a16z: 7 Charts on How Tokenization Is Changing 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 reshaping the form of assets, how they flow, and how financial systems are built.

Just last month, the market capitalization of tokenized assets surpassed $30 billion and has since stabilized around $34 billion (excluding stablecoins). This is roughly equivalent to the size of a regional bank or a top university's endowment fund. While still minuscule compared to the global financial system, it is large enough to generate tangible impact.

To put this in perspective, two years ago, the tokenized asset market was worth less than $3 billion. But then the landscape shifted dramatically: the U.S. GENIUS Act brought clearer frameworks for stablecoin regulation, institutional-grade on-chain infrastructure matured, and a wave of financial institutions began deploying blockchain technology almost simultaneously. Driven by these factors, the tokenized asset market has grown 10x in less than two years. (Note: While stablecoins are not included in this statistic, they have substantially driven overall market growth by significantly simplifying on-chain payments and settlements.)

This article uses seven charts to analyze the reasons behind the rise of tokenized assets and where they are headed next.

Tokenized Assets Take Off: U.S. Treasuries Become the Biggest Growth Engine

U.S. Treasuries are the primary driver of recent growth in the tokenized asset market.

The advantages of tokenized 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, this streamlines settlement and collateral allocation, facilitating smooth interaction with digital financial markets.

Crypto investors can also use tokenized Treasuries to put idle stablecoins to work, earning traditional money market yields. Asset management giants like BlackRock and Franklin Templeton have strategically positioned themselves in this space, giving rise to a multi-hundred-billion-dollar market.

It's important to note that the growth rates of various tokenized asset classes vary significantly. This divergence stems both from the technical and regulatory difficulty of bringing different assets on-chain, as well as the market acceptance of the resulting products.

• Asset-backed credit classes are growing the fastest. This category primarily includes tokenized home equity lines of credit and lending vault tokens. Following closely are specialized financial assets like reinsurance contracts and Bitcoin mining notes, which reached a $1 billion market cap within two years.
• Venture capital-type assets took over seven years to surpass a $10 billion market cap. Active strategy assets have a similar timeline. These assets have complex structures and long investment cycles, leading to higher operational and regulatory hurdles.
• U.S. Treasuries and commodities have a moderate on-chain pace, reaching a $10 billion market cap in 2 to 3 years. They are now mainstream market categories.

At the beginning of 2024, U.S. Treasuries and commodities dominated almost the entire tokenized asset market share. After 2024, the share of categories like credit, specialized finance, and equities has steadily increased, but market concentration remains high. Currently, tokenized U.S. Treasuries and commodities together account for about two-thirds of the market.

The Segmentation of the Tokenized Asset Market

The commodity tokenization segment is highly concentrated internally, with gold tokens claiming the vast majority of the share. The total market size is approximately $5.1 billion, with gold tokens alone accounting for $5 billion. Tokens for silver and other commodities total only $57.6 million, representing less than 0.01% of the segment.

Gold is naturally well-suited for the tokenized asset model. Currently, the tokenized commodity market is largely dominated by gold. This is because gold has a globally uniform standard, is easy to store, does not deteriorate, and has long been traded via equity certificates.

Furthermore, the crypto market has historically favored gold as an asset; Bitcoin was even called digital gold in its early days. Products like Tether's gold token (XAUT) and Paxos's gold token (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.

Tokenized assets for emerging categories like crude oil, agricultural products, and energy/computing power hold a very small market share, indicating the industry is still in its infancy.

Looking at the underlying public chain landscape, the tokenized asset ecosystem is more diverse. Ethereum, leveraging its first-mover advantage in decentralized finance and established institutional foundation, still holds the dominant position, hosting $15.7 billion in assets and commanding over half of the market.

The remaining tokenized asset market is distributed across several blockchains: BNB Chain holds about $4 billion, Solana about $2.2 billion, Stellar about $1.7 billion, and the Bitcoin sidechain Liquid Network about $1.5 billion. The tokenized asset scales on XRP Ledger, ZKsync Era, and Arbitrum are all close to $1 billion.

The tokenized asset industry has not coalesced onto a single public chain. Instead, assets are distributed across various blockchain ecosystems based on factors like transaction costs, liquidity, 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 delve deeper—

Most Tokenized Assets Currently Lack 'Composability'

Market size isn't the only key metric; the practical utility of assets is more insightful.

Bonds are the largest tokenized asset class by market cap at $15.2 billion, but only 5% of the circulating supply, or about $800 million, is used in DeFi protocols. The utilization rate for tokenized precious metals is similarly low. Most tokenized assets are primarily used for on-chain storage and have not yet become freely combinable, reusable financial building blocks.

Smaller tokenized asset classes tell a completely different story: reinsurance tokens, with a market cap of $362 million, see an 84% utilization rate in on-chain protocols. The utilization rate for private credit tokens is 33%. Both asset classes were designed from the outset to be compatible with on-chain composable applications. In contrast, leading tokenized assets like Treasuries and gold are primarily positioned to simplify on-chain holding and transfer, without fundamentally altering the original operational logic of the assets. This situation highlights a core divergence in the tokenized asset industry: the varying degrees of "on-chain nativity" among different tokenized assets.

Some assets can flow and be used freely across chains, while others merely use the blockchain as a ledger, limiting their transfer and composability functions. Currently, most tokenized assets are essentially digitized versions of assets, merely migrating their records to the chain without unlocking their combinatorial potential. Composability is the core value of on-chain finance and a key lever for upgrading the financial system.

The Pantera Capital Token Nativity Index shows that over 70% of tokenized assets are at the lowest level of on-chain nativity. A large number of tokens are simply digital certificates for off-chain physical assets, with actual asset control still reliant on off-chain ledgers and intermediaries.

The tokenized asset industry is still in its early development stage: one category comprises assets that are only digital records on-chain in form, while the other consists of assets deeply aligned with blockchain characteristics—true native on-chain assets.

The infrastructure for on-chain composability is already in place, and the variety of asset classes is gradually expanding. However, deep, integrated applications are just beginning to emerge.

Future Trends for Tokenized Assets

Industry forecasts for the long-term scale of the tokenized asset market vary, but there is a consensus that it will continue to expand.

• McKinsey predicts a market size of $2 to $4 trillion by 2030;
• Ark Invest estimates an $11 trillion market size;
• Boston Consulting Group, in collaboration with Ripple, projects a market size of $9.4 trillion by 2030, rising to $18.9 trillion by 2033;
• Standard Chartered forecasts 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 industry could be a hundredfold. Of course, the numerical differences are not due to disagreements on the speed of industry adoption, but rather different definitions and statistical scope. The surveyed categories vary by institution, covering different asset classes, whether stablecoins and deposits are included, and the defining scope of tokenization itself. For example: 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. However, despite differing statistical methodologies, the industry unanimously agrees that the scale of tokenized assets is poised for a transformative expansion.

Looking at the global financial landscape, tokenized assets are still a drop in the ocean.

• Total global bond markets exceed $140 trillion. Tokenized bonds are only $15.2 billion, representing 0.01%.
• The global market cap of physical gold is several trillion dollars. Tokenized gold is $5 billion, less than 0.02%.
• Global equity market capitalization is over $100 trillion. Tokenized equities are $1.5 billion, just 0.001%.

Today, nascent tracks are steadily taking shape. Assets with clear pricing, stable demand, and simple ownership structures, such as U.S. Treasuries, gold, and private credit, have been the first to be successfully tokenized. At this stage, tokenization has not yet disrupted the underlying nature of assets; it primarily optimizes their settlement and transfer. Deep integration of assets with the digital financial system is still in the exploratory phase.

Currently, tokenized assets are largely in a "digitization" phase, making it difficult for assets to achieve programmable, composable use. The next phase of the industry presents a hard challenge: bringing more complex parts of the financial system on-chain and integrating tokenized assets more deeply into a composable, internet-native financial infrastructure.