From the data of Dune Analytics, RWA has become the only encryption narrative that has pumped in the past 3 months, apart from MEME. In the context of the overall market stagnation, this performance has attracted our follow. In fact, the voice about RWA has been continuous since June last year. After BlackRock launched the BUIDL on-chain fund, this narrative was completely ignited.

In front of the wind, everyone's sense of smell is not bad, but the person who can truly "hit the point" is not long. In the past half year, countless teams have rushed to transform RWA, but few projects have successfully seized the opportunity and shown initial results. Whether it is transformation or entry, seeing the opportunity is the key for the team to get a ticket, and among the many long competitors, a project called Jiritsu has attracted our attention.

Fragmentation of Liquidity in RWA

The biggest advantage of tokenization of real-world assets is the ability to provide faster and more efficient trading and settlement processes for these assets, which is undoubtedly the main reason why all institutions are interested in RWA. Although this idea is logically sound, it will encounter many difficulties at the technical level in practice, and the fragmentation problem of Liquidity after assets are put on the chain is one of them.

When the on-chain and transaction of RWA are complex, the fragmented market exacerbates this problem. Digital Asset Research emphasized in its report in July last year that more than 60% of the current RWA institutions trade through their own tokenization asset markets, which means that after the assets are 'experienced difficulties' and completed on-chain, they can only attract a small number of fixed customers.

According to data from The Block, the total financing scale of the RWA track has also reversed the downward trend this year, rising to 3 billion US dollars. The current trend of RWA's recovery has brought new 'narrative opportunities' to many entrepreneurs, and the concept projects of RWA in the market are also increasing at a visible speed. However, most of the funded projects tend to focus on very small vertical fields, such as natural resources, specific commodities, and art, while RWA projects in the real estate sector are particularly evident in this respect.

To what extent can this type of category be subdivided? For example, platforms such as Balcony and Mnzl provide tokenization processes for regional real estate resources. The buyers and sellers who often deal with on-chain assets and transactions through on-chain tools are local institutions or government departments, and can basically be seen as a semi-closed asset market.

The verticalization and regionalization of the RWA project can indeed be understood, after all, many real-world assets have strong regional characteristics, often requiring dedicated personnel and targeted solutions. However, due to different regulatory restrictions in different regions, almost every RWA project is building its own on-chain process and trading platform from scratch, while also facing different choices in selecting underlying public chains and smart contract development tools, which poses a huge challenge to interoperability between different RWAs.

Many entrepreneurs have seen this kind of liquidity fragmentation, so in the same period, platforms such as Midas and Plume, which aggregate RWA assets or launch RWA, began to appear in the market. However, upon further consideration, you will find that they still face a dilemma: if they want to establish a unified market, they must first have some compatibility in terms of tokens and contract standards, which hinders the platform from aggregating RWA assets on a large scale and in a variety of ways. And if they aggregate different RWA protocols first, they will be limited to the role of 'launch platform' due to the technical stack differences between protocols, although it brings some liquidity to small projects, it still faces the problem of market fragmentation for on-chain assets.

Even the best Liquidity tokenization of the US bond market is like this, although the push from institutions such as BlackRock and Franklin Templeton has solved the problem of scale for single categories, you will still find that in order to give potential investors and cooperative projects more long choices, these assets are also distributed on different public chains such as Ethereum, Stellar, Avalanche, etc.

This also brings a narrative window to the Cross-Chain Interaction interoperative protocol, which has been slow to gain momentum in terms of volume, such as Axelar, which started layout RWA very early. Last year, it cooperated with Centrifuge and Ondo respectively to launch Centrifuge Everywhere and Ondo Bridge, optimizing protocols and cross-chain interoperability and liquidity for RWA tokenization products. In the current market environment where fragmentation is evident, Cross-Chain Interaction interoperability may not be a solution.

Jiritsu ZK-MPC: Trustless, automated off-chain asset verification

In fact, it is not difficult to see that the bottleneck of breaking through the scalability limitation of RWA is the lack of automated processes or technologies like Automated Market Maker (AMM) in the Decentralized Finance (DeFi) field. For RWA products, tokenization is often just the beginning, and ensuring continuous asset updates and transparency after the product is deployed on the blockchain is the key to testing efficiency and cost. Generally, it includes the following aspects:

1. Financial Report: Asset managers need to regularly publish financial and performance reports on assets, such as real estate managers need to provide details on payment dates and amounts of rental income, or details on debts and vacancy status, to give investors a clearer understanding of the cash flow dynamics of the property.

2. Debt Management: Similar to RWA credits and other products, it is necessary to regularly update the details of the mortgage, repayment, interest rate adjustments, refinancing activities, etc. of the loan to let investors understand its health status. This is the basis for maintaining investor trust in such products.

3. Change of ownership: If there is a change in the underlying assets or the basic ownership of the legal entity that owns the asset, it also needs to be announced in a timely manner.

4. Market regulation: When there are changes in the market regulation environment where the underlying assets are located, the manager also needs to report and make corresponding adjustments to ensure the compliance of the product.

In addition, there are also complicated details such as asset insurance and Risk Management strategies, asset valuation and inspection, legal entities for issuance, etc. A real-world asset requires asset managers to invest a lot of effort in various details throughout the investment lifecycle, from tokenization to information updates and maintenance. In summary, in the current market environment of 'redundant infrastructure,' on-chain assetization is no longer the most challenging aspect of RWA development. Continuous off-chain verification and legal regulation are the main factors that slow down the rise and erode the value of on-chain assets. All of this can only be discussed under the premise of excluding off-chain centralized audit risks.

The scale and growth of RWA assets depend entirely on the strength of off-chain issuance and management institutions, which is also the key reason for the rapid rise of US bond RWA products after BlackRock's entry. In contrast, other assets such as real estate and commodities have difficulty achieving economies of scale due to the lack of process automation. Of course, the value erosion of on-chain assets also means huge business opportunities, and at present, most of these potential benefits have flowed into the hands of asset issuers and managers similar to Securitize.

Is it possible to build an automated 'asset Oracle Machine' system in the RWA field, like ChainLink in Decentralized Finance? We found some answers in the Jiritsu project.

Jiritsu is an Avalanche subnet specifically designed for the validation of off-chain assets, aiming to achieve automated and Trustless registration and validation of off-chain assets, while reducing on-chain wear and costs. By integrating ZK proof and MPC longer computation, Jiritsu ensures secure and private automated validation of asset details, while embedding regulatory compliance and asset integrity into tokenization products. Interestingly, the name 'Jiritsu' comes from the Japanese word 'じりつ', meaning self-reliance. In the current RWA field, which heavily relies on centralized manpower, this is exactly what enhances the native attributes of encryption and achieves the most needed economies of scale.

The Jiritsu ZK-MPC Oracle Machine aggregates data from long sources and verifies relevant calculations, and adopts a long function data retrieval mechanism to enhance the integrated Depth of different types of assets. The Oracle Machine includes two main mechanisms, "Push" and "Pull", the former is that data providers (such as asset managers) directly send information to the Oracle Machine, and the latter allows the Oracle Machine to directly access data from integrated information suppliers such as Supply Chain software, bank information systems, etc. through APIs.

In the aspect of Consensus Mechanism, Jiritsu introduces the concept of Proof of Workflow (PoWF), where Nodes in the network run an operating system driven by a computation engine and workflow manager, using generated ZK proofs to ensure verifiable computation and smart contract execution for the Consensus Mechanism, integrating the Consensus Mechanism directly into its MPC framework. Compared to existing Oracle Machines like ChainLink or Pyth, Jiritsu does not need to use cross-chain bridges for information transmission when aggregating information, while also adding analysis and verification functions to simple data feedback.

After users or asset managers register the assets and their detailed information for tokenization on Jiritsu, the ZK-MPC validator will analyze this information and confirm the value and compliance status of the assets. The analysis process involves two types of validators, one for reviewing business policies and regulatory compliance, and the other for handling financial data, performing spot price retrieval, market price assessment, and other tasks. After the information is analyzed and validated, ZK-MPC will generate ZK proofs and store them on the chain. Users can then claim these proofs and embed them in their own smart contracts, completing the entire asset tokenization process.

Jiritsu officials used Paxos' tokenization gold product PAXG as an example to demonstrate the complete process of their product usage:

First, Paxos purchases gold through a reliable gold exchange and deposits it into a custodian service. Then, Jiritsu users can create validators on the ZK-MPC Node of the Jiritsu network using the Jiritsu dApp supported on the public chain. After retrieving relevant information about Paxos' gold custody, the ZK-MPC Node generates the corresponding ZK proof by the validator.

During the verification process, the ZK-MPC Node is responsible for off-chain verification calculation, and the generated ZK proof also has different levels of access and confidentiality permissions. For example, auditors can have full access to all information, while asset managers can only see specific information related to their roles. This verification process can update information at a preset time or on demand, which is much more efficient and reliable than the manual verification of inventory by Paxos every quarter.

After the ZK proof is uploaded to the Jiritsu network, Paxos can proceed with the tokenization of its custodied gold. At this stage, Jiritsu also implements the concept of "chain abstraction", allowing asset issuance parties like Paxos to mint corresponding tokens on ideal target chains such as Solana, Avalanche, or BNB Chain.

After the Token is generated, Paxos pays fees to Nodes and validators through the Jiritsu dApp, with a portion allocated to the Jiritsu network. PAXG Tokens purchased by investors will include an underlying gold proof and can access gold custody status information on the Jiritsu network using that proof, with Paxos transferring the cost burden to investors at this stage.

Jiritsu dApps on the network are specifically designed for easy writing of specific data, allowing users to create validators for any business logic, data reader, and Smart Contract integration, ensuring Jiritsu's ability to provide customized solutions for a wide range of business needs. In addition, its Jiritsu Proof under the ZK-MPC cloud service significantly expands the asset categories for information verification. In addition to traditional financial verifications such as bank information and corporate credit, it can also verify the status information of a range of real-world assets, such as equipment, inventory, and transaction and income information in company factories. Recently, Jiritsu provided inventory proof for an Amazon Supply Chain company with over 100,000 SKUs, valued at approximately 20 million US dollars.

On this basis, Jiritsu also measures its impact on the on-chainization of real-world assets through two data indicators: Total Asset Verified and Total Asset Secured, and uses these data indicators to provide a more compatible and interoperable underlying asset Lego for the Decentralized Finance protocol. According to the official Dune dashboard data, Jiritsu has verified over $18 billion in assets so far, with over $60 million in assets waiting to be used by various protocols at any time.

Not long ago, Jiritsu integrated with BlackRock's RWA ecosystem to provide automated on-chain proof for the valuation, verification, compliance, and KYC platform information of its BTCSpot ETF and BUIDL fund reserve assets, making it easier for other protocols to use these assets that have already been on-chain. On the other hand, although iBIT and BUIDL have brought significant incremental funding to the encryption market and RWA, their asset verification still relies on self-reporting and only provides annual audits, while Jiritsu has brought more transparency and cost-effective solutions to these products.

Jiritsu also integrates with the Republic platform that deeply cultivates the RWA field, allowing any asset manager to directly implement and use similar solutions, improving compliance and operational efficiency while providing a wide range of long tokenization products. Asset managers can use the mature infrastructure provided by Republic for tokenization, compliance, marketing, and customer service. By automating and trustlessly verifying and auditing, Jiritsu moves the work previously done by institutions such as Moody's and PwC to on-chain. This part of the traditional market generates revenue of over $150 billion, even if calculated at 10%, it is still an imaginative business ceiling.

Team Background

Jacob Guedalia and David Guedalia, the two co-founders of Jiritsu Network, are highly respected in the academic field. The former holds a Bachelor's degree in Physics and Philosophy from New York University, as well as a graduate degree in Applied Physics from the Weizmann Institute of Science in Israel. The latter holds a Master's degree in Computational Geography from Bar-Ilan University and a Ph.D. in Neural Computation from the Hebrew University of Jerusalem. In addition, Jacob is a successful serial entrepreneur, having founded and exited four companies. Together, they hold a total of 100 long US patents.

Jiritsu raised a total of $10.2 million in the past two rounds of financing, led by gumi Cryptos Capital, with participation from Susquehanna Private Equity Investments, LLLP, Republic Capital, and other investors. Former BlackRock asset management manager Michael Lustig also announced joining the Jiritsu team. The company plans to use the new funds to "accelerate the development and adoption of the UVC platform and Tomei RWA." Jiritsu was founded in 2020 and has developed technologies such as Universal Verifiable Computation (UVC), aiming to provide a programmable method that can be applied to any workflow and generate workflow proofs.