Author: Mesh
Compile:Deep Tide TechFlow
Frankly, the development of institutional-grade RWA tokenization over the past six months is worth close attention. The market size is approaching $20 billion. This is not hype, but real institutional capital being deployed on-chain.
I've been following this field for some time, and the recent pace of development is astonishing. From government bonds and private debt to tokenized equities, these assets are moving to blockchain infrastructure at a speed faster than the market anticipated.
Currently, five protocols have become the foundation in this field: RaylsLabs, OndoFinance, Centrifuge, CantonNetwork, and Polymesh. They are not competing for the same type of clients, but instead addressing different institutional needs: banks require privacy, asset management companies pursue efficiency, and Wall Street firms demand compliance infrastructure.
This is not a question of who "wins," but rather about which infrastructure institutions choose, and how trillions of dollars in traditional assets can be transitioned through these tools.
The overlooked market is approaching the 20-billion-dollar mark.
Three years ago, tokenized real-world assets (RWA) were hardly a recognized category. Today, on-chain deployments of assets such as government bonds, private credit, and public equities have approached $20 billion. This represents a significant increase from the $6–8 billion range at the beginning of 2024.
To be honest, the performance of niche markets is more interesting than the overall size.
According to the market snapshot provided by rwa.xyz at the beginning of January 2026:
Treasury securities and money market funds: approximately 8 to 9 billion U.S. dollars, accounting for 45% to 50% of the market.
Private Credit: $2 billion to $6 billion (smaller base but fastest growing, accounting for 20%-30%)
Public equity: Over $400 million (rapid growth, primarily driven by Ondo Finance)
Three Key Drivers Accelerating the Adoption of RWA:
The appeal of yield arbitrage: Tokenized treasury products offer returns of 4% to 6% and provide 24/7 access, whereas traditional markets have a T+2 settlement cycle. Private credit instruments offer returns of 8% to 12%. For institutional treasurers managing billions of dollars in idle capital, the math is straightforward.
Gradual improvement of the regulatory framework: The European Union's Markets in Crypto-Assets Regulation (MiCA) has been mandated across 27 countries. The SEC's "Project Crypto" is advancing a framework for securities on blockchains. Meanwhile, No-Action Letters have enabled infrastructure providers like DTCC to tokenize assets.
Maturity of custody and oracle infrastructure: Chronicle Labs has processed over $20 billion in total value locked, and Halborn has completed security audits for major RWA protocols. These infrastructures are mature enough to meet standards of fiduciary responsibility.
Nevertheless, the industry still faces significant challenges. The cost of cross-chain transactions is estimated to be as high as $1.3 billion annually. Due to capital flow costs exceeding arbitrage profits, the price spreads of the same asset traded on different blockchains reach 1% to 3%. The conflict between privacy demands and regulatory transparency requirements remains unresolved.
RaylsLabs: The Privacy Infrastructure Banks Truly Need
@RaylsLabsPositioning itself as a compliance-first bridge connecting banks with decentralized finance (DeFi), it was developed by Brazilian fintech company Parfin and is supported by Framework Ventures, ParaFi Capital, Valor Capital, and Alexia Ventures. Its architecture is a public-permissioned, EVM-compatible L1 blockchain specifically designed for regulated institutions.
I've been following the development of Enygma's privacy tech stack for some time. The key isn't the technical specifications, but rather their methodology. Rayls is addressing the real problems banks need solved, rather than catering to the DeFi community's imagination about banking needs.
Core Features of the Enygma Privacy Tech Stack:1. Zero-Knowledge Proofs: Ensure transaction confidentiality. 2. Homomorphic Encryption: Enable computations on encrypted data. 3. Native operations across public blockchains and private institutional networks. 4. Confidential Payments: Support atomic swaps and embedded "payment finalization." 5. Programmable Compliance: Allow selective data disclosure to designated auditors.
Practical application case: 1.1. Central Bank of Brazil: Pilot for cross-border settlement using CBDC; 2. Núclea: Tokenization of regulated accounts receivable; 3. Multiple undisclosed node clients: Private payment delivery workflows.
Latest Developments
On January 8, 2026, Rayls announced the completion of a security audit conducted by Halborn. This provides institutional-level security certification for its RWA infrastructure, which is particularly significant for banks evaluating production deployment.
In addition, the AmFi Alliance plans to achieve a $100 million tokenized asset target on Rayls by June 2027, supported by a reward of 5 million RLS tokens. AmFi, Brazil's largest private credit tokenization platform, brings immediate trading volume to Rayls and has set specific 18-month milestones. This represents one of the largest institutional RWA commitments to date within any blockchain ecosystem.
Target Market and Challenges
Rayls targets banks, central banks, and asset management firms that require institutional-level privacy. Its public permissioned model restricts validator participation to licensed financial institutions, while ensuring the confidentiality of transaction data.
However, Rayls faces the challenge of proving its market appeal. Without publicly available TVL data or announced customer deployments beyond pilots, its $100 million AmFi target by mid-2027 becomes a critical test.
OndoFinance: The Fast-Track Race of Cross-Chain Expansion
OndoIt has achieved the fastest expansion from institutional to retail in the RWA tokenization space. Starting with protocols focused on government bonds, it has now become the largest platform in the tokenization of publicly traded stocks.
Latest data as of January 2026:
TVL: $1.93 billion
Tokenized Stocks: Over $400 million, accounting for 53% of market share
USDY holdings on the Solana blockchain: approximately $176 million
I personally tested the USDY product on Solana, and the user experience was incredibly smooth: combining institutional-grade treasury bonds with the convenience of DeFi is the key.
Latest News
On January 8, 2026, Ondo launched 98 new tokenized assets at once, covering stocks and ETFs in fields such as artificial intelligence (AI), electric vehicles (EVs), and thematic investments. This was not a small-scale trial, but rather a rapid advancement.
Ondo plans to launch tokenized U.S. stocks and ETFs on Solana in the first quarter of 2026, marking its most aggressive attempt yet to enter retail-friendly infrastructure. According to the product roadmap, as expansion progresses, the goal is to list over 1,000 tokenized assets.
Industry Focus:
AI and artificial intelligence field: Nvidia, data center REITs (Real Estate Investment Trusts)
Electric Vehicle Industry: Tesla, Lithium Battery Manufacturers
Thematic Investment: Special Sectors Traditionally Restricted by Minimum Investment Requirements
Multi-chain Deployment Strategy:
- Ethereum: DeFi Liquidity and Institutional Legitimacy
BNB Chain: Reaching Native Exchange Users
Solana: Supports large-scale consumer usage with sub-second transaction finality.
Frankly speaking, the most important signal is that while Ondo's token price fell, its TVL (Total Value Locked) reached $1.93 billion. This demonstrates that the protocol's growth is prioritized over speculative activities. This growth is primarily driven by the demand for yield on idle stablecoins from institutional treasuries and DeFi protocols. The increase in TVL during the market consolidation period in Q4 2025 indicates genuine demand, rather than just chasing market trends.
By establishing custodial relationships with broker-dealers, completing a Halborn security audit, and launching its product on three major blockchain networks within six months, Ondo has gained a significant head start that competitors struggle to catch up with. For example, its competitor Backed Finance has a tokenized asset size of only approximately $162 million.
However, Ondo still faces some challenges:
Price fluctuations during non-trading hours: Although tokens can be transferred at any time, pricing still needs to refer to the operating hours of exchanges, which may create arbitrage price gaps during overnight trading sessions in the U.S.
Compliance Constraints: Securities laws require strict KYC and verification checks, which limit the "permissionless" narrative.
Centrifuge: How Asset Managers Can Actually Deploy Billions of Dollars
CentrifugeIt has become the infrastructure standard for institutional-grade private credit tokenization. As of December 2025, the protocol's TVL has surged to between $1.3 billion and $1.45 billion, driven by actual institutional capital deployments.
Key Institutional Deployment Cases
Janus Henderson Partnership (a global asset management company with $373 billion in assets under management)
Anemoy AAACLO Fund: Fully On-Chain AAA-rated Collateralized Loan Obligations (CLO)
Uses the same portfolio management team as its $21.4 billion AAACLOETF.
The expansion plan was announced in July 2025, aiming to secure an additional $250 million in investment on Avalanche.
Grove Funding Allocation (Institutional Credit Protocol for the Sky Ecosystem)
The committed funding allocation strategy has reached $10 billion.
The initial startup capital is 50 million USD.
The project's founding team comes from Deloitte, Citigroup, BlockTower Capital, and Hildene Capital Management.
ChronicleLabs Oracle Partnership (Announced on January 8, 2026)
Asset Verification Framework: Providing Cryptographically Verified Holding Data
Support transparent net asset value (NAV) calculations, custodian verification, and compliance reporting.
Provide dashboard access for limited partners and auditors.
I have been following the oracle problem in the blockchain space, and Chronicle Labs' approach is the first solution that meets institutional needs: providing verifiable data without sacrificing on-chain efficiency. The announcement on January 8th also included a video demo showing that this solution is already in practical use, not just a future promise.
Centrifuge's Unique Operating Model:
Unlike competitors who simply wrap off-chain products, Centrifuge tokenizes credit strategies directly at the issuance stage. The process is as follows:
The issuer designs and manages funds through a single, transparent workflow;
Institutional investors allocate stablecoins for investment;
Funds flow to the borrower after credit approval;
Repayments are distributed proportionally to token holders through a smart contract;
AAA-rated assets have an annual percentage yield (APY) between 3.3% and 4.6%, with full transparency.
Multi-chain V3 architecture supported networks: Ethereum; Base, Arbitrum, Celo, Avalanche
The key is that asset managers need to demonstrate that on-chain credit can support deployments in the billions of dollars, and Centrifuge has already achieved this. Just the partnership with Janus Henderson provides capacity in the billions of dollars.
In addition, Centrifuge's leadership in setting industry standards—such as co-founding the Tokenized Asset Coalition and the Real-World Asset Summit—further reinforces its position as an infrastructure rather than a single product.
Although the $1.45 billion TVL demonstrates institutional investment demand, the target annualized yield of 3.8% pales in comparison to the higher-risk, higher-return opportunities historically seen in DeFi. Attracting DeFi-native liquidity providers beyond those allocated by the Sky ecosystem has now become Centrifuge's next major challenge.
CantonNetwork: Blockchain Infrastructure for Wall Street
CantonIt is an institutional-grade blockchain in response to DeFi's permissionless philosophy: a privacy-preserving public network supported by top Wall Street companies.
Participating Organizations:DTCC (Depository Trust & Clearing Corporation), BlackRock, Goldman Sachs, Citadel Securities.
Canton's goal is to target the $37 trillion annual settlement volume processed by DTCC in 2024. Yes, that number is correct as stated.
DTCC Partnership (December 2025)
The collaboration with DTCC is crucial. This is not merely a pilot project, but a core commitment to building the U.S. securities settlement infrastructure. With the approval of a No-Action Letter from the SEC, this partnership enables the native tokenization of certain U.S. Treasury securities held by DTCC on Canton, with plans to launch a controlled MVP (Minimum Viable Product) in the first half of 2026.
Key details:
DTCC and Euroclear jointly serve as co-chairs of the Canton Foundation;
Not just participants, but leaders in governance;
Initially focus on government bonds (lowest credit risk, high liquidity, and clear regulation);
After the MVP phase, it may be expanded to corporate bonds, stocks, and structured products.
Initially, I was skeptical about permissioned blockchains. But DTCC's collaboration changed my mind. This wasn't due to any technical superiority, but because it represents the kind of infrastructure that traditional finance is actually likely to adopt.
Temple Digital Platform Launch (January 8, 2026):Canton's institutional value proposition is further clarified in the private trading platform launched by Temple Digital Group on January 8, 2026.
Canton provides a central limit order book with sub-second matching speed, utilizing a non-custodial architecture. It currently supports trading in cryptocurrencies and stablecoins, with plans to add support for tokenized stocks and commodities by 2026.
Ecosystem Partners: 1.Franklin Templeton manages a $828 million money market fund; 2. JPMorgan Chase achieves payment and settlement through JPMCoin.
Canton's privacy architecture:Canton's privacy features are implemented at the smart contract level using Daml (Digital Asset Modeling Language):
The contract clearly specifies which parties can see which data;
Regulators can access complete audit records;
The counterparty can view the transaction details;
Competitors and the public cannot see any transaction information;
Status updates are propagated through the network in an atomic manner.
For institutions accustomed to conducting confidential trades via Bloomberg terminals and dark pools, Canton's architecture is particularly well-suited, as it provides blockchain efficiency while avoiding the exposure of trading strategies. After all, Wall Street would never expose proprietary trading activities on a transparent public ledger. Canton's 300+ participating institutions demonstrate its appeal within the institutional space. However, much of the reported trading volume may currently be more attributable to simulated pilot activities rather than actual production traffic. The current limitation lies in the development speed: the planned MVP delivery in the first half of 2026 reflects a multi-quarter planning cycle. In contrast, DeFi protocols often launch new products within weeks.
Polymesh: A Security Token Blockchain Network Designed for Compliance
PolymeshStand out through compliance at the protocol level rather than the complexity of smart contracts. As a blockchain specifically designed for regulated securities, Polymesh performs compliance validation at the consensus level, without relying on custom code.
Core Features
Authentication at the protocol level: Authentication through accredited customer due diligence providers;
Embedded transfer rules: Non-compliant transactions directly fail during the consensus phase;
Atomic payment settlement: Transactions are completed with final confirmation within 6 seconds.
Production-level Integration
Republic (August 2025): Supports private placement of securities;
AlphaPoint: covering more than 150 trading venues in 35 countries;
Target Areas: Regulated funds, real estate, corporate equity, etc.
Advantages:No need for customized smart contract audits; the protocol automatically adapts to regulatory changes; non-compliant transfer operations cannot be executed.
Challenges and the Future:Polymesh currently operates as a standalone chain, which isolates it from DeFi liquidity. To address this issue, an Ethereum bridge (EthereumBridge) is planned for Q2 2026. Whether this can be achieved on schedule remains to be seen. To be honest, I have underestimated the potential of this "compliance-native" architecture. For security token issuers troubled by the complexity of ERC-1400, Polymesh's approach is indeed more attractive: embedding compliance directly into the protocol, rather than relying on smart contracts.
How do these agreements divide the market?
These five protocols do not directly compete with each other because they address different issues:
Privacy Solutions:
Canton: Based on Daml smart contracts, focusing on counterparty relationships in Wall Street;
Rayls: Utilizes ZKP to provide bank-grade mathematical privacy protection;
Polymesh: Protocol-level authentication, providing a one-stop compliance solution.
Extended Strategy:
Ondo: Managing $1.93 Billion Across Three Chains, Prioritizing Liquidity Speed Over Depth;
Centrifuge: Focused on the institutional credit market with a size of 1.3 to 1.45 billion U.S. dollars, prioritizing depth over speed.
Target Market:
Bank/CBDC → Railways
Retail/DeFi → Ondo
Asset Management Company → Centrifuge
Wall Street → Canton
Security Tokens → Polymesh
In my view, this market segmentation is more important than people realize. Institutions won't choose the "best blockchain," but rather infrastructure that addresses their specific compliance, operational, and competitive needs.
Unresolved issues
Inter-chain liquidity fragmentation:The cost of cross-chain fragmentation is extremely high, estimated at $1.3 to $1.5 billion annually. Due to the high cost of cross-chain bridging, a 1%-3% price discrepancy arises when the same asset is traded on different blockchains. If this issue persists until 2030, the annual cost is expected to exceed $75 billion. This is one of my biggest concerns. Even if you build the most advanced tokenization infrastructure, any efficiency gains will be lost if liquidity is fragmented across incompatible chains.
The Contradiction Between Privacy and Transparency:Institutions require confidentiality for their transactions, while regulators demand auditability. In scenarios involving multiple parties (such as issuers, investors, rating agencies, regulators, and auditors), each party needs a different level of visibility. Currently, there is no perfect solution.
Regulatory fragmentation:The EU has adopted the MiCA (Markets in Crypto-Assets) regulation, which applies to 27 countries. In contrast, the U.S. requires case-by-case applications for No-Action Letters, a process that can take several months. Cross-border fund transfers face challenges due to conflicts in jurisdiction.
Oracle Risk:Tokenized assets rely on off-chain data. If the data provider is attacked, the performance of on-chain assets may reflect an incorrect reality. Although Chronicle's asset proof framework provides some solutions, risks still remain.
The Path to a $100 Billion Market: Key Catalysts for 2026
Catalysts to Watch in 2026:
Ondo's Solana Launch (Q1 2026):Test whether retail-scale distribution can create sustainable liquidity; success metrics: more than 100,000 holders, demonstrating the existence of genuine demand.
Canton's DTCC MVP (First Half of 2026):Verify the feasibility of using blockchain for U.S. Treasury securities settlement; if successful, it could potentially move trillions of dollars in transactions onto blockchain infrastructure.
The U.S. CLARITY Act is passed:Provide a clear regulatory framework to enable institutional investors who are currently waiting to deploy their capital.
Grove Deployment for Centrifuge:The allocation of 1 billion USD will be completed by 2026; the actual capital operations of tokenizing credit for testing institutions will be implemented. If executed smoothly without credit events, it will enhance the confidence of asset management companies.
Market Forecast
2030 Target: Tokenized asset volume reaches 2-4 trillion U.S. dollars;
Growth in demand: Increase from the current $1.97 billion by 50 to 100 times;
Assumptions: Regulatory stability, cross-chain interoperability readiness, and no major institutional failure events.
Growth forecast by industry:
Private credit: From the current $20-60 billion to $1,500-2,000 billion (small base, highest growth rate);
Tokenized Treasury Securities: If money market funds migrate on-chain, the potential could exceed $5 trillion+;
Real estate: Estimated to reach 3-4 trillion U.S. dollars (depending on whether the real estate registration system adopts blockchain-compatible property rights registration).
Billion-Dollar Milestone:
Expected Implementation Time: 2027-2028;
Estimated distribution: Institutional credit: $30–40 billion; Government bonds: $30–40 billion; Tokenized equities: $20–30 billion; Real estate/commodities: $10–20 billion.
This requires a fivefold increase from the current level. Although the target is ambitious, it is not out of reach, considering the institutional momentum and the upcoming regulatory clarity expected by the fourth quarter of 2025.
Why are these five protocols so important?
The institutional RWA landscape in early 2026 reveals an unexpected trend: there is no single winner, as there is no single market.
Frankly, this is exactly the direction infrastructure should be moving towards.
Each protocol addresses different issues:
Rayls → Banking Privacy;
Ondo → Tokenized stock distribution;
Centrifuge → On-chain deployment of asset management companies;
Canton→Wall Street infrastructure migration;
Polymesh→Simplify Security Compliance.
The market size growing from $8.5 billion at the beginning of 2024 to $19.7 billion indicates that demand has moved beyond speculative behavior.
Core Needs of Institutional Players:
Finance Director: Return Rate and Operational Efficiency;
Asset management company: Reduce distribution costs and expand the investor base;
Bank: Infrastructure compliant with regulatory requirements.
The next 18 months are critical.
Ondo's Solana launch → testing the scalability of the retail market;
Canton's DTCC MVP → Test institutional-level settlement capabilities;
Centrifuge's Grove deployment → testing credit tokenization with real capital;
Rayls's $100 million AmFi goal → testing the adoption of privacy infrastructure.
Execution is more important than architecture, and results are more important than blueprints. This is what truly matters at the moment.
Traditional finance is undergoing a long-term transition toward on-chain migration. These five protocols provide the necessary infrastructure for institutional capital: privacy layers, compliance frameworks, and settlement infrastructure. Their success will determine the future trajectory of tokenization—whether it will serve as an efficiency enhancement to existing structures or emerge as a completely new system that replaces traditional financial intermediaries.
The infrastructure choices made by organizations in 2026 will define the industry landscape for the next decade.
Key Milestones for 2026
Q1: Ondo's Solana listing (more than 98 stocks listed);
H1: Canton's DTCC MVP (Treasury Bond Tokenization Based on Wall Street Infrastructure);
Ongoing: Centrifuge's $10 billion deployment of Grove; Rayls' AmFi ecosystem development.
Trillion-dollar assets are coming soon. NFA.