Build usable real-world benefits

Understanding Real World Returns

And what R2 is doing

1. Why We Need to Reinterpret "Returns"

In the past few years, the understanding of "returns" in the on-chain world has been severely simplified.

Many users tend to focus their attention on:

• How high the APY number is
• How quickly rewards are distributed
• Whether they can exit at any time

But in the real world, returns are always the result of risk, duration, and cash flow, rather than something that appears out of thin air.

When we allocate funds to real world assets (RWA), the core question is never:

"Can you give me a return number?"

But rather:

• Where does this return come from?
• How long is the asset duration?
• Are the redemption terms clear?
• In extreme cases, does the mechanism still hold?

R2 aims to bring these questions back to the table.

2. What Assets Mainly Contribute to Real World Returns

In the traditional financial system, stable and explainable returns mainly come from several types of assets:

1. U.S. Treasuries

• Extremely low risk
• Transparent returns
• Best liquidity
• But limited long-term yield

They act more like an anchor for returns rather than an amplifier.

2. Credit Assets

• Includes short-term corporate bonds, senior loans, trade finance, etc.
• Higher returns than Treasuries
• Risk depends on: duration, collateral structure, borrower quality

These assets form the core of most "medium risk, medium return" portfolios.

3. Regional and Structured Cash Flow Assets

• Latin America, Asia, small and medium enterprise financing
• Supported by real operating cash flows
• Stricter requirements on duration and redemption

These assets are not suitable for "anytime entry and exit," but can provide stable returns under clear structures.

3. What Are the Real Issues After RWA Goes On-Chain

Many people think the issue with RWA is that the assets are not good enough. But in actual encounters, we find the opposite to be true.

RWA does not lack assets; it lacks usability.

The real issues mainly focus on:

• Mismatch between asset duration and user expectations
• Unclear redemption rules
• Inconsistent risk disclosures
• Users not knowing exactly what they hold

This is also why many "seemingly good RWA products" ultimately struggle to be widely used.

4. What R2 Is Doing

R2 is not a protocol that "invented returns."

What R2 is doing can be summarized in three points:

1. Transforming Complex Assets into Understandable Products in the Form of Vaults

R2's Vault is not aimed at pursuing extreme APY, but rather focuses on:

• Short to medium-term assets
• Clear redemption rules
• Traceable cash flows

So that users clearly know: what their money is doing.

2. Serving as the Underlying Return Execution Layer, Connecting the Real World with On-Chain

Beyond the Vault, R2 is also doing something more fundamental:

• Collaborating with asset managers and issuers
• Bringing real world returns on-chain
• Providing standardized execution and settlement methods

This makes R2 not just a "front-end product," but a return execution infrastructure.

3. Focusing on Tangible Regions and Asset Types

The underlying assets that R2 currently focuses on mainly come from:

• The United States
• Latin America (LATAM)
• Asia

These regions have:

• Clear legal and financial structures
• Mature short-term credit markets
• Existing demand for real returns

5. Core Principles of R2

In all products and collaborations, R2 always adheres to several principles:

• No promises of unexplained returns
• No hiding of asset durations
• No treating liquidity illusions as product selling points
• No using short-term incentives as long-term returns

Returns are not marketing jargon, but the result of system design.

Final Thoughts

Real world returns are not a new concept; they have long existed in the traditional financial system.

What R2 is doing is not inventing returns, but rather:

Bringing existing, explainable returns to users and end-users who truly need them in a more transparent, usable, and simpler way.

We believe that what truly matters is not "how high the returns are," but rather:

• Where the returns come from
• How risks are constrained
• Whether users understand what they hold in any market environment

R2 will continue to build products around these principles, rather than chasing short-term numbers.