RWAs are Breaking the Mold: Navigating the Future of Tokenization

Eterna Capital
13 min readMay 1, 2024

Disclaimer: this blog post was put together for informational purposes only based on our review and analysis. This should not be construed as a solicitation, offer, or recommendation to acquire or dispose of any investment, engage in any transaction.

By Nassim Olive —General Partner at Eterna Capital

Imagine a world where you can tokenize all sorts of assets, tangible or intangible. A world where regardless of your financial situation and where you live you can have access and invest in any sort of asset. You can live in a remote place and participate to the next high-speed rail project in North America, you can own a piece of land in the middle of the next trendiest city, you can own a piece of your favorite singer’s property rights, you can own shares in the next private equity fund launched by KKR. This technological innovation can unlock one of the main challenges our society faces — financial inclusion — allowing anyone to create a diversified portfolio of assets to build wealth and secure their future.

In this blog we will explore the growing trend of Real-World Assets (RWAs) and its implications. We will start by defining what it is and how it can disrupt current financial rails. We will then look to outline the state of the market and its potential by discussing some of the solutions being built by some of our portfolio companies. We will end by looking at some of the benefits and limitations associated with tokenization of Real-World Assets.

What are RWA’s?

RWAs, or Real-World Assets, are common assets such as securities, real estate, commodities, cash, and other similar assets that are represented digitally on-chain, in the form of a token. By tokenizing RWAs, we are essentially creating a digital twin that exists on a blockchain. It unlocks new ways of sharing revenue streams, transferring ownership, enhancing transparency, improving access and increasing liquidity for assets that were previously illiquid or difficult to access.

Furthermore, blockchain technology enables fractionalization of these assets by issuing tokens representing a fraction of the underlying RWAs. Ultimately democratizing financial assets by making high-value assets accessible to anyone who wants to participate or own a piece. We believe that the innovation behind the tokenization of assets holds great potential to reshape the landscape of asset ownership and financial markets more broadly.

By serving as the foundational infrastructure for integrating traditional assets into the decentralized ecosystem, they effectively bridge the gap between traditional finance and decentralized finance (DeFi). The tokenization of RWAs enables DeFi applications to offer a multitude of new assets on-chain, making DeFi a more complete and mature financial ecosystem.

The shift in TradFi

In the ever-changing landscape of finance, a technological revolution is underway, and its name is: tokenization. Real-World Assets are poised to redefine the way we perceive, engage with, and benefit from financial instruments.

With the surge in interest and demand for tokenized assets, as indicated by a noteworthy 69% planned investment by buy-side firms in tokenized assets, the financial landscape is undergoing a profound shift [1]. While still very early, this wave of investment underscores the growing recognition of tokenized assets as a sought-after avenue for capital deployment. As traditional investment norms undergo re-evaluation, the move towards tokenization signifies a strategic embrace of innovation and efficiency, opening new vistas for both institutional and individual investors.

(Ledgerinsights, 2023)

Tokenization is revolutionizing investing

Discussions about the potential of Real-World Assets are gaining momentum, with influential figures such as BlackRock’s CEO, Larry Fink, signaling increasing interest in financial innovation.

“We do believe that if we can create more tokenization of assets and securities — that’s what bitcoin is — it could revolutionize finance’’ — Larry Fink, CEO of BlackRock

No longer relegated, tokenized assets are gaining mainstream trust, sparking a surge in capital investment. The recent launch of the BlackRock USD Institutional Digital Liquidity Fund (BUIDL) [2], a tokenized fund that operates on the Ethereum blockchain to offer US dollar yields through tokenization of US treasuries, spearheaded by none other than BlackRock, is a testament to this newfound confidence in the space.

The technical requirements for tokenizing these assets set the stage for a more streamlined and automated investment landscape. From selecting an appropriate blockchain infrastructure to ensuring legal compliance through smart contracts, the groundwork is being laid for a new era in financial markets.

State of the Market

As of today, the total value of Real-World Assets sits at c.$90 billions, made up mostly of fiat-collateralized products (stablecoins) [3].

Tokenization Market Cap by Type of Asset, Dune 2024

The stablecoin market is currently the largest segment of the market, with Tether holding a dominant c.58% market share, closely followed by Circle with c.35% [4]. It is worth noting that there are varying trends among issuers, with some, like First Digital Labs, Securitize and Ondo Finance, experiencing notable growth, while others are seeing declines. Stablecoins are specifically engineered to preserve price stability in relation to designated assets, such as currencies or commodities. They serve a pivotal function in practical applications, such as facilitating cross-border payments and establishing banking infrastructure for individuals without access to traditional banking services. This use case’s increasing global popularity highlights its significance in the current financial landscape.

Tokenization Market Cap by Project, Dune 2024

Active users

Real-World Assets are becoming increasingly popular among major financial institutions. Digitizing financial products is just the beginning of tokenization of RWAs, and BlackRock now joins Franklin Templeton, JP Morgan, Société Générale, UBS, HSBC, Credit Agricole Investment Bank (CIB), and SEB among others as active participants in the tokenization trend.

  • J.P. Morgan uses a tokenized collateral network to engage in Over-The-Counter (OTC) transactions with Barclays. This approach not only enhances liquidity but also streamlines the collateralization process through blockchain-based tokenization.
  • UBS is using tokenization to enhance the efficiency and accessibility of money market funds by leveraging the benefits of RWAs. This aligns with the industry’s shift towards embracing blockchain for traditional financial services.
  • Credit Agricole Investment Bank (CIB) and SEB have developed a blockchain-based platform for tokenized bonds, showcasing the increasing use of RWAs in bond transactions. This venture significantly enhances efficiency and transparency in the bond market.
  • Société Générale, a major European financial player, issued its first digital green bond on the Ethereum public blockchain on November 30, 2023, using SG-FORGE. This marks their inaugural digital green bond, leveraging blockchain for enhanced transparency and traceability of Environmental, Social, and Governance (ESG) data.
  • HSBC is tokenizing gold for everyday investors in Hong Kong [5] and claiming to be the first bank to create a blockchain-based real-world asset aimed at the retail marketplace.

The current user base for RWAs extends beyond major financial institutions to curious investors who recognize the inherent value of tokenizing RWAs. These investors are likely attracted to the potential benefits of increased liquidity, transparency, and accessibility that RWAs offer within the blockchain ecosystem.

Market sentiment

According to a survey conducted by Celent, a research and advisory firm, and American banking giant BNY Mellon, 91% of institutional investors expressed interest in investing some managed funds in tokenized assets [6]. Additionally, 97% of participants agreed that tokenized assets will revolutionize asset management. Bernstein Private Wealth Management researchers predict that by 2028, stablecoins and central bank digital currencies could represent nearly 2% of the global money supply, bringing the sector’s value to $5 trillion (only for stablecoins and CBDCs) [7]. Digital asset manager estimates that the market for tokenized assets could reach $10 trillion by 2030 as traditional financial institutions continue to adopt blockchain technology [8].

The prevailing sentiment in the market leans predominantly towards optimism when it comes to digital assets operating on blockchain technology. Investors and industry experts alike express a positive outlook, anticipating growth, innovation, and increased adoption. This optimistic sentiment is fuelled by the perceived advantages of blockchain, such as enhanced security, transparency, and efficiency.

Unlocking global financial inclusion

Beyond the traditional boundaries of investing, tokenization is proving to be a game-changer, especially in emerging markets.

Tokenization is a crucial factor in promoting financial inclusion in emerging markets. Fractional ownership, a key feature, reduces entry barriers and promotes growth for smaller businesses. Blockchain serves as a bridge, especially in underbanked regions where traditional financial systems are inadequate. The integration of RWAs on the blockchain signifies a move towards a more inclusive era for financial products and markets. This transition increases access, attracting more cash inflows and promoting a fairer distribution of influence in markets.

The implementation of RWAs on the blockchain isn’t just a numerical addition; It’s fundamentally reshaping the economic landscape, especially in crypto-friendly emerging markets where the adoption of digital wallets is accelerated by domestic economic challenges.

Deciphering tokenization models

As we delve into the heart of tokenization, we encounter a spectrum of models that are redefining how assets are represented and enforced. From traditional off-chain transactions to fully on-chain, digitally native models, each has unique implications for decentralized and digitally native projects.

This spectrum serves as a compass to guide us through the evolving landscape of tokenization. As we explore models such as the on-chain integration model and the fully on-chain model, we uncover the nuances that make these projects not just numerical additions, but pioneers in the integration of blockchain technology into traditional investment vehicles.

(Mac Naggar And Jack Chong, n.d.) [9]

The predominant models at the moment, known as Model 2 and Model 3, emerge as central players in this transformative landscape. These models, situated between traditional off-chain exchanges and fully on-chain structures, carry distinct implications for decentralized initiatives and projects within the Web3 and financial realms.

Promising tech on the horizon

When talking about digital finance and asset tokenization, two innovative players in our portfolio rise to prominence, each contributing a unique perspective to the evolving narrative: Securitize and Jiritsu.

Securitize: Building the Future of Private Market Investing

Securitize is reshaping tokenization standards by building the future of private market investing. Securitize’s operations are centred around the DS Protocol, a blockchain-based protocol that standardizes the issuance and management of digital securities. Ultimately, Securitize enables issuers to raise capital and allow investors to access alternative investment opportunities in a fast and transparent way.

The company’s commitment to regulatory compliance is a pillar of strength in an industry navigating complex regulatory frameworks. The platform instills confidence among issuers, investors, and regulatory bodies by ensuring that tokenized securities comply with relevant financial regulations.

Securitize provides end-to-end lifecycle management for digital securities, simplifying the complexities associated with managing tokenized assets and contributing to the seamless integration of digital securities into the broader financial ecosystem. This approach enhances the liquidity and market accessibility of tokenized assets issued through the platform, creating a dynamic and interconnected ecosystem for digital securities trading.

Securitize recently announced a strategic partnership with BlackRock [10] with the launch of the BlackRock USD Institutional Digital Liquidity Fund (BUIDL) leveraging Securitize’s technology. As part of this partnership, BlackRock has made a strategic investment in Securitize as they look to expand the suite of tokenized products in the near future.

Jiritsu: Revolutionizing Real-World Asset Management

Jiritsu is utilizing advanced technologies like zero-knowledge proofs, off-chain verifiable compute, and multi-party computation to revolutionize the security and programmability of blockchain transactions.

Jiritsu focuses on RWAs tokenization beyond the boundaries of cryptocurrency, recognizing its potential impact on global trading infrastructure. By automating tokenization processes and utilizing verifiable computing, Jiritsu addresses the intricacies of asset management and tokenization, providing cost-effective solutions for financial institutions and cryptocurrency protocols.

The platform’s ability to maintain zero-knowledge plays a crucial role in attestation, confirming the accuracy of asset tokenization without compromising privacy. This feature is attractive to financial institutions that seek a delicate balance between offering financial products to high-net-worth clients and preserving confidentiality.

The recent partnership with Republic’s marketplace exemplifies Jiritsu’s mission to democratize investment and expand opportunities beyond traditional boundaries.

Benefits and challenges associated with tokenization of real-world assets

Benefits of Tokenization:

There are many benefits to tokenizing Real-World Assets, including:

Trust and transparency

Utilizing a public and immutable record on the blockchain provides complete visibility into asset ownership and transaction activity. This establishes a clear title and provenance by leveraging the inherent auditability of blockchain technology. Furthermore, it prevents fraud by enabling open tracking of transfers, liens, and other relevant details. This reduces discrepancies and increases the overall trustworthiness of investments.

Increased liquidity

Fractionalizing RWAs facilitates greater liquidity by being tradable in small tranches (and technically at any time), opening a new secondary market for real-world investments that was not previously possible.

Efficiency and accessibility

Tokenization of RWAs allows for the trading of fractional parts of high-value assets with greater efficiency, operating 24/7 on digital exchanges. This approach eliminates the need for traditional brokers, allowing for fast and global transactions on a large scale. Tokenization advancements streamline processes, especially in cross-border deals, and automate the redistribution of income and profits.

Global financial inclusion

Fractionalization of RWAs can provide global access to a wider audience. With a digital wallet, individuals from anywhere in the world can participate in these markets, breaking down geographical barriers that have traditionally limited market access.

Cost reduction

Tokenization of RWAs reduces transactional fees and documentation expenses by removing many intermediaries. Automated blockchain consensus can also reduce maintenance costs.

Bridge between TradFi and DeFi

RWAs and tokenized assets serve as foundational infrastructure for integrating traditional assets into DeFi, bridging the gap between the two markets.

Challenges of Tokenization:

Tokenizing RWAs presents substantial potential but is accompanied by several challenges. These include the necessity for compliance with regulations, the development of appropriate technological frameworks, and gaining acceptance within the market.

Regulatory challenges

The legal connection between RWAs and their off-chain counterparts presents challenges due to unclear regulatory guidance when it comes to tokenized assets and the need for a new regulatory framework that links the on-chain digital representation of an asset to comply with existing financial laws that govern off-chain assets. We expect regulators to provide clarity as tokenized assets become more widely used and tokens come to represent a more diverse set of asset rights.

Blockchain complexity and user discouragement

Although blockchain products can offer true and secure ownership, its user interface remains complex, making it difficult to use for those unfamiliar with its intricacies, limiting broader adoption.

Technical complexity and financial risks

Integrating RWAs into blockchains is a complex process that involves several technical challenges.

Maintaining a real-time price connection between the on-chain representation of an asset (the ‘digital twin’) and its real-world counterpart is one of the primary complexities. Sophisticated technology and constant monitoring are necessary to ensure real-time synchronization of digital and physical asset values.

In addition, tokenized assets are vulnerable to de-pegging risk, where their value diverges from the underlying asset. This can stem from market volatility, liquidity issues, or doubts about maintaining the peg. To prevent this, advanced technological solutions and strategic risk management are required to maintain the integrity and value stability of the tokenized assets.

Final remarks

Tokenization isn’t just a buzzword; it’s a transformative force that is reshaping the financial sector as we know it. From revolutionizing investing, to unlocking global financial inclusion, to navigating different tokenization models, the journey is filled with promise, challenges, and the potential for unprecedented growth.

One thing is certain: the era of tokenization is upon us, and its impact is reverberating throughout the global economy.

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General source: (2023, February 18). Tokenized Real-World Assets (RWAs): Scaling Onchain Finance to a Global Level. Chainlink Blog.

General source: What are tokenized real-world assets (RWA), and why do they matter in DeFi. (n.d.). Cointelegraph.

[1] SIX survey finds massive buy side demand for digital asset tokenization. (2023, June 26). Ledger Insights — Blockchain for Enterprise. URL:

[2] Bloomberg. (2024, March 27). BlackRock’s Tokenized Fund Draws $240 Million Since Debut. URL:

[3] Dune Analytics / (2024, April 4). Overview of Tokenization. Data accessed April 4, 2024. URL : — Only Includes Fiat-Collateralized Stablecoins that are being natively minted on blockchains

[4] Dune Analytics / (2024, April 4). Overview of Tokenization. Data accessed April 4, 2024. URL :

[5] CoinDesk (2024, March 27). HSBC’s Gold Token Goes Live for Retail Investors in Hong Kong. URL:

[6] Amoussou, M. (2022, October 20). BNY Mellon Believes ‘Digital assets are here to stay’ — 2022 Survey Results Revealed. URL:

[7] CoinDesk (2023, August 9). Stablecoin market to grow to almost $3t in next 5 years. URL:

[8] CoinDesk (2023, October 17). Tokenized RWAs Could Grow to a $10T Market by 2030 as Crypto Converges to TradFi: Report. URL:

[9] Mac Naggar And Jack Chong, C. E. (n.d.). Blog — The Spectrum of Tokenization Report. URL:

[10] Securitize (2024, March 20). BlackRock Launches Its First Tokenized Fund, BUIDL, on the Ethereum Network. URL:

[11] Ledesma, L., & Godbole, O. (2023, October 11). First Mover Americas: JPMorgan Goes Live With First Blockchain-Based Collateral Settlement. CoinDesk. Retrieved from URL: