Over-Centralization

One of the most problematic aspects of traditional RWA investment is the over-centralization of wealth and power within the hands of a few large institutions. Large banks, private equity firms, venture capitalists, and other centralized entities control the flow of capital, making it difficult for smaller investors and entrepreneurs to access funds or participate in opportunities.

This centralization of power creates an ecosystem where a small group of individuals and organizations hold disproportionate influence over entire markets. These institutions dictate terms, control pricing, and essentially shape the market to suit their interests. Smaller players, including both investors and entrepreneurs, are at the mercy of these central authorities, who have the resources and influence to dictate the direction of the market.

For example, in the real estate market, institutional investors are often able to acquire entire portfolios of properties, outbidding smaller players and leaving them with limited opportunities. In the startup world, venture capital firms dominate the funding landscape, with access to deals often limited to those with insider connections or extensive resources. The vast majority of wealth in the system remains concentrated within the hands of a few, perpetuating a cycle of inequality that prevents more equitable access to investment opportunities.

Furthermore, this centralization limits innovation. When decision-making is concentrated in the hands of a few powerful entities, the scope for new ideas and projects is often restricted. Small-scale entrepreneurs and innovators who seek to challenge the status quo are frequently excluded from opportunities simply because they lack the resources or access to these central institutions. As a result, the market stagnates, and the benefits of new ideas and technological advancements are slow to materialize.