Ethereum’s Dominance in the RWA Market: Who’s Next in Line?

This report was written by Tiger Analysis, analyzing Ethereum’s present dominance in the real-world asset tokenization market, inspecting the structural challenges it faces, and exploring which blockchain platforms are positioned to steer the subsequent section of RWA progress.

• Ethereum presently leads the RWA market, supported by its first-mover benefit, previous institutional experiments, deep on-chain liquidity, and decentralized structure.

• Nonetheless, general-purpose blockchains with quicker and cheaper transactions, together with RWA-specialized chains designed for regulatory compliance, are addressing Ethereum’s limitations in value and efficiency. These rising platforms are positioning themselves as next-generation infrastructure by providing both superior technical scalability or built-in compliance options.

• The subsequent section of RWA progress shall be led by a sequence that efficiently integrates three parts: on-chain regulatory compatibility, a service ecosystem constructed round real-world belongings, and significant on-chain liquidity.

🇰🇷 한국어로 읽기 →

The tokenization of real-world belongings (RWA) has change into one in all the most outstanding themes in the blockchain {industry}. World consulting corporations akin to BCG have launched in depth market projections, and Tiger Analysis has performed in-depth analyses of rising markets like Indonesia—underscoring the sector’s rising significance.

So, what precisely is RWA? They discuss with tangible belongings—akin to actual property, bonds, and commodities—which can be transformed into digital tokens. This tokenization course of requires a blockchain infrastructure. Presently, Ethereum is the main infrastructure supporting these transactions.

Regardless of rising competitors, Ethereum has maintained its dominant place in the RWA market. Specialised RWA blockchains have emerged, and platforms like Solana, well-established in the DeFi area, are increasing into RWA. Even so, Ethereum continues to account for over 50% of market exercise, underscoring the power of its incumbent place.

This report examines the key components behind Ethereum’s present dominance in the RWA market and explores the evolving situations that will form the subsequent section of progress and competitors.

There are clear the explanation why Ethereum has change into the default platform for institutional tokenization. It was the first to introduce sensible contracts and proactively ready for the RWA market.

Supported by a extremely energetic developer group, Ethereum established crucial tokenization requirements, akin to ERC-1400 and ERC-3643, nicely earlier than competing platforms emerged. This early basis offered the technical and regulatory groundwork essential for pilot initiatives.

Consequently, many establishments started evaluating Ethereum earlier than contemplating alternate options. A number of notable initiatives throughout the late 2010s helped validate Ethereum’s function in institutional finance:

• JPMorgan’s Quorum and JPM Coin (2016–2017): To help enterprise use instances, JPMorgan developed Quorum, a permissioned fork of Ethereum. The launch of JPM Coin for interbank transfers demonstrated that Ethereum’s structure—even in a non-public type—might meet regulatory calls for round knowledge safety and compliance.

• Société Générale Bond Issuance (2019): SocGen FORGE issued €100 million in coated bonds on the Ethereum public mainnet. This confirmed that regulated securities could possibly be issued and settled on a public blockchain whereas minimizing middleman involvement.

• European Investment Bank Digital Bond (2021): In collaboration with Goldman Sachs, Santander, and Société Générale, the EIB issued a €100 million digital bond on Ethereum. The bond was settled utilizing a central financial institution digital forex (CBDC) issued by the Banque de France, highlighting Ethereum’s potential in absolutely built-in capital markets.

These profitable pilot instances strengthened Ethereum’s credibility. For establishments, belief is predicated on confirmed use instances and references from different regulated gamers. Ethereum’s observe report continues to draw curiosity, making a reinforcing cycle of adoption.

For instance, in 2018, Securitize introduced in official documents that it will construct instruments on Ethereum to handle the full lifecycle of digital securities. This initiative laid the basis for the eventual launch of BlackRock’s BUIDL, the largest tokenized fund presently issued on Ethereum.

One other key cause for Ethereum’s continued dominance in the RWA market is its capability to transform on-chain liquidity into precise buying energy. Tokenizing real-world belongings is just not merely a technical course of. A useful market requires capital that may actively make investments in and commerce these belongings. On this regard, Ethereum stands out as the solely platform with deep and deployable on-chain liquidity.

That is evident in platforms akin to Ondo, Spark, and Ethena, all of which maintain substantial quantities of the tokenized BUIDL fund on Ethereum. These platforms have attracted lots of of tens of millions of {dollars} by providing merchandise primarily based on tokenized U.S. Treasuries, stablecoin-based lending, and artificial yield-bearing greenback devices.

• Ondo Finance has collected over $600 million in whole worth locked (TVL) via its treasury-backed merchandise, USDY and OUSG.

• Spark Protocol, leveraging DAI liquidity from MakerDAO, has bought real-world Treasuries price over $2.4 billion.

• Ethena has constructed a bankless yield infrastructure on Ethereum utilizing its artificial stablecoins USDe and sUSDe, attracting each institutional demand and DeFi liquidity.

These examples present that Ethereum is just not merely a platform for asset tokenization. It affords a strong liquidity base that permits actual funding and asset administration. In distinction, many rising RWA platforms battle to safe capital inflows or secondary market exercise past the preliminary token issuance section.

The rationale for this divergence is obvious. Ethereum already integrates stablecoins, DeFi protocols, and compliance-ready infrastructure. This creates a complete monetary surroundings the place issuance, buying and selling, and settlement can all happen on-chain.

Consequently, Ethereum capabilities as the best surroundings for changing tokenized belongings into precise buying exercise. This offers it a structural benefit that goes past easy market share.

Decentralization performs a crucial function in constructing belief. Tokenizing real-world belongings includes transferring possession and transaction information of high-value belongings to a digital system. On this course of, institutional considerations middle on system reliability and transparency. That is the place Ethereum’s decentralized structure affords a definite benefit.

Ethereum operates as a public blockchain supported by hundreds of independently run nodes worldwide. The community is open to anybody, and modifications are decided via participant consensus somewhat than centralized management. Consequently, it avoids single factors of failure, ensures resilience towards hacks and censorship, and maintains uninterrupted uptime.

In the RWA market, this construction creates tangible worth. Transactions are recorded on an immutable ledger, lowering fraud danger. Sensible contracts allow trustless transactions with out intermediaries. Customers can entry companies, execute agreements, and have interaction in monetary exercise with out requiring central approval.

These attributes—transparency, safety, and accessibility—make Ethereum a compelling alternative for establishments exploring asset tokenization. Its decentralized system aligns with the key necessities for working in high-stakes monetary environments.

Ethereum’s mainnet demonstrated the feasibility of tokenized finance. Nonetheless, together with its success, it additionally uncovered structural limitations that hinder broader institutional adoption. Key obstacles embrace restricted transaction throughput, latency points, and an unpredictable payment construction.

To deal with these challenges, Layer 2 rollup options akin to Arbitrum, Optimism, and Polygon zkEVM have emerged. Main upgrades—together with the Merge (2022), Dencun (2024), and the upcoming Pectra (2025)—have introduced enhancements in scalability. Nonetheless, the community falls wanting matching conventional monetary infrastructure. For instance, Visa processes over 65,000 transactions per second, a degree Ethereum has but to attain. For establishments that require high-frequency buying and selling or real-time settlement, these efficiency gaps stay a crucial constraint.

Latency and finality additionally pose challenges. Block manufacturing averages 12 seconds, and with the further confirmations required for safe settlement, finality usually takes as much as three minutes. Below community congestion, this delay can enhance additional—posing difficulties for time-sensitive monetary operations.

Extra considerably, the volatility of gasoline charges continues to be a priority. Throughout peak durations, transaction charges have exceeded $50, and even below regular situations, prices continuously rise above $20. This degree of payment uncertainty complicates enterprise planning and might weaken the competitiveness of Ethereum-based companies.

Securitize illustrates this dynamic. After encountering Ethereum’s limitations, the firm expanded to different platforms akin to Solana and Polygon whereas additionally creating its personal chain, Converage. Whereas Ethereum performed a significant function in enabling early institutional experimentation, it now faces mounting stress to fulfill the calls for of a extra mature and performance-sensitive market.

As Ethereum’s limitations change into extra obvious, establishments are more and more exploring general-purpose blockchains that supply various strengths to Ethereum. These platforms complement Ethereum by addressing key efficiency bottlenecks—notably in transaction velocity, payment stability, and time to finality.

Nonetheless, regardless of ongoing collaboration with institutional gamers, the precise quantity of tokenized belongings—excluding stablecoins—stays far decrease on these platforms in comparison with Ethereum. In lots of instances, tokenized belongings launched on general-purpose chains are nonetheless a part of a multi-chain deployment technique led by Ethereum.

Even so, there are indicators of significant progress. In the non-public credit score phase, new tokenization initiatives are rising. On zkSync, as an example, the platform Tradable has gained traction, accounting for over 18% of exercise in this sector—second solely to Ethereum.

At this stage, general-purpose blockchains are simply starting to ascertain a foothold. Platforms like Solana, which have seen fast progress in their DeFi ecosystems, now face a strategic query: the right way to translate this momentum right into a sustainable place in the RWA area. Superior technical efficiency alone is just not enough. Competing with Ethereum would require infrastructure and companies that meet the belief and compliance expectations of institutional buyers.

Finally, the success of those blockchains in the RWA market will rely much less on uncooked throughput and extra on their capability to ship tangible worth. Differentiated ecosystems—constructed round every chain’s distinctive strengths—will decide their long-term positioning in this rising sector.

A rising variety of blockchain platforms are shifting away from general-purpose designs in favor of domain-specific specialization. This pattern can also be evident in the RWA area, the place a brand new wave of purpose-built chains is rising, optimized particularly for the tokenization of real-world belongings.

The rationale for RWA specialised blockchains is obvious. Tokenizing real-world belongings requires direct integration with present monetary laws, making the use of normal blockchain infrastructure inadequate in many instances. Specialised technical necessities—notably round regulatory compliance—have to be addressed from the floor up.

One crucial space is compliance processing. KYC and AML procedures are important to the tokenization workflow, but these have historically been dealt with off-chain. This strategy limits innovation, because it merely wraps conventional monetary belongings in a blockchain format with out redesigning the underlying compliance logic.

The shift now lies in bringing these compliance capabilities absolutely on-chain. Demand is rising for blockchain networks that may not solely report possession but in addition implement regulatory necessities natively at the protocol degree.

In response, a number of RWA-focused chains have began to supply on-chain compliance modules. As an illustration, MANTRA contains decentralized id (DID) options that help compliance enforcement at the infrastructure layer. Different specialised chains are anticipated to observe comparable paths.

Along with compliance, many of those platforms are concentrating on particular asset courses with deep area experience. Maple Finance focuses on institutional lending with asset administration, Centrifuge on commerce finance, Polymesh on regulated securities. Slightly than tokenizing broadly held belongings like sovereign bonds or stablecoins, these chains are pursuing vertical specialization as a aggressive technique.

That mentioned, many of those platforms are nonetheless in early levels. Some have but to launch their mainnet, and most stay restricted in phrases of scale and adoption. If general-purpose chains are simply beginning to achieve traction in the RWA area, specialised chains are nonetheless at the beginning line.

Ethereum’s dominance in the RWA market is unlikely to persist in its present type. At present, the dimension of the tokenized asset market accounts for lower than 2% of its projected potential, indicating that the sector stays in an early stage. Ethereum’s benefit to this point has largely stemmed from its early discovery of product-market match (PMF). Nonetheless, as the market matures and scales, the aggressive panorama is predicted to shift considerably.

Indicators of this transition are already evident. Establishments are not solely targeted on Ethereum. Each general-purpose and RWA-specialized blockchains are being evaluated, and an growing variety of companies are exploring customized chain deployments. Tokenized belongings initially issued on Ethereum are actually increasing into multichain ecosystems, breaking down the earlier monopoly construction.

A crucial turning level shall be the utilization of on-chain compliance. For blockchain-based finance to symbolize real innovation, regulatory processes akin to KYC and AML should happen immediately on-chain. If specialised chains succeed in providing scalable, protocol-level compliance and drive industry-wide adoption, the present market hierarchy could possibly be considerably disrupted.

Equally essential is the presence of actual buying energy. Tokenized belongings solely change into investable as soon as there may be energetic capital keen to accumulate them. No matter the expertise, with out significant liquidity, tokenization has restricted utility. Consequently, next-generation RWA platforms should domesticate a strong ecosystem of companies constructed on tokenized belongings and guarantee robust liquidity participation from customers.

Briefly, the situations for fulfillment have gotten clearer. The subsequent main RWA platform will seemingly be one which achieves all three of the following:

• A completely built-in on-chain compliance framework

• A service ecosystem constructed on tokenized belongings

• Deep and sustainable liquidity enabling actual funding

The RWA market continues to be in its infancy. Ethereum has confirmed the idea. The chance now lies with platforms that may supply superior options—people who meet institutional necessities whereas unlocking new worth in the tokenization economic system.

Learn extra experiences associated to this analysis.

This report has been ready primarily based on supplies believed to be dependable. Nonetheless, we don’t expressly or impliedly warrant the accuracy, completeness, and suitability of the data. We disclaim any legal responsibility for any losses arising from the use of this report or its contents. The conclusions and suggestions in this report are primarily based on data out there at the time of preparation and are topic to alter with out discover. All initiatives, estimates, forecasts, aims, opinions, and views expressed in this report are topic to alter with out discover and will differ from or be opposite to the opinions of others or different organizations.

This doc is for informational functions solely and shouldn’t be thought of authorized, enterprise, funding, or tax recommendation. Any references to securities or digital belongings are for illustrative functions solely and don’t represent an funding suggestion or a suggestion to offer funding advisory companies. This materials is just not directed at buyers or potential buyers.

Tiger Analysis permits the honest use of its experiences. ‘Truthful use’ is a precept that broadly permits the use of particular content material for public curiosity functions, so long as it would not hurt the business worth of the materials. If the use aligns with the objective of honest use, the experiences could be utilized with out prior permission. Nonetheless, when citing Tiger Analysis’s experiences, it’s obligatory to 1) clearly state ‘Tiger Analysis’ as the supply, 2) embrace the Tiger Analysis logo. If the materials is to be restructured and printed, separate negotiations are required. Unauthorized use of the experiences could consequence in authorized motion.