The Tokenized RWA Race Is Moving From Issuance to Infrastructure

The number of tokenized RWA holders is constantly growing, but that doesn’t mean we have a functional market just yet.

We can see as much reflected in the market data. A mid-2026 report by Castle Labs highlighted that while the overall tokenized RWA market was estimated at over $28 billion, only $3 billion was active in DeFi. In other words, only about 10% of the total volume is being utilized instead of sitting idle.

For the last couple of years, the industry has kept most of its attention on proving that real-world assets can move on-chain. And yes, that was an important milestone to clear, but I think that hyperfocusing on it any further is a mistake.

“Can we tokenize this asset?” is a question that we’ve answered quite firmly by now, and in most cases it’s a “yes.” But here’s a harder question: “What happens after we tokenize it?”

Because putting an asset on a blockchain does not automatically give it a market. It does not tell us how it should be priced, or who should be allowed to trade it, or where its liquidity is supposed to come from, or how it should interact with other markets.

That’s the next big roadblock that we need to clear for tokenization to grow in a meaningful way, and we won’t achieve that by simply bringing in more tokens. What we need is infrastructure.

A Market Is More Than a Token

Speaking about infrastructure, let’s turn our attention to TradFi and see what we have to work with. A traditional financial asset does not exist in a vacuum: there are rules governing access, trading hours, settlement, pricing, ownership, and more. So RWAs pretty much bring an entire market structure with them.

Take a tokenized security, for example. Perhaps only investors who have completed KYC can hold it, or perhaps residents of certain jurisdictions cannot buy it. There are rules and restrictions around these assets that are deeply intertwined with how they function.

Problem is, crypto started from practically the opposite end: a token could be created, put into a liquidity pool and traded 24/7 by anyone. But while this model can work well for most digital assets, it does not work for RWAs that carry their own rules. We can’t simply plug them into the existing DEX infrastructure and expect things to just work.

In order to make it work, on-chain markets need to understand the rules of those assets and adjust accordingly. Instead of treating every token as essentially the same, trading venues need to become configurable around the asset. You should be able to define who can own which asset class, who can trade it and under what circumstances, and which compliance demands need to be followed.

The most important thing is that those parameters should be fully programmable. And the good thing is, I think today’s blockchain really can make that happen.

But at the same time, this is going to change the role of decentralized exchanges. They can no longer be simply a place where one token is swapped for another; now they will need an in-depth understanding of the rules that belong to the assets it trades. In a sense, they will be building the rules for how these assets can move across DeFi, and that makes them an intrinsic part of the market infrastructure.

On the one hand, that’s not going to be an easy transition to make, since classic DEX logic assumes tokens behave similarly. Adjusting to RWAs will take time and a lot of flexibility. But on the other hand, it will make entirely new types of assets possible.

There are assets not being tokenized today because nobody has a convincing answer for how they will trade once they are on-chain. There is no suitable market infrastructure for it today. But if we solve that problem, we’ll be able to greatly expand what assets can be brought into the market and function effectively.

Interoperability Is Not Just Moving Tokens

In order to get to that point, however, there is another problem that needs to be dealt with: fragmentation.

The more the RWA market grows, the more we’re going to have various assets spread across different blockchains, issued by different platforms and traded through different venues. That is inevitable to some degree, but it’s also a problem, because it can split liquidity inconveniently across all those markets.

Imagine the same asset trading on three separate networks: each one can have its own pool, its own liquidity pool, buyers, sellers, and, potentially, its own price. So which price is correct, then?

This is where price discovery becomes tricky, because a blockchain does not inherently know what is happening in external markets or what the asset is worth outside of its own network. It cannot simply ask Nasdaq what Nvidia is trading at — someone has to bring that information on-chain.

Traders can help solve part of this problem. If the asset is cheaper in one market and more expensive in another, they have an incentive to buy it for less and sell for more. As traders do this, the prices should gradually move closer together. Arbitrage like this is important because it creates an economic connection between otherwise fragmented markets, bringing on-chain prices closer to external reference points.

But the nature of RWAs makes this considerably more complicated. The assets themselves have additional rules and constraints, which can affect where and how these assets can be traded. As a result, moving liquidity from one market to another becomes much harder.

Even now, while still in the early stages of development, we can already see how fragmented this ecosystem is becoming. RWA.xyz (one of the most trusted data layers for tokenized assets) tracks data across more than 15 blockchain networks and hundreds of issuers. And these figures will only grow as the market itself does.

Precisely because of this, interoperability needs to mean more than “I can move this token from one chain to another.” It should also mean that the asset can move between all these markets without losing the rules that define how it is supposed to trade.

Otherwise, we haven’t really connected the markets; we have just created more places for the same asset to trade.

Institutional Money Changes the Rules

There is an interesting irony here. DeFi was originally built around the idea of removing intermediaries and making financial services permissionless, but if we want institutional capital to use this infrastructure, that idea has to change. We have to accept that real-world finance doesn’t work that way.

Banks and other financial institutions have spent decades operating within legal frameworks that are not going to suddenly disappear. Assets moving onto decentralized rails changes nothing in that regard — some of them will still only be available in certain countries, just like KYC and other compliance requirements will continue to apply.

The challenge we face is not removing those rules, but making DeFi programmable enough (flexible enough) to accommodate them. A bank, for example, should be able to use blockchain infrastructure while still following the rules it has to abide by now. Likewise, an issuer should be able to establish the rules around its asset without relying on a third party to change them later.

This last point is particularly important because large financial institutions are understandably reluctant to have their core business dependent on infrastructure they cannot control. If someone else has influence over your trading venue, they can potentially change anything: fees, rules, access conditions — and you can’t do anything about it.

For institutional participants, this is a major dependency they absolutely do not want. So if we want to attract their capital into RWAs at scale, the architecture needs to give issuers and market operators much more control over how their markets are going to work.

Again, the goal isn’t to make DeFi behave like TradFi; it’s to give institutions the sense of safety and confidence they need. While, of course, also keeping the programmability that makes blockchain infrastructure valuable.

The Next Infrastructure Layer

Ultimately, I don’t think the future of RWA markets is about creating one giant blockchain where every asset lives. Different assets will always have different conditions affecting them, and so will the institutions operating in these markets. Besides which, the market itself is still new, so it’s only natural that every network is going to try and carve out its own piece of the pie early on.

I think we will end up with several major public ecosystems alongside many permissioned networks operated by banks and other financial institutions. And that’s OK. The important thing should not be to eliminate diversity, but to make liquidity move efficiently between all these different markets.

More importantly, we need to start thinking about new economic models that combine different RWAs (potentially across different blockchains, as well) and create new use cases that would be very difficult, if not impossible, to build in TradFi.

Creating financial structures where assets from completely different markets interact in a programmable manner is, in my eyes, where the real opportunity is. We would not just be making “more efficient” versions of things we already have, but coming up with entirely new ways to conduct financial activities.

That’s the real challenge — and it’s a very interesting one to solve.