a16z: 7 Charts on How Tokenization Changes the Nature of Assets

Source: a16z crypto

Compiled by Odaily (@OdailyChina); Translated by Moni

Tokenized assets, often referred to as "Real World Assets (RWAs)," are transforming the form of assets, how they flow, and the very structure of the financial system.

Just last month, the market for tokenized assets surpassed the $30 billion mark and is currently stabilizing around $34 billion (excluding stablecoins). This scale is roughly comparable to a regional bank or a top university endowment. While still minuscule relative to the global financial system, it is already large enough to have a tangible impact.

To put it in perspective, two years ago, the market for tokenized assets was less than $3 billion. But then, the landscape changed dramatically: the U.S. GENIUS Act provided a clearer regulatory framework for stablecoins, institutional-grade on-chain infrastructure matured, and a large number of financial institutions began deploying blockchain technology around the same time. Driven by these factors, the tokenized asset market has grown 10x in less than two years. (Note: While stablecoins are not included in the above statistics, they have substantially driven overall market growth by significantly simplifying on-chain payments and settlements.)

This article will use 7 charts to analyze the reasons behind the rise of tokenized assets and their future trajectory.

Tokenized Assets Take Flight: U.S. Treasury Bonds Become the Biggest Growth Engine

U.S. Treasury bonds have been the primary driver of the recent growth in the tokenized asset market.

The advantages of tokenized U.S. Treasuries are clear and intuitive: investors can hold stable, yield-bearing assets in digital form, enabling more efficient and flexible trading and transfer. For financial institutions, it enhances the efficiency of settlements and collateral rebalancing, smoothly connecting them with the digital financial market.

Crypto investors can also use tokenized Treasuries to activate idle stablecoins and capture traditional money market yields. Asset management giants like BlackRock and Franklin Templeton have followed this trend, fostering a market that has grown to hundreds of billions of dollars.

It's important to note that the growth rates of various tokenized asset types vary significantly. This is due to both the technical and regulatory difficulty of placing different assets on-chain, as well as the market acceptance after product launch.

• Asset-backed credit assets are growing the fastest. This category mainly includes tokenized home equity lines of credit and lending vault tokens. Other specialty financial assets like reinsurance contracts and Bitcoin mining notes follow, reaching a $1 billion market cap within two years.
• Venture capital-type assets took over seven years to surpass a $10 billion market cap, with actively managed strategies having a similar lifecycle. These assets have complex structures, long investment cycles, and higher operational and regulatory hurdles.
• The pace of tokenizing Treasury bonds and commodities is moderate, reaching a $10 billion market cap in 2-3 years; they are now mainstream market categories.

At the beginning of 2024, Treasury bonds and commodities accounted for nearly the entire market share of tokenized assets. After 2024, the share of categories like credit, specialty finance, and equities has steadily increased, but market concentration remains high. Currently, tokenized U.S. Treasuries and commodities together account for roughly two-thirds of the market.

Segmentation of the Tokenized Asset Market

Within the commodity tokenized asset sector, the market is highly concentrated, with gold tokens commanding the vast majority of the share. The total scale is about $5.1 billion, with gold tokens comprising approximately $5 billion. Tokens for silver and other categories amount to only $57.6 million, representing less than 0.01% of the market.

Gold is naturally suited for the tokenized asset model. Currently, the commodity token market is essentially dominated by gold. This is because gold has a global uniform standard, is easy to store, non-perishable, and has a long history of trading based on equity certificates.

Furthermore, crypto market investors have always favored gold as an asset. Bitcoin was even dubbed digital gold in its early days. Products like Tether Gold (XAUT) and Paxos Gold (PAXG) map the ownership of gold in vaults onto the blockchain, converting physical gold rights into digital tokens that can be held in on-chain wallets.

The market share of tokenized assets for emerging categories like crude oil, agricultural products, energy, and computing power is extremely low; the industry is still in its infancy.

From the perspective of underlying public chain deployment, the tokenized asset ecosystem is quite diverse. Ethereum, leveraging its first-mover advantage in DeFi and institutional adoption foundation, still holds the leading position, hosting assets worth $15.7 billion, accounting for over half of the market.

The rest of the tokenized asset market is distributed across multiple chains: BNB Chain hosts about $4 billion, Solana around $2.2 billion, Stellar about $1.7 billion, and the Bitcoin sidechain Liquid Network around $1.5 billion. Tokenized assets on XRP Ledger, ZKsync Era, and Arbitrum are each close to the $1 billion mark.

The tokenized asset industry hasn't converged on a single chain. Assets are distributed across various blockchain ecosystems based on transaction costs, liquidity needs, compliance requirements, and business partnerships. However, the most telling data point isn't the size of the tokenized asset market... but how these assets are used.

Let's dig deeper—

Most Tokenized Assets Currently Lack "Composability"

Market size isn't the only key metric; the actual utility and application value of assets are more insightful.

Bonds are the largest category of tokenized assets by market cap, standing at $15.2 billion. Yet, only 5% of this circulating supply is used in DeFi protocols, amounting to just about $800 million. The utilization rate for tokenized precious metals is similarly low. Most tokenized assets are merely used for on-chain storage and have yet to become freely composable, interoperable financial building blocks.

Niche tokenized asset categories tell a completely different story: Reinsurance tokens, with a market cap of $362 million, boast an on-chain protocol usage rate of 84%. Private credit tokens have a usage rate of 33%. Both asset types were designed from the ground up for on-chain combinatorial applications. In contrast, leading tokenized assets like Treasuries and gold are primarily positioned to simplify on-chain holding and transfer of assets. They haven't fundamentally changed the underlying operational logic of the asset. This situation highlights a core divergence in the industry: the varying degrees of on-chain nativity among different tokenized asset classes.

Some assets can freely flow and be used across chains, while others simply use the blockchain as a ledger, with limited capabilities for transfer and combination. In essence, most tokenized assets today are merely digital representations of assets—migrating the ledger on-chain without unlocking their combinatorial potential. Composability is the core value of on-chain finance and a key upgrade for the financial system.

Pantera Capital's Token Native Index shows that over 70% of tokenized assets are at the lowest level of on-chain nativity. Many tokens are simply digital vouchers for off-chain physical assets, with actual asset control still relying on off-chain ledgers and intermediaries.

The tokenized asset industry is still in its early stages. On one hand, there are assets that are merely digital records tokenized on-chain. On the other, there are native on-chain assets deeply aligned with blockchain characteristics.

While the technical infrastructure for on-chain composability is ready, and asset categories are gradually diversifying, deep integration and application have only just begun.

Future Development Trends for Tokenized Assets

Industry projections for the long-term scale of the tokenized asset market vary, but the overall consensus is that the market will continue to expand.

• McKinsey predicts the tokenized asset market size to reach $2 to $4 trillion by 2030;
• Ark Invest estimates the market could be $11 trillion;
• Boston Consulting Group, in partnership with Ripple, calculates the market size could reach $9.4 trillion by 2030 and $18.9 trillion by 2033;
• Standard Chartered Bank predicts the market will surpass $30 trillion by 2034.

Based on these institutional estimates, compared to the current market size of $34 billion, the long-term growth potential for the tokenized asset market could be exponential. Of course, the differences in these numerical projections aren't primarily due to disagreements on the speed of industry adoption, but rather different definitions and statistical scopes. The coverage of each institution varies, including differences in asset classes included, whether stablecoins and deposits are counted, and the very definition of tokenization. For instance: McKinsey focuses on bonds, credit, funds, and equities; Standard Chartered adds commodities and trade finance; Boston Consulting Group and Ripple additionally include deposits and stablecoins. Despite different statistical methodologies, the industry unanimously agrees on a massive expansion in the size of tokenized assets.

Looking at the global financial landscape, tokenized assets currently represent a minuscule fraction.

• The total global bond market exceeds $140 trillion, with tokenized bonds at just $15.2 billion, a penetration rate of 0.01%;
• The global physical gold market is valued at trillions of dollars, with tokenized gold at $5 billion, representing less than 0.02%;
• The global stock market capitalization is over $100 trillion, with tokenized equities at $1.5 billion, a mere 0.001% share.

Now, an emerging track is steadily taking shape. Assets with clear pricing, stable demand, and simple ownership, such as U.S. Treasuries, gold, and private credit, have been the first to complete on-chain deployment. At this stage, tokenization hasn't yet disrupted the underlying nature of assets; it has primarily optimized their settlement and transfer. The deep integration of assets with the digital financial system is still being explored.

Currently, tokenized assets remain largely digital, making it difficult for them to achieve programmable, composable applications. The next phase for the industry presents a formidable challenge: bringing the more complex parts of the financial system on-chain and embedding tokenized assets more deeply into a composable, internet-native financial infrastructure.