A16z: RWA has completed the proof of concept, but the real challenge is just beginning

7 Charts: Tokenized Assets Have Proven the Concept. Now Comes the Hard Part.

By Robert Hackett

Source:

Reprint: Mars Finance

Editor’s Note: RWA is moving from concept to real markets. According to a16z crypto statistics, excluding stablecoins, the tokenized asset market size has already surpassed $30 billion and is currently around $34 billion. Compared with the market size of less than $3 billion in mid-2024, this market has grown 10x in under two years.

This wave of growth is mainly driven by U.S. Treasuries and gold. They have clear pricing, clear demand, and are easier to bring on-chain. For investors, tokenized Treasuries allow idle stablecoins to earn yield; for institutions, it means more efficient settlement, collateral circulation, and access to digital financial markets.

But what’s truly worth paying attention to in this piece is not only that the RWA market has gotten bigger—it’s that there’s still a long road to go before it becomes real “on-chain finance.” Today, many tokenized assets are essentially still digital representations of off-chain assets. They’re mainly used for holding and transferring, but they have not yet become financial modules that can be freely composed, called, and reused within DeFi.

This means the next phase of RWA is not just about turning more assets into tokens, but about actually connecting these assets to the on-chain financial system. The more critical question ahead is whether it will ultimately remain a digitized version of traditional finance, or become part of the new generation of financial infrastructure.

Below is the original text:

The tokenized asset market—also known as “Real World Assets” (RWA)—surpassed $30 billion last month. Since then, the market size has stayed above that level and is currently close to $34 billion. (This does not include stablecoins.) This market is roughly comparable to the size of a regional bank or a top university endowment fund: it’s big enough to have an impact, but still very small relative to the entire global financial system.

In mid-2024, the tokenized asset market was still under $3 billion. Then growth started to accelerate: the GENIUS Act brought a clearer regulatory framework for U.S. stablecoins; institutional-grade on-chain infrastructure gradually matured; and a number of financial institutions shifted—from blockchain pilot projects to production-level systems—at nearly the same time. (Although stablecoins are not included in this article’s statistics, they have driven overall market growth by making on-chain payments and settlements easier.)

Under these changes, the tokenized asset market grew 10x in less than two years.

Tokenization takes off

U.S. Treasuries have driven most of the recent market growth.

Its appeal is straightforward: investors can hold a familiar, yield-generating asset in a faster, more flexible form with more digital-native characteristics; while institutions benefit from more efficient settlement, collateral circulation, and integration with digital markets.

For crypto investors, tokenized U.S. Treasuries also offer a way for idle stablecoins to earn yield while accessing returns from traditional money markets. BlackRock, Franklin Templeton, and an ever-increasing number of asset management firms are quickly responding to this demand, building a market worth billions of dollars around this logic.

Different categories of tokenized assets expand at vastly different speeds. This reflects both the complexity of onboarding different asset classes to the chain and how quickly early products find market demand.

Asset-backed lending—including tokenized home equity lines of credit (HELOCs) and lending vault tokens—reached a market cap of $1 billion just 185 days after first recording on-chain activity, making it the fastest-growing category among all tokenized asset categories, and with a significant lead.

Specialized financial products—such as tokenized reinsurance contracts and Bitcoin mining notes—are the second-fastest category, crossing the same threshold in less than two years.

On the other end, venture capital-style assets took more than seven years to reach $1 billion, and actively managed strategies took nearly the same amount of time. This reflects that these asset structures are more complex, with longer cycles, and higher operational and regulatory complexity.

Government debt and commodities have expanded relatively quickly, reaching $1 billion in about 2 to 3 years, after which they gradually became the dominant categories. By early 2024, these two asset classes nearly made up the entire tokenized asset market.

Although since 2024 other categories—such as asset-backed lending, specialized finance, equities, and actively managed strategies—have also steadily increased their market share, the market overall remains highly concentrated. Today, tokenized U.S. Treasuries and commodities together account for about two-thirds of the market.

Further breaking down the tokenized asset market

Concentration within the commodities category is even higher: gold nearly makes up the entire market. Out of a total scale of about $5.1 billion, approximately $5.0 billion comes from gold. By contrast, products related to silver and other commodities are almost negligible: the total size is only $57.6 million, accounting for 0.01%.

Gold is naturally well-suited for tokenization: it has globally standardized characteristics, is easy to store, does not spoil, and has long been widely traded in the form of paper certificates. Crypto investors have also long felt a close affinity with gold. Even before tokenized gold products appeared, Bitcoin was already referred to as “digital gold.” Products like Tether’s XAUT and Paxos’ PAXG have migrated a familiar ownership model onto blockchain infrastructure: certificates that originally represented ownership of gold stored in vaults are now tokens that can be held on-chain via wallets.

Tokenized oil, agricultural products, and emerging categories such as energy and computing power still have very low market shares and remain at a very early stage overall. At present, the tokenized commodities market is almost entirely a tokenized gold market.

As for the networks that underpin the entire tokenized asset market, the picture is more diverse. Ethereum is still dominant, holding slightly more than half the market share, with a scale of $15.7 billion. This matches its early-mover advantages in DeFi and institutional adoption.

But the rest of the tokenized asset market has already formed a multi-chain landscape: BNB Chain holds $4.0 billion, Solana $2.2 billion, Stellar $1.7 billion, Liquid Network (a Bitcoin sidechain) $1.5 billion. XRP Ledger, ZKsync Era, and Arbitrum each are close to $1.0 billion.

Tokenized assets have not converged onto a single public chain. Instead, they are dispersed across multiple blockchain ecosystems based on factors such as cost, liquidity, compliance requirements, and market entry.

However, the most thought-provoking data is not just how large the tokenized asset market is, but how these assets are being used.

Most tokenized assets are not truly “composable”

Bonds are currently the largest tokenized asset category, with a market cap of $15.2 billion. But only about 5% of the supply—roughly $0.8 billion—is deployed in DeFi protocols.

The utilization rate for precious metals is also very low. Most of these assets are simply held on-chain rather than being used as composable financial building blocks that can be further expanded, restructured, or made interoperable with other assets and protocols.

Smaller categories show different characteristics. Reinsurance tokens have a market cap of only $362 million, but 84% of their supply is deployed in DeFi; the same ratio for private credit reaches 33%.

These data are not surprising. The categories with the highest DeFi utilization were designed from the beginning for on-chain composability, such as through protocols like Nexus Mutual and Maple Finance. In contrast, the largest tokenized asset categories—U.S. Treasuries and gold—initially focused mainly on making familiar assets easier to hold and transfer on-chain, rather than fundamentally changing how they operate.

This difference points to a larger split within the tokenized asset market: not all tokenized assets have the same degree of “on-chain attributes.”

Some assets can be freely transferred and used across various on-chain applications; others mainly treat blockchain as a record-keeping infrastructure, with limited transferability and composability. (For example, RWA.xyz distinguishes between “distributed assets” and “representative assets.”)

Today, much of what is called “tokenization” is actually more like digitization: it only moves records onto the blockchain and does not truly unlock composability. This is important because composability is one of the core value propositions of on-chain financial systems and could be what makes them stronger.

Other attempts to measure “on-chain depth” also reach similar conclusions. Pantera Capital’s “Token Presence Index” scores tokenized assets based on their native on-chain characteristics. The results show that more than three-quarters of assets are in the lowest tier. In practice, many tokenized assets function almost solely as digital receipts—representing claims on certain assets that are still primarily managed by off-chain ledgers and intermediaries.

This gap—on one side, assets “shaped” onto the chain as digital records; on the other side, assets that truly leverage the unique properties of blockchain and are natively on-chain—is one of the clearest signals that the market is still in its early stages.

The infrastructure for composability already exists, and the assets are already there. But deeper integration is just beginning.

Where tokenized assets are heading

Looking ahead, different institutions have vastly different forecasts for the scale of tokenized assets, but they are highly aligned on direction: they all point to expansion.

McKinsey’s baseline scenario suggests that by 2030, this market will reach $2 trillion to $4 trillion. Ark Invest estimates $11 trillion. BCG and Ripple expect the market to reach $9.4 trillion by 2030 and rise to $18.9 trillion by 2033. Standard Chartered expects that by 2034, this market will exceed $30 trillion.

Nearly all major forecasts imply a 100x increase compared with today’s market size of roughly $30 billion. Their differences mainly lie in what is included.

The gap between $2 trillion and $30 trillion is less about judging adoption speed and more about differing definitions. Different institutions measure different things: which asset classes should be included, whether stablecoins and deposits are counted, how broad the definition of tokenization should be, and so on. McKinsey mainly focuses on bonds, loans, funds, and stocks. Standard Chartered adds commodities and trade finance. BCG and Ripple include deposits and stablecoins as well, alongside more traditional asset classes.

Despite methodological differences, the overall direction behind all these forecasts is consistent: asset tokenization is expected to far surpass today’s market size.

Relative to the scale of the global financial system, today’s tokenized asset market is still just a tiny point. The global bond market exceeds $140 trillion; tokenized bonds are about $15 billion, only around 0.01%. The total value of above-ground gold is in the hundreds of trillions; tokenized gold is about $5 billion, accounting for less than 0.02%. The global stock market value is far above $100 trillion; tokenized stocks are about $1.5 billion, only around 0.001% of the underlying market.

But an emerging market is already starting to take shape. The earliest successful categories are often the easiest assets to bring on-chain: U.S. Treasuries, gold, private credit, and other assets with clear pricing, existing demand, and relatively simple ownership structures.

In most cases, tokenization has not reinvented these underlying assets. What it changes is how these assets circulate and settle—and only just beginning to make them connect more directly to digital financial infrastructure. Today’s tokenized asset market is still often closer to digitization than to true on-chain composability. Many assets exist on blockchain infrastructure, but they have not yet become programmable financial building blocks.

The next, more difficult challenge is to bring the more complex parts of the financial system onto the chain and enable tokenized assets to be more deeply integrated into composable, internet-native financial infrastructure.

Acknowledgments: Thanks to Ryan Holloway for valuable insights, including the idea for the third chart.