The future of RWAs: from tokenization to trading

Vladimir Tikhomirov, Co-Founder of Algebra and Founder of Theorem, looks beyond tokenization to share what real-world assets (RWAs) need to achieve full-fledged adoption. 

The tokenization industry has spent the past few years proving that almost any real-world asset (RWA) can be on-chain. From treasury funds, equities, and gold to real estate, the list keeps growing every day, as does the overall value of tokenized assets. 

According to RWA.xyz, tokenized RWAs now make up nearly USD 39 billion in distributed on-chain value and span hundreds of platforms. While that’s quite remarkable, I also think we may be celebrating the wrong milestone. Creating a token is no longer complex, but what comes after the asset issuance is. If an investor can't easily buy, sell, or use it as collateral, then tokenization has only digitised ownership, not created a functioning market where RWAs can move freely. 

To increase RWA adoption, we need to do more than create more tokens, and this is what I want to talk about. 

RWA issuance and why this isn’t the reason for slow adoption

Despite its growth, today’s RWA market follows the same simple lifecycle: an asset is issued, purchased, held, and eventually redeemed. Secondary trading remains limited, and investors generally rely on issuers being primary liquidity sources, rather than active marketplaces. 

So, although tokenization improves settlement, it doesn’t create market efficiency. In fact, the ‘Real State of Tokenization’ report found that 56% of tokenized asset value is dormant, with no signs of weekly transfer activity. This obviously suggests that most assets remain effectively buy-and-hold instruments, not actively traded. 

Admittedly, this isn’t unusual for an emerging market. In some ways, tokenized assets remind me of Bitcoin’s early years: functional technology, but without surrounding infrastructure. BTC was difficult to trade at scale until exchanges and professional liquidity providers appeared. RWAs are in a similar stage: we’ve proven assets can live on-chain, so now they need markets to move in. 

RWAs don't trade like cryptocurrencies

Getting there is easier said than done, as tokenized RWAs behave fundamentally differently from typical crypto. 

Every RWA has its own requirements: some need know your customer (KYC) verification, while others have jurisdiction-specific limitations or restricted ownership eligibility. A lot also depend on external valuations, redemption windows, or regulated trading hours.                                           

However, many current trading venues still treat them as if they were standard crypto tokens, creating friction that shouldn’t be there and that will only increase as tokenization expands beyond familiar asset classes. 

In the future, RWA trading infrastructure will have to account for more factors, like:

• Which jurisdiction is an investor located in? 
• Do they qualify as an accredited investor under that jurisdiction’s laws?
• What assets do they already hold? 
• What does their transaction history look like? 

The above are only a few examples, and we will need to consider even more aspects. 

As we bring more assets on-chain, we will need increasingly sophisticated market logic to support them. If we fail to build the necessary flexibility to manage it all, tokenization risks becoming little more than a blockchain-based version of current public equity markets. 

However, the real opportunity is much larger. We can also create entirely new asset types and markets that couldn't exist in traditional finance, which we are trying to step outside of and build beyond. 

Why RWA liquidity cannot stay fragmented

Fragmentation is another obstacle we should overcome. Today, tokenized assets are spread across far too many blockchains, issuance platforms, and trading venues. While this helps broaden distribution, it also fragments liquidity and makes price discovery harder. 

Markets function when buyers and sellers gradually converge on a common price, so if liquidity is scattered across isolated venues, it is considerably less efficient. Instead of one market, you end up with multiple isolated liquidity platforms that might price the same asset slightly differently. This is even more pronounced as institutional participation grows. Banks, asset managers, and tokenization platforms are joining the RWA space due to its opportunity. But to settle here long term, they need reliable market infrastructure that can support compliance and configurable trading rules. 

Large financial institutions are understandably reluctant to build core business services on infrastructure they cannot influence, control, or anticipate. If the rules governing your marketplace can change overnight, it brings risks that financial institutions won’t accept. If tokenized assets are to be acknowledged as long-term financial instruments at the institutional level, operational certainty is essential.

The next step of RWA development and adoption

Given the above, it shouldn’t be hard to see why infrastructure development will be the metric measuring tokenization progress. Among other things, better secondary markets expand tokenized assets' utility, making them useful for things beyond investment portfolios. They can serve as collateral, support financing, or be used in commercial payments where real-time settlements are always highly desirable. 

Tokenization will be globally accepted if we combine the flexibility of DeFi with the TradFi-style discipline that institutional assets expect. However, we shouldn't aim to recreate traditional markets on blockchain rails. Our goal should be to build more programmable, accessible markets, able to support new classes of financial assets and commercial use cases. 

Solving RWA issuance is the first step in this direction, but building markets is what’s going to determine how far tokenization goes. 

About the author

Vladimir Tikhomirov is a technology entrepreneur and Co-Founder of Algebra, a DeFi infrastructure company. He is also the Founder of Theorem, an infrastructure platform for tokenized RWAs. With a PhD in Engineering and a strong academic background in mathematics, Vladimir combines rigorous technical expertise with hands-on experience building technology products and companies. His work focuses on blockchain infrastructure, decentralised finance, and the development of technology for digital asset markets worldwide. 

 

About Algebra

Algebra is a DeFi infrastructure company powering over 100 decentralised exchanges across 50+ blockchain ecosystems. Protocols built on its infrastructure have processed more than USD 200 billion in cumulative trading volume. Theorem is an infrastructure platform for tokenised RWAs, focused on developing secondary markets and trading infrastructure. Together, the companies work across blockchain infrastructure, decentralised finance, and digital asset markets, supporting on-chain financial applications and markets development.