#Simple Earn APY Breaks 24%# Tokenization Wave: The boundaries of assets are being reshaped

"Great accomplishment appears as if it is lacking, yet its utility is not diminished; great abundance appears as if it is overflowing, yet its utility is inexhaustible."

No matter what you call it: ETF, Delta-1 swap, stablecoin, RWA asset tokenization... Ultimately, they are essentially the same thing: a tool that anchors underlying financial assets and achieves a 1:1 synthetic exposure, aimed at enabling more people to access and trade these assets more conveniently and freely.

An ETF (Exchange-Traded Fund) is essentially a fund product that tracks a specific type of asset or index and can be traded on an exchange, allowing investors to efficiently participate in that asset class without having to manage a basket of underlying assets themselves.

Stablecoins may sound trendy, but their logic is quite similar: they are pegged to fiat currency prices, providing a price-stable and circulating digital tool on the blockchain, allowing users to hold an equivalent amount of US dollars or other fiat currencies in the blockchain world.

Delta-1 swaps are commonly used tools by institutional investors. In certain regions where there are quotas or tax controls on foreign capital, by signing Delta-1 contracts with brokers, investors can obtain a 1:1 financial exposure to the asset's price (i.e., delta is 1) without actually holding the underlying asset, thereby circumventing regulatory restrictions or compliance barriers.

Before we delve deeper, we need to return to two fundamental premises of the cryptocurrency industry: first, cryptocurrency is a new alternative asset class; second, blockchain is a new distributed ledger technology. These two are often confused with each other, but the following discussion requires us to distinguish between them.

The core objectives of this type of synthetic asset product are only two: first, to lower the threshold and second, to achieve diversified allocation.

Taking Bitcoin ETF as an example. Why did it attract significant market attention 18 months ago? Because it perfectly meets these two goals. First, for traditional investors who are not familiar with buying coins, wallets, or signature operations, Bitcoin ETF allows them to easily gain exposure to BTC through familiar brokerage systems. Second, investors who have never ventured into crypto assets can finally allocate 1%, 5%, or even 10% of their funds. When countless funds and accounts make small allocations, the accumulated inflow of funds will be substantial.

Therefore, the launch of Bitcoin (as well as Ethereum, Solana, etc.) ETFs is a victory for cryptocurrency as an "asset class", but it does not provide direct benefits to blockchain as a "technical solution".

The asset tokenization of xStocks, on the other hand, works in reverse. First of all, if you already hold cryptocurrencies, you need to convert your funds into fiat currency, transfer them to a brokerage account, wait for the market to open, and only then can you invest in traditional assets—this entire process is cumbersome and inefficient. But now, you can directly participate in traditional asset trading on the Gate platform using your existing crypto assets with just one click, providing an almost frictionless experience.

Secondly, the logic of diversified allocation still holds. The entire cryptocurrency market is essentially a high-risk asset domain; if one does not want to bear excessive risks, the only option is to park funds in stablecoins, which are relatively safe but also yield limited returns. The entire industry actually lacks options for medium-risk assets, and asset tokenization precisely fills this gap, providing a whole new possibility for asset distribution.

Therefore, tokenization is more like a victory of blockchain technology rather than a victory of cryptocurrency itself.

Think about it, we have achieved cross-market rotation within the cryptocurrency asset system for the first time: users can trade these tokenized assets 24/7 without the need to withdraw funds or switch to traditional financial systems; all trading pairs support USDT, eliminating the need to convert to corresponding fiat currencies, and supporting efficient cross-chain settlement, allowing for arbitrary transfers. This mechanism also avoids exchange rate fluctuations and bridging costs. More importantly, we have successfully implemented the cross-collateral mechanism: users can use existing cryptocurrency assets as collateral to gain long and short exposure to traditional stock-like assets. This is a problem that banks and brokers have been trying to solve for years but have not yet achieved, and we have already done it.

Synthetic assets are essentially a tool for representation. For instance, if you believe that oil prices will rise in the future, you wouldn't actually buy a barrel of crude oil to store at home. Since the day humanity moved away from barter, this financial concept of "representing value" has been evolving and continues to extend to this day. Tokenization is just the latest phase, and the asset classes that can be anchored behind it will become increasingly diverse in the future.

On the other hand, although the theory of asset allocation is not an ancient discipline, it has developed for more than seventy years. Modern Portfolio Theory has been widely accepted since 1952 and is applicable to all types of assets. Today, there are single-coin ETFs in the market, and it is only a matter of time before ETFs that can represent a basket of crypto assets or crypto index ETFs emerge. Conversely, the tokenization of traditional assets has just begun, and in the future, tokenized products that can anchor a basket of stocks and track indices like MSCI will also become mainstream investment tools.