi ) after being tokenized and put on the chain. The industry expects that by 2030, the asset tokenization market size will reach 10 trillion dollars.

As investor interest continues to rise, some projects focused on RWA are expected to occupy advantageous positions in this growth process. RWA is gradually becoming the core of the DeFi market based on equity, physical assets, and fixed income, with an increasing number of related projects emerging.

This article will delve into Dusk Network, a compliance-focused "infrastructure" project in the Web3 RWA space. After long-term development, Dusk's mainnet is scheduled to launch in the second quarter of 2024, marking an important milestone for the project.

Dusk Network: A Public Blockchain for RWA Balancing Compliance and Privacy

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

Dusk Network adopts a unique consensus mechanism that combines Proof of Stake (PoS) and zero-knowledge encryption technology to ensure confidentiality and compliance. The platform aims to simplify regulated markets by eliminating high-cost intermediaries while still strictly adhering to regulatory standards.

Main Features

1. Regulatory-compliant blockchain solutions

Dusk Network aims to meet the regulatory needs of institutions. It is an open-source, public, permissionless blockchain that allows companies of all sizes to access.

2. Integrated Privacy Protection

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

3. Confidential Smart Contract

Dusk is one of the first blockchains with native confidential smart contract functionality, allowing for the creation and issuance of tokenized securities with privacy features. This simplifies business operations by automating audit trails, reducing administrative and legal costs, and improving overall efficiency. Institutions can also leverage these contracts to fully utilize the advantages of public networks for financial applications while ensuring compliance.

Zero-Knowledge Technology Applications

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.

Market Competition Analysis

Dusk Network is a unique player in the realm of real-world assets (RWA), focusing on regulatory compliance and emphasizing privacy protection. Here is a comparison with the main competitors:

1. Mantra

   • Features: Built on Cosmos SDK, Layer 1, RWA tokenization, decentralized identity system, compliant exchange
   • Difference from Dusk: broader application scope, higher market value
   • Advantages of Dusk: Privacy-supported blockchain, confidential smart contracts

2. Nexera

   • Features: Tokenization solutions, operating across multiple blockchains, in collaboration with Chainlink and Peaq
   • Difference from Dusk: not Layer 1, focusing on multi-chain
   • Advantages of Dusk: Emphasizing privacy, applying for EU license

3. Securitize

   • Features: Digital securities platform, blockchain tokenization, in collaboration with BlackRock
   • Difference from Dusk: Strong Web2 integration, high-profile partnerships
   • Advantages of Dusk: High yield bonds, emphasizing privacy

4. Oasis Network

   • Features: Provides customizable privacy services for dApps, independent consensus and computing layers.
   • Difference from Dusk: Achieving privacy through different layers
   • Advantages of Dusk: Native privacy, confidential smart contracts

5. Secret Network

   • Features: Privacy-protecting smart contracts built on Cosmos SDK
   • Difference with Dusk: different privacy execution measures
   • Advantages of Dusk: Native privacy, regulatory compliance

6. Ondo Finance

   • Features: DeFi and institutional-level products, RWA tokenization, structured financial products
   • Difference from Dusk: primarily focuses on DeFi and structured products
   • Advantages of Dusk: Privacy-supported blockchain, providing confidential smart contracts for RWA

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: lower visibility, a smaller market capitalization, and it is still in its early stages. Additionally, its focus on privacy and regulatory compliance may limit its appeal to a broader range of blockchain and DeFi projects.

Token Economics

The DUSK token is the core of the Dusk Network, and the details are as follows:

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
• Maximum supply: 1 billion DUSK, of which 500 million are issued before the mainnet, and 500 million are distributed to coin holders during the mainnet period of 18 to 36 months.
• Next unlock: Fully unlocked as of April 11, 2022

Token Use

• Staking and Rewards: Lock DUSK coins to earn rewards and enhance network security
• Transaction and Gas Fees: The transaction costs and Gas expenses for network interactions.
• Payment and Collateral: Use DUSK for payments within the network and as collateral for issuing crypto assets.

Token Distribution

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 possess extensive experience from top institutions and companies, supported by 17 technical team members and 9 advisory board members.

In terms of fundraising, Dusk Network has achieved significant results: the ICO raised $1 million in 2020, a private sale supported by a certain trading platform raised $8.08 million in 2018, and BlockVenture's seed fund raised $1 million.

Dusk Network is collaborating with NPEX to create Europe’s first blockchain-driven securities exchange. This initiative positions Dusk favorably against the backdrop of the increasing popularity of digital tokenization in Europe, with the market expected to reach a size of $3.7 billion by 2032.

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

Project Outlook Analysis

Favorable Factors:

1. The RWA market has huge potential: Large financial institutions have shown a strong interest in physical RWAs, highlighting the development potential in this field.
2. Private Market Opportunities: Dusk provides a secure on-chain trading solution for digital assets in the private market by combining privacy and compliance.
3. Europe's first blockchain stock exchange: Dusk is expected to become the first blockchain-based stock exchange in Europe.
4. Multi-language programming support: The Dusk blockchain supports various programming languages, including Rust, C, C++, and Go, and runs on the Piecrust( Dusk's zero-knowledge friendly virtual machine), optimizing privacy and efficiency.
5. Developer Support Program: The grant program named Thesan promises to provide 15 million DUSK to support development on the Dusk network, promoting innovation and growth in the ecosystem.
6. The mainnet is about to launch: Dusk Network plans to launch its mainnet in the second quarter of 2024.

Adverse Factors:

1. Competitive Pressure: In the RWA sector, some projects have already taken the lead and may continue to attract the majority of attention and market share.
2. Limited interest from institutional investors: Currently, no significant buying and accumulation interest in DUSK tokens has been observed from large institutional investors.
3. Strategic Risk: Dusk focuses on the infrastructure for the tokenization of physical assets, and this relatively narrow focus may bring certain strategic risks.
4. Regulatory Challenges: Navigating the complex legal frameworks for tokenized projects across different jurisdictions is challenging. The confidential smart contracts used by Dusk may face regulatory hurdles related to contract enforceability and asset classification.