In-depth analysis of Jiritsu: Former BlackRock asset management manager joins to develop crypto-native RWA solutions

According to data from Dune Analytics, RWA has become the only crypto narrative that has experienced an increase in the past 3 months except meme. In an environment where the market as a whole is stagnant, this performance caught our attention. In fact, there has been buzz about RWA since June last year, and the narrative was completely ignited after BlackRock launched the BUIDL on-chain fund.

In front of the wind, everyone has a good sense of smell, but not many people can really "step on the right spot". In the past six months, countless teams have gathered to transform RWA, but only a few projects have successfully seized the opportunity and achieved initial results. Whether it is transformation or entry, seeing the opportunities clearly is the key for the team to get a ticket, and among the many competitors, a project called Jiritsu attracted our attention.

RWA’s liquidity fragmentation problem

The biggest benefit of tokenizing real-world assets is that it can provide faster and more efficient trading and settlement processes for these assets. This is undoubtedly the main reason why all institutions are interested in RWA. reason. Although there is no logical problem with this idea, it will encounter many difficulties at the technical level when it is actually promoted. The fragmentation of liquidity after assets are put on the chain is one of them.

When RWA is on-chain and traded, it is full of complexity, and the fragmented market makes this problem even worse. Digital Asset Research emphasized in its report in July last year that among current RWA institutions, more than 60% are trading through their own tokenized asset markets, which means that after the assets are "gotten through hardships" and completed on the chain, , can only attract a small number of fixed customers.

According to statistics from The Block, the total financing scale of the RWA track also reversed the downward trend this year and rose back to US$300 million. The current trend recovery of RWA has allowed many entrepreneurs to see new "narrative opportunities", and the number of RWA concept projects on the market is also increasing at a speed visible to the naked eye. However, most of the projects that receive financing tend to focus on particularly small vertical areas, such as natural resources, specific commodities, and art. RWA projects in the real estate sector are particularly obvious in this regard.

To what extent can this vertical category be subdivided? For example, platforms such as Balcony and Mnzl provide tokenization processes for regional real estate resources. Often the assets on the chain and the buyers and sellers who trade through on-chain tools are local institutions or government departments. You can basically see Create a semi-closed asset market.

The categorization and regionalization of RWA projects is indeed understandable. After all, many real-world assets have strong regional characteristics, which often require dedicated personnel and dedicated posts to prescribe the right medicine. However, due to different regulatory restrictions in various places, each RWA project is almost building its own on-chain process and trading platform from scratch. At the same time, there are different choices when choosing technology stacks such as the underlying public chain and smart contract development tools, which makes different Interoperability between RWAs poses significant challenges.

Many entrepreneurs have seen this fragmentation of liquidity, so during the same period, RWA asset aggregation platforms or RWA launch platforms such as Midas and Plume began to appear in the market. However, when you think about it further, you will find that they are still Facing a dilemma: If you want to establish a unified market, you must first have certain compatibility in terms of token and contract standards, which hinders the platform from aggregating RWA assets on a large scale and in multiple categories. If you take the lead in aggregating different RWA protocols, you will be limited to the role of a "launching platform" due to the differences in technology stacks between the protocols. Although it brings some liquidity to small projects, it still requires a lot of effort for the assets on the chain. Facing the problem of market fragmentation.

This is true even for the most liquid tokenized U.S. bond market. Although the scale problem of single categories has been solved with the push of BlackRock, Franklin Templeton and other institutions, you will still find that in order to Allowing future potential investors and cooperative projects to have more choices, these assets are also dispersed on different public chains such as Ethereum, Stellar, and Avalanche.

This also brings a narrative window to cross-chain interoperability protocols that have been slow to gain momentum, such as Axelar, which started laying out RWA very early. Last year, we partnered with Centrifuge and Ondo to launch Centrifuge Everywhere and Ondo Bridge respectively to optimize the protocol and inter-chain interoperability and liquidity for RWA tokenized products. In the current market environment with obvious fragmentation problems, cross-chain interoperability may not be a compensatory solution.

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

In fact, it is not difficult to see that the bottleneck of RWA breaking through the scale limit is the lack of automated processes or technologies such as AMM in the DeFi field. For RWA products, tokenization is often just the beginning. Ensuring continuous asset updates and transparency after the product is put on the chain is the key to testing efficiency and cost. Generally speaking, it includes the following aspects:

1. Financial report: Asset managers need to regularly publish financial and performance reports on assets. For example, real estate managers need to regularly provide payment dates and amounts of rental income, or details of arrears and vacancies to give investors a clearer understanding of the property’s cash. Flow dynamics.

2. Debt management: Products such as RWA credit need to regularly update the details of the loan's mortgage, repayment, interest rate adjustment and refinancing activities to let investors understand its health. This is how such products maintain investor trust. Foundation.

3. Ownership changes: If the basic ownership of the underlying assets or the legal entity that owns the assets changes, timely announcements are also required.

4. Market supervision: When the market supervision environment where the underlying assets are located changes, managers also need to report and make corresponding adjustments to ensure product compliance.

Of course, in addition to this, there are also complicated details such as asset insurance and risk management strategies, asset valuation and inspection, issuing legal entities, etc. A real-world asset starts from tokenization to information update and maintenance All require asset managers to devote a lot of energy and attention to various details throughout the entire investment life cycle. In short, in the current market environment of "redundant infrastructure", putting assets on the chain is no longer the most difficult part of RWA development. Continuous off-chain verification and legal supervision are what slow down the growth of asset categories and scale and wear down the value of assets on the chain. main reason. All this can only be discussed under the premise of putting aside the risk of centralized auditing of off-chain entities.

The scale and growth rate of RWA assets completely depend on the strength of off-chain issuance and management institutions. This is also an important reason why U.S. bond RWA products have grown rapidly after BlackRock entered the market. In comparison, other products such as Assets such as real estate and commodities have difficulty achieving economies of scale because they have not enhanced automation in their processes. Of course, the value erosion of on-chain assets also means huge business opportunities, and for now, this potential income basically flows into the hands of asset issuers and managers like Securitize.

Is it possible to build our own automated "asset oracle" system in the RWA field like ChainLink does for DeFi? We found some answers with this project Jiritsu.

Jiritsu is an Avalanche subnet dedicated to off-chain asset verification. It aims to automate and detrust off-chain asset registration and verification, while improving the economic efficiency and transparency of RWA tokenization while reducing on-chain wear and cost. . By integrating ZK proofs and MPC multi-party computation, Jiritsu is able to ensure secure and private automated verification of asset details while embedding regulatory compliance and asset integrity into tokenized products. Interestingly, the name "Jiritsu" comes from the Japanese "じりつ", which means self-reliance. In the current RWA field, where the core link relies heavily on centralized manpower, this is what is most needed to enhance the native attributes of encryption and achieve economies of scale.

Jiritsu ZK - MPC oracle aggregates data from multiple sources and verifies related calculations, and adopts a versatile data retrieval mechanism to enhance the depth of integration of different types of assets. The oracle includes two main mechanisms: "Push" and "Pull". The former allows data providers (such as asset managers) to send information directly to the oracle, while the latter allows the oracle to directly collect information from the oracle through the API. Integrate information providers' systems such as supply chain software, banking information, etc. and obtain data.

In terms of consensus mechanism, Jiritsu introduces the concept of Proof of Workflow (PoWF). The nodes in the network run an operating system driven by a computing engine and a workflow manager, using the generated ZK proof to ensure verifiable calculations and smart contract execution. Consensus mechanism to integrate the consensus mechanism directly into its MPC framework. Compared with existing oracles such as ChainLink or Pyth, Jiritsu does not need to use cross-chain bridges for information transmission when aggregating information, and it also adds information analysis and verification functions in addition to simple data feedback.

After a user or asset manager registers the assets they wish to tokenize and their detailed information in Jiritsu, the ZK-MPC validator will analyze the information and confirm the value and compliance status of the assets. The analysis process involves two types of validators, one used to review business policies and regulatory compliance, and the other used to process financial data and perform tasks such as spot price retrieval and market price assessment. After the information is analyzed and verified, ZK-MPC will generate ZK certificates and store them on the chain. Users can then claim these certificates and embed them into their own smart contracts. In this way, the entire asset tokenization process is complete. .

Jiritsu officials took Paxos’ tokenized gold product PAXG as an example to demonstrate the complete process of using its product:

First, Paxos purchases gold through a reliable gold exchange and deposits it into a custody service institution. Jiritsu users can then create validators on ZK-MPC nodes of the Jiritsu network using Jiritsu dApps on supported public chains. ZK - MPC nodes generate relevant ZK proofs by validators after retrieving gold escrow information about Paxos.

During the verification process, the ZK-MPC node is responsible for off-chain verification calculations, and the generated ZK certificates also have different levels of access and confidentiality permissions. For example, auditors can have full access to all information, while asset managers can only see to specific information relevant to their role. This verification process can update information at preset times or on demand, making it far more efficient and reliable than Paxos' current method of manually verifying inventory every quarter.

Once the ZK proof is uploaded to the Jiritsu network, Paxos can move forward with the tokenization of its custodial gold. In this link, Jiritsu also implements the concept of "chain abstraction", allowing asset issuers like Paxos to mint corresponding tokens on ideal target chains such as Solana, Avalanche or BNB Chain.

After token generation, Paxos pays nodes and validators through the Jiritsu dApp, a portion of which will be allocated to the Jiritsu network. The PAXG tokens purchased by investors will contain a certificate of the underlying gold and can use this certificate to access gold custody status information on the Jiritsu network, where Paxos can pass the cost of fees to the investor.

The dApps on the Jiritsu network are specifically designed to facilitate the writing of specific data, allowing users to create validators for any business logic, data readers, and smart contract integrations. This adaptability ensures that Jiritsu can be used for a wide range of businesses The ability to provide customized solutions is required. In addition, Jiritsu Proof under its ZK-MPC cloud service has significantly expanded the asset categories for information verification. In addition to traditional financial verification such as bank information and corporate credit, it can also verify the status information of a range of real-world assets, such as equipment in company plants. , inventory, transaction and revenue information, etc. Jiritsu recently provided inventory certificates for an Amazon supply chain company with over 100,000 SKUs and a total value of approximately US$20 million.

On this basis, Jiritsu also uses two data indicators: "Total Asset Verified" and "Totl Asset Secured" to measure its ability to put real-world assets on the chain. Influence, and use these data indicators to provide more compatible and interoperable underlying assets for DeFi protocols. According to the official Dune dashboard data, Jiritsu has verified more than 18 billion US dollars in assets so far, and has more than 60 million US dollars in assets waiting to be used by various protocols at any time.

Not long ago, Jiritsu integrated BlackRock's RWA ecosystem to provide automated on-chain certification for its Bitcoin spot ETF and BUIDL fund's reserve asset valuation and verification, compliance and KYC platform information, etc. , to facilitate other protocols to use these assets that have been uploaded to the chain more conveniently and quickly. On the other hand, although iBIT and BUIDL bring huge incremental funds to the crypto market and RWA, their asset verification still relies on self-reporting and only provides annual audits, while Jiritsu brings more transparency and cost to these products Efficient solutions.

Jiritsu has also integrated with the Republic platform, which is deeply involved in the field of RWA, allowing any asset manager to directly implement and use similar solutions, while providing a variety of tokenized products while improving compliance and operational efficiency, asset management People can use the mature infrastructure provided by Republic for tokenization, compliance, as well as marketing and customer service. Through automated and trustless verification and auditing, Jiritsu moves work that has been done by Moody's, KPMG and other institutions in the past to the chain. The fee income of this part of the traditional market exceeds 150 billion US dollars. Even if calculated at 10%, this is still a Very imaginative business ceiling.

Team Background

The two co-founders of Jiritsu Network, Jacob Guedalia and David Guedalia, are both well-known in the academic field. The former holds a bachelor's degree in physics and philosophy from New York University and a graduate degree in applied physics from the Weizmann Institute in Israel. He holds a master's degree in computational geography from Bar-Ilan University and a PhD in neural computing from the Hebrew University of Jerusalem. In addition, Jacob is a successful serial entrepreneur who has founded and exited 4 companies. Together, he and David hold more than 100 U.S. patents.

Jiritsu has raised a total of US$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, while former BlackRock asset management manager Michael Lustig also announced Join the Jiritsu team. The company plans to use the new funding to "accelerate the development and adoption of the UVC platform and Tomei RWA." Founded in 2020, Jiritsu develops technologies such as Unlimited Verifiable Computation (UVC), aiming to provide an easy-to-program method that can be applied to any workflow and generate workflow proofs.

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