Mantle Identifies a $127 Trillion Gap in Onchain Finance

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• Mantle says that onchain finance has failed to capture the $127 trillion global capital markets, with only $34 billion in non-stablecoin RWAs.

• This market will only be brought onchain when the sector blends four factors: settlement, compliance, liquidity, and distribution.

Tokenization has been all the rage in recent years. Global giants like the Boston Consulting Group and Standard Chartered have claimed it will unlock over $15 trillion within the next five years. However, according to Mantle, the crypto industry has barely scratched the surface, and most of what is being claimed as tokenization is just digitalization.

The global capital markets are a $127 trillion industry. Onchain finance was built to mirror these markets, but it still looks nothing like them. It has also failed to attract any meaningful capital. Stablecoins account for over 90% of tokenized assets at $322 billion, with other tokenized RWAs only hitting $33.8 billion according to rwa.xyz, and most of it is tokenized treasuries.

Data courtesy of rwa.xyz.

According to Mantle, this is because stablecoins solved an immediate payment need, while tokenized treasuries have limited structural complexity. Neither of them required the market to formulate new laws or rethink how value moves.

Equities and private credit are the biggest markets, but tokenizing them is much more complex. They require compliance built directly into the asset, investor verification, settlement that meets institutional counterparty standards and liquidity systems that merge centralized and decentralized markets.

Mantle captures the challenge, stating:

“Most blockchain infrastructure was not designed to support all four simultaneously. The gap between today’s onchain RWA market and the scale of traditional capital markets is, at its core, an infrastructure problem.”

Mantle Solves The Four-Pillar Challenge

Mantle acknowledged that there’s a massive market for equities onchain. This sector clears up to $5 trillion daily, dwarfing stablecoins and tokenized treasuries. However, most of the processing is done on traditional rails.

Tokenizing equities would introduce 24/7 settlement and open the sector to a wider investor base through fractionalization. Compliance would be easier, faster and cheaper as it would be embedded into the token natively, while distribution would be global without the need for intermediaries.

Tokenized equities are growing. According to a recent report by CoinGecko, the sector has grown from $2.1 million mid-last year to $486 million in March this year.

However, to go into the next phase, it needs a network that can solve the four-pillar challenge: settlement, compliance, liquidity, and distribution. Mantle solves them all. It offers institutional-grade finality, enforces regulatory requirements at the protocol level, offers centralized order book depth and DeFi composability together, and has access to both institutional and retail users.

Mantle stated:

“Most networks optimize for one or two of these variables. Very few can credibly support all four at an institutional scale. The next phase of the RWA market will be determined by which infrastructure they settle on.”

The Mantle report comes alongside an in-depth analysis by a16z crypto, which noted that most of what the market calls tokenization today is merely digitalization. Bonds, for instance, are the most tokenized asset. However, of the $15.2 billion in tokenized bonds, only $800 million is composable and can be deployed on DeFi protocols.

a16z crypto, which has invested in projects such as Coinbase, Lido, OpenSea and Uniswap, stated:

“Much of what gets called “tokenization” today is actually closer to digitization: moving records onto blockchains without unlocking composability. This matters because composability is one of the core value propositions of onchain financial systems and could make them much more powerful.”