Project Motivation

Limitations of Traditional Securities/Investment Markets - A Company Perspective

Not only is it difficult to raise funds through listing on the stock market (the process and duration of listing is long, making it difficult for startups and SMEs that need to raise funds and grow quickly), but it is also difficult to raise funds through VCs if the company lacks a network in the field. Therefore, the traditional stock/investment market is not practical for companies with products that can grow large enough if they can raise funds quickly.

Crowdfunding, which has lowered the barriers to raising funds, is also limited to 3 million dollars per year (the total amount of securities issued in the past year (securities report filed and issued + small public offering + crowdfunding amount) must not exceed 3 million dollars).

The biggest limitation is that it is virtually impossible to attract foreign investment. Since it is often difficult for individual foreign investors to participate in domestic capital markets, it is virtually impossible for many non-large companies to attract foreign investment. Therefore, even if a business is attractive enough to international investors, it may not have a chance to attract funding.

Limitations of Traditional Securities/Investment Markets - Investor Perspective

While it has the advantage of guaranteeing institutional rights, it also has a heavy tax burden such as securities transaction tax and capital gains tax, and there are markets where it is difficult for individual investors to get investment opportunities unless they have a lot of capital such as real estate. Of course, new securities are emerging in the form of real estate REITs and fragmented investments using STO tokens, but entry barriers are still high and returns are low.

STO(Security Token Offering) vs RWA(Real World Asset)

RWAs are similar to traditional security tokens (STOs), but the difference is that while STOs are securities that do not involve crypto (but utilize blockchain technology) and are therefore subject to regulation (a financial institution must play a key role in the issuance, such as controlling at least 51% of the blockchain nodes), RWAs tokenize non-securities assets into crypto and are used in the decentralized finance (DeFi) space.

Source: The Korea Economic Daily, Financial Services Commission

cOne category that is clearly the next frontrunner to take on the mission of expanding the coin ecosystem is real-world assets (RWA). RWA refers to the concept of tokenizing real-world assets such as gold, real estate, etc. on a blockchain network. This has the effect of making them more accessible to investors by offering advantages such as increased liquidity, faster settlement, and lower costs.

It's similar to an STO, but it can be utilized in a way that is efficient for both investors and companies, without getting bogged down in unnecessary regulations. The most important difference is that

  1. Tax implications: In South Korea, cryptocurrency transactions will be taxed from January 1, 2025, when the assets are transferred. The National Tax Service will classify crypto assets as other income out of total income and tax them separately.

  2. Return: Since RWA is a crypto asset and STO is a security, RWA has no upper limit because the increase in the price of the crypto asset is the return, but STO is a security with clear rights, such as the involvement of a financial institution in the issuance, but the return is limited, such as the increase in the value of the real asset or the dividend of the corporate proceeds, so the return is still very low. Despite its low profitability, the process is complicated for both investors and companies. In addition, compared to STOs, it may be thought that there is a risk because it still needs institutional complementation, but not only Chris World Asset (CWA), but also the RWA market (currently a $310 billion market, source: Byline Network) is making efforts to hedge risks such as investor protection (cooperation with various organizations such as law firms and securities companies), and RWA is based on the value of real assets, so unlike virtual assets (NFTs, existing DeFi tokens, etc.) before RWA, there is a minimum guarantee of its value.

  3. Raise funds from international markets, not just domestic ones, so you can raise enough money to scale up your company quickly and get the opportunity to showcase your company to the world.

"The tokenization of RWA, which puts the ownership of tangible assets such as stocks and bonds on the blockchain, provides the convenience of buying and selling assets around the clock because it does not involve traditional intermediaries," said Coindesk, "It will overcome the limitations of the current blockchain market, which is that it is somewhat detached from reality." "Unlike STOs, RWA is much easier to diversify business because it is not securitized and can avoid regulatory scrutiny," said the article.

Differences from traditional DeFi and crypto financial systems

If the DeFi system is utilized well, both investors and companies can win-win, but most of the DeFi projects so far lack real assets, growth engines (additional revenue sources for interest payments) compared to the total value locked (TVL) collected, and eventually shut down or collapsed in token value. As a recent example, OlympusDAO achieved a TVL of up to KRW 4 trillion overseas and KronosDAO achieved a TVL of up to KRW 110 billion in Korea, but instead of utilizing the capital to invest to cover interest payments, the service collapsed because it was only looking for a solution within the DeFi ecosystem. (In the meantime, many investors made a lot of money, but the project was not sustainable).

In other words, no matter how well the protocols and contracts that will run within the DeFi ecosystem are designed to compensate for the shortcomings of existing projects, it has been proven that the DeFi system cannot realize its potential utilization value without the value of real assets, such as generating external revenue streams through investment in real assets.

Therefore, we want to raise funds to achieve the company's roadmap through Chris World Asset, an RWA platform that makes it easy to invest in real assets and maximize returns by leveraging the cryptocurrency system, so that the company's revenue and profits can grow accordingly and the profits can be efficiently returned to investors.

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