"Completeness looks like deficiency, and its use does not disrupt; fullness looks like emptiness, and its use does not exhaust." Regardless of what you call it: ETF, or Delta-1 swap, or stablecoins, or real-world asset tokens (RWA)... in the end, they are essentially one thing: tools that establish the underlying financial assets, achieving a 1:1 leveraged exposure, and their purpose is to enable more people to access and trade these assets more easily and freely.
(Exchange-Traded Fund) ETF 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 an asset class without having to manage a portfolio of assets themselves. Although stablecoins seem new, their logic is quite similar: they peg their price to fiat currency, providing a stable and tradable digital instrument on-chain, allowing users to own what is equivalent to the dollar or another fiat currency in the blockchain world.
A Delta-1 contract is a common tool used by institutional investors. In some areas where there are restrictions on foreign capital or tax controls, investors can, by signing a Delta-1 contract with brokerage firms, obtain 1:1 financial exposure (i.e., delta equals 1) to the price of the asset without actually owning it, thus avoiding regulatory restrictions or compliance hurdles. Before we delve deeper, we need to return to two fundamental hypotheses in the cryptocurrency industry: first, cryptocurrencies are a new class of alternative investment assets; second, blockchain technology is a new type of distributed ledger technology. These two are often confused, but the following discussion needs to differentiate between them. The two main objectives of composite asset products of this kind are: first, lowering barriers, second, achieving diversification in distribution. For example, consider the Bitcoin ETF. Why did this generate significant market interest 18 months ago? Because it perfectly meets these two goals. First, for traditional investors who do not know how to buy cryptocurrencies, or how to use a wallet, or how to conduct a signature, the Bitcoin ETF allows them to gain BTC exposure easily through a familiar brokerage system. Second, those who have never entered into cryptocurrency can finally allocate 1%, 5%, or even 10% of their funds. When countless funds and accounts make small allocations, the accumulated flow of money will be very large. Therefore, the launch of a Bitcoin ETF (as well as Ethereum, Solana, and others) is a victory for cryptocurrencies as an 'asset class', but it has not provided direct benefits for blockchain as a 'technical solution'. The asset tokens for xStocks are the complete opposite. First, if you already own cryptocurrency, you have to convert the funds to fiat currency, then transfer it to the brokerage account, wait for the market to open, and only then can you invest in traditional assets - the entire process is exhausting and inefficient. But now, you can directly on the Gate platform, use the cryptocurrencies you own to participate with one click in trading traditional assets, providing a nearly frictionless experience. Second, the rationale for diversifying allocation remains valid. The entire cryptocurrency market is essentially a high-risk asset field; if you do not want to take on very high risks, you have no choice but to put money in stablecoins, which are relatively safe but have limited returns. In fact, the entire sector lacks medium-risk asset options, while tokenizing assets completely fills this gap, offering the possibility of distributing new assets. Thus, tokens resemble more of a victory for blockchain technology, not for the digital currencies themselves. Think about it, we have achieved cross-market trading within the cryptocurrency asset system for the first time: without the need to withdraw funds, and without the need to transition to the traditional financial system, users can trade these tokenized assets around the clock; all trading pairs support USDT, without needing to convert them to the corresponding fiat currencies, and effective cross-chain settlement is supported, allowing for free transfers. This mechanism also avoids exchange rate fluctuations and bridge costs. More importantly, we have implemented a cross-collateral mechanism: users can use their existing cryptocurrencies as collateral to gain long and short exposure to traditional assets like stocks. This is the problem that banks and brokerage firms have been trying to solve for years but have not yet succeeded, while we have achieved it. Synthetic assets, at their core, are representational tools. For example, if you are optimistic about rising oil prices in the future, it is natural that you would not buy a barrel of oil and store it in your home. Since the day humanity left the barter system, this financial idea of "representing value" began to evolve, and it has continued to expand to this day. Tokenization is just the latest phase, and the assets that can be linked to it in the future will be even more diverse. On the other hand, although the theory of asset allocation is not an ancient science, its development has surpassed seventy years. The modern portfolio theory has been widely accepted since 1952, and it is applicable to all types of assets. Today, there are #ETFs single currency funds in the market, and it is likely that ETF funds representing a basket of cryptocurrencies or crypto index funds will just be a matter of time. On the other hand, traditional asset tokenization has just begun, and products that can link a basket of stocks and track indices like MSCI are expected to become major investment tools in the future. So all this is still just the beginning.