Blockchain Capital Partner: Tokenization is the containerization of capital markets

Written by Aleks Larsen, General Partner at Blockchain Capital

Compiled by Chopper, Foresight News

The financial industry has long faced high costs associated with asset encapsulation. Each type of asset operates on its own separate vehicle within its own system: a mortgage loan is a collection of countless contracts, PDF files, databases, and service agreements; a private fund share corresponds to a subscription agreement and a single line entry in transfer agent forms; stock holdings are dispersed across multiple record chains held by brokers, custodians, and depositaries—examples like these are countless.

When assets move between institutions, they often require disassembly, verification, reconciliation, and then repackaging to align with the recipient’s system. The root cause of this excessive redundancy lies in each institution maintaining its own independent records of the same underlying asset and the same income voucher.

Globally, this market fragmentation imposes significant hidden social costs. While vast amounts of assets sit on global balance sheets, the vast majority of these assets incur customized operational costs when attempting to flow freely across institutions. This friction hinders capital from returning to emerging enterprises, infrastructure projects, residential real estate, and other productive sectors.

Tokenization fundamentally addresses this pain point by providing assets or financial entitlements with a standardized, machine-readable interface for interaction. Once assets can be identified and accessed on a shared network, exchanges, lending platforms, custodians, asset service providers, and applications can directly integrate with these assets without having to rebuild the entire financial infrastructure from scratch. Ultimately, capital markets will operate on a universal programmable infrastructure, significantly reducing friction costs in asset transfer, settlement, and liquidity activation.

To understand the logic of how tokenization is reshaping the world, the container is the most apt analogy.

Before the 1960s, cargo transportation varied widely: coffee packed in burlap sacks, machinery placed in wooden crates, cotton compressed into bales, and crude oil stored in barrels. Each type of goods had its own specific loading and unloading requirements, and all cargo was handled manually at docks. Skilled longshoremen mastered specialized techniques: tightly packing loads, balancing weight, and securing cargo to prevent shifting and damage during sea transport. The fundamental reason for this cumbersome process was the lack of a standardized container for global trade. The direct consequence was that ships spent far more time docked at ports than they did sailing at sea. Breakbulk cargo was repeatedly transferred, counted, and handled between ships, trucks, trains, and warehouses, leading to frequent incidents of damage, loss, and theft.

In 1956, North Carolina freight entrepreneur Malcolm McLean converted an oil tanker, the Ideal-X, to transport standardized shipping containers from the Port of Newark to Houston. Upon arrival, trucks could directly haul away the containers without opening them. The cost per ton to load the Ideal-X was far lower than traditional breakbulk handling, marking the birth of modern maritime shipping containers.

Over the next two decades, shipping containers adopted an ISO standard, prompting the entire supply chain to reorganize its divisions around the container, with each link achieving specialized operations. Ships were designed with vertical cell guides to ensure safe stacking of containers; cranes were upgraded into high-speed handling equipment compatible with standardized containers; truck chassis and rail cars were manufactured according to uniform dimensions and coupling structures; and ports evolved into massive transshipment hubs, facilitating the transfer of standardized containers between various modes of transport.

The primary impact was a significant reduction in transportation costs, including time and money. Freight cycles from Australia to Europe were drastically shortened, and ship capacity quadrupled. Trade shifted toward manufactured goods and intermediate products, as companies began to split production processes across different countries. New logistics service providers emerged to coordinate increasingly complex global networks, leading to rapid expansion of supply chains.

Secondly, economic activity has also grown significantly. The World Bank estimates that over the fifteen years following the widespread adoption of container shipping by both trading partners, bilateral trade among developed countries increased substantially. With the reconfiguration of global supply chains based on containerization and supporting infrastructure, the global economy experienced rapid growth.

Tokens are containers that carry financial entitlements. They do not hold physical goods, but rather various economic rights and operational states: asset ownership, transfer permissions, cash flow distribution rules, access restrictions, and programmable interaction logic callable by software.

Once an asset has a machine-readable standardized interface, exchanges can list it for trading, lending markets can use it as collateral, custodians can hold the asset, and wallets can automatically transfer cash flows. Various software applications can recognize the asset and execute trading rules without needing to develop separate integrations with each partner institution. This is the essential difference between tokenization and mere digitization of documents or adding new database records: all market participants can treat the token as a unified operational interface for the asset. When this effect accumulates throughout the ecosystem, the energy it unleashes will be immense.

Stablecoins are the most intuitive demonstration of tokenization’s potential. Traditional bank wire transfers of USD across borders often take days, while stablecoins can complete global transfers in seconds with transaction costs nearly zero. The foundation for all of this lies in the widespread recognition of this token interface by exchanges, custodians, fiat on/off-ramps, payment processors, and wallets across the globe. They are the new financial ports, cranes, trucks, trains, and ocean freighters, enabling value transfer through tokens. This infrastructure was originally built for Bitcoin and Ethereum; once established, stablecoins and other tokens can all leverage this same network. The growth of stablecoins attracts more users, liquidity, applications, and infrastructure, and subsequent token issuances benefit from this ever-expanding network effect.

Source: rwa.xyz

The results are evident: massive stablecoins circulate in the market, facilitating enormous transaction volumes with far faster capital turnover than traditional M1 and M2 money. Cross-border remittance costs have dropped by an order of magnitude, enabling millions worldwide to reliably access the U.S. dollar payment system. Stablecoins have proven the value of this dollar network, achieving qualitative leaps in cost, speed, and reach—each dollar now driving a multiple of economic activity.

Today, this highly liquid USD pool is attracting more assets to connect with stablecoin deposit channels. The total value of RWA tokenized assets has grown approximately tenfold compared to two years ago, and the growth rate continues to accelerate. Underlying assets include U.S. Treasuries, money market funds, commodities, private credit, equities, and various fund shares, covering diverse global markets.

Just as the global supply chain has been reshaped around containers, the global capital market will soon be rebuilt around tokens. The DeFi sector has already begun to take shape. Our portfolio project, Aave V4, allows qualified token holders to stake assets and access floating-rate credit in the lending market. The protocol includes a complete set of trading rules, with asset characteristics themselves determining eligibility—completely overturning the traditional lending market structure. Today, if an individual or business wants to collateralize assets for a loan, they first engage with financial institutions. These institutions control access, evaluate borrowers according to their own risk management processes, and offer financial products through their own channels. Financial services are tied to institutional relationships.

In the Aave ecosystem, the sole criterion for access is the asset itself. Smart contracts recognize tokens and enforce transparent rules, directly connecting to the capital markets. The relationship between asset holders and financial services is completely reversed: financial capabilities are attached to the assets themselves, not to the relationship between users and institutions.

In other words, tokens enable assets to possess software-like programmability. Once an asset is connected to a public blockchain and recognized across the network, various applications can compete to add value-enhancing services: exchanges provide trading liquidity, lending markets offer financing capabilities, and wallets automatically distribute cash flows. The asset issuer needs to deploy the asset on-chain only once, without having to build separate systems for each use case.

This will completely transform the business models of financial institutions. Currently, banks, broker-dealers, and asset management firms bundle custody, underwriting, liquidity services, asset management, and compliance into a closed product ecosystem. Cryptocurrency networks, however, drive the separation and independent, specialized operation of these functions. One institution may handle lending and loan servicing, while others provide capital, risk pricing, trade settlement, insurance, or complementary application services. Assets can flow freely between modular services through a unified interface, eliminating the need to re-enter or rebuild data in each service provider’s system.

The center of competitive advantage is shifting from large institutions to open networks. In traditional financial systems, large institutions can offer a broader range of products because they can absorb the fixed infrastructure costs associated with each asset class and customer segment. In contrast, on public blockchain networks, much of the underlying infrastructure is shared. New entrants can directly connect to assets, funds, and users without having to rebuild ledgers, exchanges, custody, or settlement systems, significantly lowering barriers to entry and operation.

The network effect of stablecoins has entered a positive feedback loop. Capital markets will gradually transition into open networks, with a wide range of specialized financial services centered around tokenized assets. Under this new paradigm, institutions will compete based on the quality of capital, underwriting capabilities, risk management standards, and asset management and distribution strength—no longer on ownership of exclusive databases or monopolistic control over user access to markets.

The most important outcome of this transformation is the creation of a borderless global capital market.

Today, capital markets are bottlenecked by major institutions. The vast majority of individuals and businesses cannot directly access capital markets and are limited to the narrow selection of products that institutions choose to offer. Institutions unilaterally determine their target clientele, geographic coverage, asset classes, and trading limits.

Investors also face reverse constraints: they cannot freely invest in all global assets, but are limited to purchasing instruments that have been underwritten, structured, and distributed by institutions.

Ultimately, the vast majority of global economic value remains isolated outside existing capital markets. Small accounts receivable, local infrastructure projects, private enterprises, emerging market credit, and non-standard cash flows—all of which possess inherent economic value—are hindered by excessive fragmentation, geographic dispersion, and small scale. The high operational costs of traditional finance prevent these assets from accessing financing. Investment opportunities are real, and capital supply is abundant, but there is no connecting network linking the two.

Tokenization has changed all of this, providing assets with a standardized interface that enables them to be discovered globally. As the financial system rebuilds itself around this new interface, the cost of participation for everyone will drop dramatically. Finance becomes a native capability of software, allowing upper-layer applications to deeply serve niche asset classes and regional markets, reaching areas traditional finance cannot access. Business applications that previously couldn’t integrate with high-end financial services can now easily embed functionalities such as payments, working capital financing, collateral management, and fund management, bringing vast amounts of idle “sleeping assets” into on-chain capital markets. Objectively speaking, tokenization cannot magically grant funding to assets with no inherent financing value—but many high-quality assets currently excluded from the system are poised to participate in market trading in the future.

Artificial intelligence will further amplify this transformation by taking over various operational tasks. AI agents can assess assets, price risk, allocate capital, manage collateral, and settle transactions in global machine-readable markets, continuously reducing the cost of financial services. When combined with crypto payment channels, previously customized and intermittent trading markets will evolve into 24/7, global, automated markets, creating new opportunities worldwide and breaking down institutional barriers to capital.

Capital allocation is the most fundamental regulatory tool in human society. It determines the direction of corporate expansion, the scale of technology deployment, and the location of residential and industrial construction, shaping regional economic development patterns. Assets that were previously too small, localized, customized, or costly to operate within traditional financial systems gain commercial underwriting value once the costs of connection, financing, and management plummet.

This is also a deeper transformation brought about by containers. Containers have made entirely new models of trade and production economically viable. Goods can be manufactured in the lowest-cost regions, assembled elsewhere, and sold globally, significantly reducing the overall cost of supply chain coordination.

Tokens will bring the same transformation to capital. Over the coming decades, global balance sheets will shift from isolated, siloed ledgers to an open market accessible and navigable by software, allowing capital to flow freely based on the intrinsic value of assets, rather than being constrained by who controls financial channels. Stablecoins have already shown us the way: this system has the potential to dramatically expand global capital markets and reach previously inaccessible domains.