GREAT article by Nathan Allman

Centered around a useful observation re how people use tokenized RWAs in the real world

(lizard brain explanation below)

founder @seismic // product-focused cryptography // rookie years @ stanford, google

People use tokenized RWAs for three reasons:

[1] Buy anywhere. Global distribution and settlement for cheap

[2] Use anytime. 24/7

[3] Compose everything. Plug into defi

FOR CASH EQUIVALENTS

Need all three reasons (buy, use, compose)

FOR EVERYTHING ELSE

Don't need #2 (use anytime)

What does recognizing this help you do? Solve a major problem of tokenized RWAs, fragmented liquidity

i.e. It's bad that you currently can't sell $TSLA_TOKEN into a $TSLA bid

This is fixed if you throw away #2 (use anytime)

How? Instead of tokenizing $TSLA directly, tokenize a receipt of $TSLA

So now if you have $TSLA_TOKEN, you're NOT holding a distinct asset

You're instead holding the right to use $TSLA in a centralized broker-dealer

In other words, your $TSLA isn't on-chain. It's off-chain, controlled by smart contract txs instead of API calls

Weird, subtle distinction

Simple example. Try calling swap() on $TSLA_TOKEN

> BEFORE: Happens immediately against the pool of other on-chain assets

> AFTER: Action "settles" immediately, but the actual swap happens during market hours against the pool of all assets

The actual swap happens later, so #2 (use anytime) is sacrificed

For a good cause: $TSLA now doesn't have fragmented liquidity

And we still keep #1 (buy anywhere) / #3 (compose everything)

A prime example of breaking down what people really need from your dapp

Then cutting out everything people don't need, informed by demonstrated demand

Which results in a better product

The article evaluates the utility of these properties for

a) Cash equivalents, investments that you can treat as cash bc [high liquidity, low risk, short maturity], e.g. mm funds

b) Everything else, e.g. stocks