a16z: Tokenization Is Reshaping Asset Fundamentals with a $34B Market Size

This article comes from:a16z crypto

Compiled by Odaily Planet Daily (@OdailyChina); Translator: Moni

Tokenized assets, often referred to as "real-world assets (RWA)," are transforming how assets are structured, how they move, and how financial systems are built.

Last month, the tokenized assets market size surpassed $30 billion and has since stabilized around $34 billion (excluding stablecoins), a scale comparable to that of a regional bank or a top-tier university endowment. While still minuscule compared to the global financial system, it is large enough to make a tangible impact.

Two years ago, the tokenized assets market was worth less than $3 billion, but since then, the landscape has transformed dramatically: the U.S. GENIUS Act provided a clearer regulatory framework for stablecoins, institutional-grade on-chain infrastructure has matured, and a wave of financial institutions began deploying blockchain technology around the same time—driving the tokenized assets market to grow tenfold in under two years. (Note: Although stablecoins are not included in the above figures, they have substantially accelerated overall market growth by significantly simplifying on-chain payments and settlements.)

This article uses seven graphics to analyze the reasons behind the rise of tokenized assets and their future direction.

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

The advantages of tokenized U.S. Treasuries are clear and straightforward: investors can hold stable, income-generating assets in digital form, enabling more efficient and flexible trading; financial institutions can streamline settlement and collateral mobilization, seamlessly integrating with digital financial markets.

Crypto investors can also unlock idle stablecoins by investing in tokenized treasuries to earn yields from traditional money markets, prompting major asset managers like BlackRock and Franklin Templeton to enter the space and catalyze a market worth hundreds of billions.

It should be noted that the growth rates of various tokenized assets vary significantly, due not only to differences in the technical and regulatory challenges of bringing different assets on-chain, but also to the market adoption following product deployment.

• Asset-backed credit assets have seen the fastest growth, with such tokenized assets primarily including home equity line of credit tokens and lending vault tokens; followed by specialty financial assets such as reinsurance contracts and Bitcoin mining notes, with a market capitalization target of $1 billion within two years.
• Venture capital assets took over seven years to surpass a $10 billion market cap, and active strategy assets have a similar timeline; these assets feature complex structures, long investment horizons, and higher operational and regulatory barriers.
• Government bonds and commodities are being tokenized at a moderate pace, with market capitalizations expected to exceed $10 billion within 2 to 3 years, and they have now become mainstream asset classes in the market.

At the beginning of 2024, government bonds and commodities accounted for nearly the entire market share of tokenized assets. Since then, shares of categories such as credit, specialty finance, and equities have steadily increased, but market concentration remains high. Currently, U.S. tokenized government bonds and commodities together account for approximately two-thirds of the market share.

The commodity tokenization asset sector is highly concentrated, with gold tokens accounting for the vast majority of the market, totaling approximately $5.1 billion, of which gold tokens amount to $5 billion. Silver and other categories of tokens total only $57.6 million, accounting for less than 0.01%.

Gold is naturally suited to the tokenized asset model; currently, the commodities tokenization market is dominated by gold, because gold has a global standard, is easy to store and transport, is resistant to degradation, and has long been traded through ownership certificates.

Moreover, cryptocurrency market investors have historically favored gold assets, with Bitcoin often dubbed digital gold in its early years. Products such as Tether’s XAUT and Paxos’s PAXG map ownership of physical gold stored in vaults onto the blockchain, transforming gold entitlements into digital tokens that can be held in blockchain wallets.

The tokenized asset market for crude oil, agricultural products, and emerging categories such as energy and computing power holds a very low market share and is still in its infancy.

From the perspective of underlying public chain infrastructure, the tokenized asset ecosystem is more diversified. Ethereum, leveraging its first-mover advantage in decentralized finance and its established institutional adoption, remains the leader, with assets totaling $15.7 billion, accounting for more than half of the market share.

Other tokenized asset markets are distributed across multiple public blockchains: the tokenized asset market size on BNB Chain is approximately $4 billion, Solana is about $2.2 billion, Stellar is around $1.7 billion, the Bitcoin sidechain Liquid Network is approximately $1.5 billion, and tokenized asset sizes on XRP Ledger, ZKsync Era, and Arbitrum are each close to $1 billion.

The tokenized assets industry is not consolidated on a single public blockchain; instead, assets are distributed across various blockchain ecosystems based on transaction costs, liquidity, compliance requirements, and business partnerships. However, the most telling data point is not the size of the tokenized assets market… but how these assets are being used.

Let’s continue the analysis—

Market size is not the only key metric; the actual utility value of assets is more meaningful.

Bonds are the largest category of tokenized assets, with a market capitalization of $15.2 billion, but only 5% of the circulating supply, approximately $800 million, is utilized in DeFi protocols. The utilization of tokenized precious metals is similarly low, with most tokenized assets being used only for on-chain storage and not yet functioning as freely combinable and reusable financial building blocks.

Minority tokenized asset classes show starkly contrasting performance: the reinsurance token, with a market cap of $362 million, boasts an on-chain protocol usage rate of 84%, while private credit tokens have a usage rate of 33%. Both asset types were designed from the outset to fit on-chain portfolio applications. In contrast, leading tokenized assets such as government bonds and gold are primarily intended to simplify on-chain holding and transfer, without altering the underlying operational logic of the assets. This highlights a core divergence in the tokenized assets industry: varying degrees of native on-chain integration across different tokenized asset classes.

Some assets can be freely transferred across chains, while others use the blockchain only as an accounting tool, limiting asset transfer and combination capabilities. Currently, most tokenized assets are essentially just digital representations of assets, merely migrating ledger entries onto the chain without unlocking the potential for asset composition. Composability is the core value of on-chain finance and a key driver of financial system advancement.

The Pantera Capital token-native index shows that over 70% of tokenized assets have the lowest level of on-chain nativity. Many tokens are merely digital representations of offline physical assets, with actual asset control still dependent on offline ledgers and intermediaries.

The tokenized assets industry is still in its early stages: one category consists of digital records of assets that are merely tokenized on-chain, while the other comprises native on-chain assets that are deeply aligned with blockchain characteristics.

The on-chain composite technology infrastructure is now complete, and asset categories are gradually expanding, but deep integration applications have only just begun.

Industry forecasts for the long-term size of the tokenized assets sector vary, but all agree that the market will continue to expand.

• McKinsey predicts the tokenized assets market will reach $2 to $4 trillion by the 2030s;
• Ark Invest estimates the tokenized assets market size at $11 trillion;
• Boston Consulting Group, in collaboration with Ripple, estimates that the tokenized assets market size will reach $9.4 trillion by 2030 and rise to $18.9 trillion by 2033;
• Standard Chartered Bank predicts that the tokenized assets market will surpass $30 trillion by 2034.

Based on the above institutional estimates, the tokenized assets market has the potential to grow a hundredfold compared to its current size of $34 billion. Of course, the disparity in figures does not stem from differing predictions about industry adoption speed, but rather from variations in statistical definitions. Each institution employs different scopes: some include asset classes, whether stablecoins and deposits are counted, and the definition of tokenization vary—for example, McKinsey focuses on bonds, credit, funds, and equities; Standard Chartered adds commodities and trade finance; Boston Consulting Group and Ripple further include deposits and stablecoins. Despite these differences in methodology, the industry unanimously agrees that the scale of tokenized assets will experience transformative growth.

Globally, the total value of tokenized assets remains negligible.

• The global bond market exceeds $140 trillion, while tokenized bonds amount to only $15.2 billion, accounting for 0.01%;
• The global market value of physical gold reaches hundreds of billions of dollars, while tokenized gold stands at $5 billion, accounting for less than 0.02%.
• Global stock market capitalization exceeds one trillion dollars, while tokenized stocks amount to $1.5 billion, accounting for only 0.001%.

Today, emerging sectors have steadily taken shape, with assets such as U.S. Treasuries, gold, and private credit—characterized by clear pricing, stable demand, and simple ownership—leading the way in being tokenized and brought on-chain. At this stage, tokenization has not disrupted the fundamental nature of assets; it has only optimized the settlement and transfer processes. Deep integration between these assets and the digital financial system is still under exploration.

Currently, tokenized assets remain largely at the digital level, making it difficult to achieve programmable composability. The industry’s next phase faces a tough challenge: bringing more complex components of the financial system on-chain and integrating tokenized assets more deeply into composable, internet-native financial infrastructure.