Author: Mesh
Translation: Shenchao TechFlow
To be honest, 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; real institutional capital is being deployed on-chain.
I have been following this field for some time, and the recent pace of development is astonishing. From government bonds, private credit to tokenized stocks, these assets are transitioning to blockchain infrastructure faster than the market expected.
Currently, five protocols have become the foundation of this field: RaylsLabs, OndoFinance, Centrifuge, CantonNetwork, and Polymesh. They are not competing for the same type of clients but are targeting different needs of institutions: banks need privacy, asset management companies pursue efficiency, and Wall Street firms demand compliance infrastructure.
This is not about who "wins," but about which infrastructure institutions choose and how traditional assets can achieve the migration of trillions of dollars through these tools.
The Overlooked Market Approaches $20 Billion
Three years ago, tokenized RWA was hardly considered a category. Today, the on-chain deployed assets of government bonds, private credit, and public stocks are nearing $20 billion. This growth is significant compared to the $6 billion to $8 billion range at the beginning of 2024.
To be honest, the performance of the sub-markets is more interesting than the total size.
According to a market snapshot provided by rwa.xyz at the beginning of January 2026:
Government bonds and money market funds: approximately $8 billion to $9 billion, accounting for 45%-50% of the market
Private credit: $2 billion to $6 billion (small base but fastest growth, accounting for 20%-30%)
Public stocks: over $400 million (growing rapidly, mainly driven by OndoFinance)
Three Major Drivers Accelerating RWA Adoption:
The appeal of yield arbitrage: Tokenized government bond products offer a return of 4%-6% and support 24/7 access, while traditional markets have a T+2 settlement cycle. Private credit tools offer returns of 8%-12%. This is a straightforward calculation for CFOs managing billions of dollars in idle capital.
Gradual improvement of regulatory frameworks: The EU's Markets in Crypto-Assets Regulation (MiCA) has been enforced in 27 countries. The SEC's Project Crypto is advancing an on-chain securities framework. Meanwhile, No-Action Letters allow infrastructure providers like DTCC to tokenize assets.
Maturity of custody and oracle infrastructure: Chronicle Labs has processed over $20 billion in total locked value, and Halborn has completed security audits for major RWA protocols. These infrastructures are mature enough to meet fiduciary standards.
Despite this, the industry still faces significant challenges. The cost of cross-chain transactions is estimated to reach $1.3 billion annually. Due to the high cost of capital movement exceeding arbitrage yields, the price difference for the same asset across different blockchains reaches 1%-3%. The conflict between privacy needs and regulatory transparency requirements remains unresolved.
RaylsLabs: The Privacy Infrastructure Banks Truly Need
@RaylsLabs positions itself as a compliance-first bridge connecting banks with decentralized finance (DeFi). Developed by the Brazilian fintech company Parfin and supported by Framework Ventures, ParaFi Capital, Valor Capital, and Alexia Ventures, its architecture is a public permissioned, EVM-compatible L1 blockchain designed specifically for regulated entities.
I have been following the development of its Enygma privacy tech stack for some time. The key is not the technical specifications but its methodology. Rayls is addressing the real needs of banks rather than catering to the DeFi community's imagination of banking needs.
Core features of the Enygma privacy tech stack: 1. Zero-knowledge proofs: ensuring transaction confidentiality; 2. Homomorphic encryption: supporting computations on encrypted data; 3. Native operations across public chains and private institutional networks; 4. Confidential payments: supporting atomic swaps and embedded "payment settlements"; 5. Programmable compliance: selectively disclosing data to designated auditors.
Real-world use cases: 1. Central Bank of Brazil: for CBDC cross-border settlement pilot; 2. Núclea: regulated accounts receivable tokenization; 3. Several undisclosed node clients: for privatized payment settlement workflows.
Latest Developments
On January 8, 2026, Rayls announced the completion of a security audit conducted by Halborn. This provides institutional-grade security certification for its RWA infrastructure, which is particularly important for banks evaluating production deployments.
Additionally, the AmFi Alliance plans to achieve a target of $1 billion in tokenized assets on Rayls by June 2027, with a reward support of 5 million RLS tokens. AmFi is Brazil's largest private credit tokenization platform, bringing immediate trading volume to Rayls and setting an 18-month specific milestone. This is one of the largest institutional RWA commitments obtained in any blockchain ecosystem to date.
Target Market and Challenges
Rayls' target clients are banks, central banks, and asset management companies that require institutional-grade privacy. Its public permissioned model restricts validator participation to licensed financial institutions while ensuring the confidentiality of transaction data.
However, the challenge Rayls faces is how to prove its market appeal. In the absence of publicly available TVL data or announced client deployments beyond pilots, the $1 billion AmFi target by mid-2027 becomes a critical test.
OndoFinance: The Rapid Race for Cross-Chain Expansion
Ondo has achieved the fastest expansion from institutional to retail in the RWA tokenization space. Starting with a focus on government bonds, it has now become the largest platform in the tokenized public stock sector.
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 chain: approximately $176 million
I personally tested the USDY product on Solana, and the user experience was incredibly smooth: combining institutional-grade government bonds with the convenience of DeFi is the key.
Latest Updates
On January 8, 2026, Ondo launched 98 new tokenized assets at once, covering stocks and ETFs in areas such as artificial intelligence (AI), electric vehicles (EV), and thematic investments. This is not a small-scale trial but 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 to enter retail-friendly infrastructure. According to the product roadmap, the goal is to launch over 1,000 tokenized assets as expansion progresses.
Industry Focus:
AI sector: Nvidia, data center REITs (Real Estate Investment Trusts)
Electric vehicle sector: Tesla, lithium battery manufacturers
Thematic investments: traditionally limited special sectors due to minimum investment thresholds
Multi-Chain Deployment Strategy:
Ethereum: DeFi liquidity and institutional legitimacy
BNB Chain: Coverage of exchange-native users
Solana: Supporting large-scale consumer use with sub-second transaction finality
To be honest, while Ondo's token price has dropped, its TVL has reached $1.93 billion, which is the most important signal: the protocol's growth prioritizes over speculation. This growth is mainly driven by the demand for idle stablecoin yields from institutional government bonds and DeFi protocols. The increase in TVL during the market consolidation in Q4 2025 indicates real demand, not just chasing market trends.
By establishing custody relationships with broker-dealers, completing Halborn security audits, and launching products on three major mainstream blockchains within six months, Ondo has gained a competitive edge that rivals find hard to catch up with. For example, its competitor Backed Finance has a tokenized asset scale of only about $162 million.
However, Ondo still faces some challenges:
Price volatility during non-trading hours: Although tokens can be transferred at any time, pricing still needs to reference exchange operating hours, which may create arbitrage price differences during U.S. night trading hours.
Compliance restrictions: Securities laws require strict KYC and verification checks, limiting the narrative of "permissionless."
Centrifuge: How Asset Managers Truly Deploy Billions
Centrifuge has become the standard infrastructure for institutional-grade private credit tokenization. As of December 2025, the protocol's TVL has soared to $1.3 billion to $1.45 billion, driven by actual deployed institutional capital.
Major 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 managed $21.4 billion AAACLO ETF
Announced expansion plans in July 2025, targeting an additional $250 million investment on Avalanche
Grove Fund Allocation (Institutional credit protocol of the Sky ecosystem)
Committed fund allocation strategy reaches $1 billion
Initial startup capital of $50 million
The founding team of the project comes from Deloitte, Citigroup, BlockTower Capital, and Hildene Capital Management
Chronicle Labs Oracle Partnership (Announced January 8, 2026)
Asset proof framework: Provides cryptographically verified holding data
Supports transparent net asset value (NAV) calculations, custody verification, and compliance reporting
Provides dashboard access for limited partners and auditors
I have been following the oracle issues 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 8 also included a video demonstration showing that this solution is already in practical use, rather than a future promise.
Centrifuge's Unique Operating Model:
Unlike competitors that simply package off-chain products, Centrifuge tokenizes credit strategies directly at the issuance stage. Its process is as follows:
Issuers design and manage funds through a single transparent workflow;
Institutional investors allocate stablecoins for investment;
Funds flow to borrowers after credit approval;
Repayments are proportionally distributed to token holders via smart contracts;
The annual percentage yield (APY) on AAA-rated assets ranges from 3.3% to 4.6%, and is fully transparent.
Networks supported by the multi-chain V3 architecture: Ethereum; Base, Arbitrum, Celo, Avalanche
The key is that asset managers need to prove that on-chain credit can support billions of dollars in deployment, and Centrifuge has already achieved this. The partnership with Janus Henderson alone provides billions of dollars in capacity.
Additionally, Centrifuge's leadership in industry standard-setting (such as co-founding the Tokenized Asset Coalition and Real-World Asset Summit) further solidifies its position as infrastructure rather than a single product.
Although the $1.45 billion TVL demonstrates institutional investment demand, the 3.8% target APY seems less attractive compared to higher-risk, higher-return opportunities in DeFi's history. How to attract DeFi-native liquidity providers beyond the Sky ecosystem allocation becomes Centrifuge's next challenge.
CantonNetwork: Wall Street's Blockchain Infrastructure
Canton is a response to the permissionless ethos of DeFi with an institutional-grade blockchain: a privacy-preserving public network supported by top Wall Street firms.
Participating Institutions: DTCC (Depository Trust & Clearing Corporation), BlackRock, Goldman Sachs, Citadel Securities.
Canton aims to target the $37 trillion annual settlement flow processed by DTCC in 2024. Yes, that number is not a typo.
DTCC Partnership (December 2025)
The partnership with DTCC is crucial. This is not just a pilot project but a core commitment to building the U.S. securities settlement infrastructure. By obtaining SEC's No-Action Letter approval, this collaboration allows some U.S. Treasury securities held by DTCC to be natively tokenized on Canton, with plans to launch a controlled production 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 focused on government bonds (lowest credit risk, high liquidity, clear regulation);
After the MVP phase, may expand to corporate bonds, stocks, and structured products.
Initially, I was skeptical about permissioned blockchains. But the partnership with DTCC changed my perspective. This is not due to its technical superiority, but because it is infrastructure that traditional finance will genuinely adopt.
Temple Digital Platform Launch (January 8, 2026): Canton’s institutional value proposition was further clarified in the private trading platform launched by Temple Digital Group on January 8, 2026.
Canton offers a central limit order book with sub-second matching speed, using a non-custodial architecture. It currently supports trading of cryptocurrencies and stablecoins, with plans to support tokenized stocks and commodities in 2026.
Ecosystem Partners: 1. Franklin Templeton manages a $828 million money market fund; 2. JPMorgan facilitates payment settlement through JPMCoin.
Canton's Privacy Architecture: Canton’s privacy features are based on smart contract level, implemented using Daml (Digital Asset Modeling Language):
Contracts explicitly state which parties can see which data;
Regulators can access complete audit trails;
Counterparties can view transaction details;
Competitors and the public cannot see any transaction information;
Status updates are propagated atomically across the network.
For institutions accustomed to using Bloomberg terminals and dark pools for confidential trading, Canton’s architecture provides blockchain efficiency while avoiding the public disclosure of trading strategies, making this design particularly reasonable. After all, Wall Street will never expose proprietary trading activities on a transparent public ledger. The participation of over 300 institutions in Canton demonstrates its appeal among institutions. However, many of the reported trading volumes may be more simulation pilot activities rather than actual production flows. The current limitation lies in the development speed: the MVP planned for delivery in the first half of 2026 reflects a multi-quarter planning cycle. In contrast, DeFi protocols typically launch new products within weeks.
Polymesh: A Securities Blockchain Network Born for Compliance
Polymesh stands out through protocol-level compliance rather than the complexity of smart contracts. As a blockchain designed specifically for regulated securities, Polymesh conducts compliance verification at the consensus level without relying on custom code.
Core Features
Protocol-level identity verification: Conducted through licensed customer due diligence providers;
Embedded transfer rules: Non-compliant transactions fail directly at the consensus stage;
Atomic payment settlement: Transactions are completed with final confirmation within 6 seconds.
Production-Grade Integration
Republic (August 2025): Supports private securities issuance;
AlphaPoint: Covers over 150 trading venues across 35 countries;
Target areas: Regulated funds, real estate, corporate equity, etc.
Advantages: No need for custom smart contract audits; the protocol automatically adapts to regulatory changes; non-compliant transfer operations cannot be executed.
Challenges and Future: Polymesh currently operates as an independent chain, which isolates it from DeFi liquidity. To address this issue, plans are in place to launch an Ethereum Bridge in the second quarter of 2026. Whether this can be achieved on schedule remains to be seen. Frankly, I had underestimated the potential of this "compliance-native" architecture. For those 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 Protocols Segment the Market?
These five protocols do not directly compete, as they each address different issues:
Privacy Solutions:
Canton: Based on Daml smart contracts, focusing on Wall Street counterparty relationships;
Rayls: Uses zkps to provide bank-grade mathematical privacy protection;
Polymesh: Protocol-level identity verification, offering a one-stop compliance solution.
Expansion Strategies:
Ondo: Manages $1.93 billion across three chains, prioritizing liquidity speed over depth;
Centrifuge: Focuses on the $1.3 billion to $1.45 billion institutional credit market, prioritizing depth over speed.
Target Markets:
Banks/CBDC → Rayls
Retail/DeFi → Ondo
Asset Management Companies → Centrifuge
Wall Street → Canton
Security Tokens → Polymesh
In my view, this market segmentation is more important than people realize. Institutions do not choose the "best blockchain," but rather the infrastructure that can address their specific compliance, operational, and competitive needs.
Unresolved Issues
Fragmentation of Interchain Liquidity: The cost of cross-chain fragmentation is very high, estimated at $1.3 billion to $1.5 billion annually. Due to the high costs of cross-chain bridging, a price difference of 1%-3% 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, if liquidity is scattered across incompatible chains, the efficiency gains will be nullified.
The Paradox of Privacy and Transparency: Institutions require confidentiality in transactions, while regulators demand auditability. In scenarios with multiple participants (such as issuers, investors, rating agencies, regulators, and auditors), each party requires different levels of visibility. Currently, there is no perfect solution.
Regulatory Fragmentation: The EU has passed MiCA (Markets in Crypto-Assets Regulation), applicable to 27 countries; the U.S. requires case-by-case applications for No-Action Letters, which can take months; cross-border capital flows face challenges from jurisdictional conflicts.
Oracle Risks: Tokenized assets rely on off-chain data. If data providers are attacked, the performance of on-chain assets may reflect an incorrect reality. Although Chronicle's asset proof framework provides some solutions, risks still exist.
The Path to a Trillion-Dollar Market: Key Catalysts in 2026
Catalysts to Watch in 2026:
Ondo's Solana Launch (Q1 2026): Testing whether retail-scale distribution can create sustainable liquidity; success metrics: over 100,000 holders, proving real demand exists.
Canton's DTCC MVP (H1 2026): Validating the feasibility of blockchain in U.S. Treasury settlements; if successful: could shift trillions of dollars in capital flows to on-chain infrastructure.
Passage of the U.S. CLARITY Act: Providing a clear regulatory framework; enabling currently hesitant institutional investors to deploy capital.
Centrifuge's Grove Deployment: $1 billion allocation to be completed within 2026; testing the actual capital operation of credit tokenization; if executed smoothly without credit events, it will boost asset management companies' confidence.
Market Forecasts
2030 Target: Tokenized asset scale reaches $2-4 trillion;
Growth Demand: Increases from the current $19.7 billion by 50-100 times;
Assumptions: Regulatory stability, cross-chain interoperability readiness, no major institutional failure events.
Growth Forecast by Industry:
Private Credit: Increases from the current $2-6 billion to $150-200 billion (small base, highest growth rate);
Tokenized Treasury Bonds: Potential to reach $5 trillion+ if money market funds migrate on-chain;
Real Estate: Expected to reach $3-4 trillion (depending on whether real estate registration systems adopt blockchain-compatible property registration).
Trillion-Dollar Milestone:
Expected Achievement Time: 2027-2028;
Expected Distribution: Institutional Credit: $30-40 billion; Treasury Bonds: $30-40 billion; Tokenized Stocks: $20-30 billion; Real Estate/Commodities: $10-20 billion.
This requires a fivefold growth from current levels. Although the target is ambitious, considering the institutional momentum in Q4 2025 and the upcoming regulatory clarity, this goal is not out of reach.
Why Are These Five Protocols Crucial?
The institutional RWA landscape at the beginning of 2026 shows an unexpected trend: there is no single winner because there is no single market.
Frankly, this is the direction that infrastructure should develop.
Each protocol addresses different issues:
Rayls → Banking privacy;
Ondo → Tokenized stock distribution;
Centrifuge → On-chain deployment for asset management companies;
Canton → Migration of Wall Street infrastructure;
Polymesh → Simplifying securities compliance.
The market size growing from $8.5 billion at the beginning of 2024 to $19.7 billion indicates that demand has surpassed speculative behavior.
Core Needs of Institutional Players:
CFOs: Yield and operational efficiency;
Asset Management Companies: Lower distribution costs, expand investor base;
Banks: Infrastructure that meets compliance requirements.
The Next 18 Months Are Critical
Ondo's Solana Launch → Testing the scalability of the retail market;
Canton’s DTCC MVP → Testing institutional-level settlement capabilities;
Centrifuge's Grove Deployment → Testing credit tokenization with actual capital;
Rayls' $1 billion AmFi Target → Testing the adoption of privacy infrastructure.
Execution takes precedence over architecture, and results matter more than blueprints. This is the key right now.
Traditional finance is moving towards a long-term process of 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 development path of tokenization—whether as an efficiency improvement of existing structures or as a new system replacing traditional financial intermediaries.
The infrastructure choices made by institutions in 2026 will define the industry landscape for the next decade.
Key Milestones in 2026
Q1: Ondo's Solana Launch (98+ stocks launched);
H1: Canton’s DTCC MVP (Tokenization of Treasury Bonds based on Wall Street infrastructure);
Ongoing: Centrifuge's $1 billion Grove Deployment; Rayls' AmFi ecosystem development.
Trillion-dollar assets are on the horizon. NFA.
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