Disclosure: The opinions and views expressed in this article are solely those of the author and do not necessarily reflect the views and opinions of the editorial team at crypto.news.
The rush to tokenize trillions of dollars in real-world assets is well underway. BlackRock, the world’s largest asset manager, is expanding into tokenized funds with its BUIDL fund surpassing $2 billion. Nasdaq has filed with the SEC to trade tokenized securities, and companies like Stripe and Robinhood are developing their own blockchain solutions.
Summary
- The focus is now on how capital markets will transition to blockchain, with flawed infrastructure posing a threat to the promise of tokenization.
- With over 50 Layer-2 solutions and fragile bridges, liquidity is fragmented, hacks are increasing, and users are navigating a disjointed market experience.
- Private blockchains create liquidity silos and reintroduce centralized risks seen in events like the Robinhood/GameStop saga.
- A horizontally scalable, natively interoperable system can consolidate liquidity, facilitate regulatory oversight, and deliver the trust, efficiency, and transparency required for global markets.
The question now is not if capital markets will transition to blockchain, but how they will do so. The answer will determine whether tokenization will transform global finance or succumb to inefficiencies. The ongoing “infrastructure debate” is crucial and will shape the future of blockchain-based finance. Failing to address this challenge could lead to the collapse of tokenization’s potential.
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The upcoming division in blockchain-based finance
While promising, the dominant approaches to financial infrastructure are unstable and flawed. Ethereum’s Layer-2 and Layer-3 roadmaps are innovative but result in disconnected systems. With numerous Layer-2 solutions in existence, liquidity is spread across isolated ecosystems, creating vulnerabilities to hacks through fragile bridges. This fragmentation hinders interoperability and creates a fragmented user experience.
On the other hand, enterprise-built blockchains create “walled-garden” environments that isolate enterprises from the broader crypto economy. This limits liquidity and user engagement, reconstructing the silos that tokenization aims to eliminate.
Centralized control poses risks, as demonstrated in the GameStop saga where Robinhood halted trading, illustrating the consequences of a single entity controlling access to markets. This highlights the potential drawbacks of tokenized assets within closed systems.
A multichain framework for global markets
Is a multichain infrastructure based on horizontal scaling and native interoperability a more viable path?
By connecting parallel blockchains, this approach enables sharing of security and finality without relying on fragile bridges. Adding more chains increases capacity, similar to expanding lanes on a highway to accommodate institutional speed and scale requirements.
Native interoperability eliminates the need for centralized intermediaries, allowing seamless movement of data and assets across chains. This shared liquidity environment fosters market exploration, enabling enterprises to launch high-performance blockchains while maintaining access to the broader ecosystem. For markets, it provides a trusted, scalable foundation.
New architectures are already demonstrating the benefits of a unified liquidity pool and specialized applications.
The importance of trust, liquidity, and regulation
Fragmented liquidity hinders the functionality of complex tokenized markets. The core value of tokenizing assets is to enhance liquidity and accessibility, but disjointed ecosystems undermine this purpose.
Imagine an investor holding a tokenized security on one Layer-2 platform. If they cannot trade with a buyer on another platform, market efficiency is compromised.
Fragmented ecosystems and enterprise silos struggle to support large trades that require deep, unified liquidity pools, leading to slippage.
Trust is also at stake, as a transparent and connected base layer provides regulators with clear audits and provenance tracking. A multichain framework offers a comprehensive view of market activity, making it easier to detect and mitigate risks. Connectivity is essential for trust, adoption, and scalability.
Emphasizing connectivity over control
As real-world assets transition to blockchain, global finance stands at a pivotal moment. Trillions of dollars in value could be made more efficient, liquid, and transparent.
However, the key question is whether we continue to build isolated systems or embrace connectivity for a sustainable future. Short-term solutions like fragmented Layer-2 platforms and closed-off enterprise chains may hinder market development and undermine the potential of tokenization.
Tokenization’s success relies on connectivity, not isolation. The future of global markets hinges on fostering interconnected systems.
Read more: 2025 will make tokenized real-world assets mainstream | Opinion
C.J Freeman
C.J Freeman is a developer, published author, and active KoL on Crypto X. He is well-known in the Web3 space not just for his Solidity expertise, but for championing crypto assets in the information age. Before joining Kadena, C.J has co-led startups, worked within LSTs, DAOS, and Oracle networks. Throughout, he has contributed to projects at both the technical and strategic levels. Now, at Kadena as Developer Relations, C.J focuses on growing and supporting a vibrant developer community through tooling, content, and events. He has established himself as a crucial link between developers and internal teams, turning feedback into real product improvements.