"Can everything be tokenized, and can it really be sold?"
Written by: Max.S
On August 27, Binance founder Zhao Changpeng (CZ) attended the "Crypto Finance Forum 2025" held at the University of Hong Kong and stated that RWA (Real World Assets) is not as easy as imagined, especially for non-financial RWA assets that may lack strong trading characteristics and could fall into liquidity shortages.
In the future, rental income from any property around the world, fractional ownership of a rare artwork, or even a portion of private credit returns could be easily traded like stocks. The concept of "tokenizing real-world assets (RWA)" paints an exciting grand blueprint. It aims to inject blockchain technology into traditional finance to break the limitations of physicality and geography. Traditionally cumbersome, non-standard, and hard-to-circulate assets like real estate, artworks, and private equity would be transformed into digital tokens that can be traded frictionlessly on-chain around the clock, fully unleashing their liquidity potential.
A financial revolution seems poised to upend Wall Street, and it sounds promising. With the rapid development of technology, by mid-year, $24 to $25 billion of real-world assets (excluding stablecoins) have successfully been moved onto the blockchain, involving 15 different blockchain ecosystems. However, peeling back the veil of this prosperous market cap reveals an awkward reality: everything can be tokenized, but can it really be sold? A deep research report released in 2025, backed by detailed data and case studies, ruthlessly exposes a secret that everyone in the RWA field understands: while we have mastered the magic of digitizing everything, the market that allows these digital assets to flow freely has yet to be built. In the RWA narrative, liquidity sounds the most enticing, yet it remains the most critical bottleneck.
The Illusion of Prosperity: A $10 Billion Market Made of "Piggy Banks"
At first glance, the data from the RWA market may astonish with its impressive growth curve. In just a few years, a new market worth hundreds of billions of dollars has emerged, seemingly proving the immense success of tokenization. However, a closer examination of its composition reveals that this prosperity is quite misleading. Currently, private credit and tokenized U.S. Treasury bonds, the two giants, almost monopolize the entire RWA market, holding the vast majority of market share.
The reason these assets dominate is simple: they serve as "on-chain piggy banks" exclusive to institutions and high-net-worth individuals. In the DeFi space, investors can purchase tokenized money market funds like BUIDL issued by traditional financial giants such as BlackRock, or hold tokenized U.S. Treasury bonds through platforms like OndoFinance to earn stable and substantial returns. The main attraction of these products is "yield" rather than "trading." Investors often hold them until maturity to collect interest, rather than frequently trading them like cryptocurrencies. Although the market cap is large, the mainstream approach is a "buy and hold" static model rather than the active secondary trading market that many expect.
Ironically, in the RWA market, the asset classes that theoretically stand to benefit the most from increased liquidity, such as real estate, artworks, and small to medium-sized enterprise loans, account for only a tiny fraction. For instance, the total market cap of tokenized real estate is about $300 million, while niche categories like artworks and carbon credits hover around $100 million. This indicates a core contradiction: the most successful application of tokenization technology currently is to digitally package assets that already have decent liquidity or low volatility, rather than tackling the structurally "illiquid" assets that are harder to chew. A series of splendid digital vaults have been built, only to find that most contain time deposits, not cash that can be traded at any time.
Cold On-Chain Data Proves: "Empty Shelves" Beneath High RWA Market Cap
If the market composition exposes the macro structure of the problem, on-chain micro data confirms the lack of liquidity in a more stark manner. Researchers analyzed data from platforms like RWA.xyz and Etherscan, outlining the true liquidity landscape through dimensions such as token holder dispersion, monthly active addresses, and trading frequency.
Take the market's brightest star — BlackRock's BUIDL token. It has consistently held the top market cap in RWA assets, valued at $2.42 billion, with monthly transfer amounts exceeding $1.8 billion. At first glance, these numbers are impressive, but looking at a few more indicators reveals that despite its large asset scale, it has only 85 holders, with only 30 truly active addresses each month. This indicates that the massive capital flow mostly occurs between the project party and a few institutional investors during the minting and redemption phases, and the kind of open secondary market trading we understand is almost non-existent.
In the RWA field, the phenomenon of "high market cap, low vitality" is quite common, with many tokens serving institutions having fewer than 10 active addresses each month. For example, the TRSY (tokenized treasury bonds) issued by Centrifuge has only 6 holders, and one study bluntly pointed out the problem: scholar Swinkels conducted an empirical analysis of residential real estate tokens issued on the RealT platform and found that each token changes hands only once a year on average. In contrast, developed market stocks typically have much higher turnover rates each year. This near-stagnant turnover rate ruthlessly shatters the myth that "tokenization equals high liquidity," as these so-called "liquid assets" behave like a stagnant pool on-chain.
However, there are exceptions. Although the RWA market is generally quiet, tokenized gold products like PAXGold (PAXG) and TetherGold (XAUT) are different; they are vibrant, with over 69,000 PAXG holders and more than 52,000 monthly transfers. On-chain activity records indicate that it has been trading for over five years, with a stable and continuous trading cycle, unlike the short-lived, isolated bursts of transfers seen with other RWA tokens.
Why can gold tokens stand out? The answer lies not in gold itself, but in its "market access." The vast majority of RWA tokens are trapped in a permissioned, fragmented trading environment. However, PAXG and XAUT are different; they are listed on mainstream centralized exchanges like Binance and Kraken, as well as decentralized trading platforms like Uniswap, providing broad trading channels without the need for permission. This significantly lowers the participation threshold for retail and institutional investors, offering real-time price discovery mechanisms and deep market depth. The success of PAXG reflects the fundamental issue of other RWA assets: the lack of an open, unified, and easily accessible trading market.
The Invisible Shackles of Liquidity: Four Structural Barriers
Why has moving assets onto the blockchain not brought the expected liquidity? Four structural shackles have locked the door to RWA liquidity.
The first shackle: Under the "invisible wall" of regulation, most RWA tokens are legally classified as "securities" and must comply with strict securities regulations. Issuers must set up numerous barriers for compliance. For instance, only users verified through "Know Your Customer" (KYC) or certified as "qualified investors" are allowed to participate in trading. While the "whitelist" mechanism ensures compliance, it also narrows the potential pool of buyers and sellers, stifling the market's breadth and depth. Investors must complete complex off-chain contracting and identity verification processes before trading, making the process not as "frictionless" as advertised.
The second shackle: The market exhibits a "fragmented island" phenomenon. Imagine if there were no central exchanges like the NYSE or NASDAQ, and stocks could only be bought and sold on hundreds of disconnected small trading applications. The RWA market currently faces such a situation. Various decentralized exchanges (DEXs), specialized alternative trading systems (ATS), and informal over-the-counter (OTC) networks disperse assets, with each platform resembling a liquidity island. Due to the lack of a unified central market to aggregate order flow, price discovery efficiency is low, and trading costs are high.
The third shackle: There is a "black box valuation problem." How can a small portion of a specific property or a unique private loan be accurately priced on-chain? Unlike homogeneous crypto assets like Bitcoin, each RWA has unique risk, legal, and value characteristics, making fair value extremely difficult to determine due to this heterogeneity. Traders, limited by information asymmetry, find it hard to reach a consensus on asset value, leading to significant bid-ask spreads. To compensate for this uncertainty and potential exit difficulties, investors often demand a "liquidity discount," further depressing asset prices and creating a self-reinforcing "illiquidity spiral."
The fourth shackle: In mature financial markets, the role of "market makers" is crucial. They ensure market liquidity by continuously providing buy and sell quotes and narrowing spreads. However, in the current RWA ecosystem, professional market makers are scarce, leading to a "role vacancy" situation. Although some DeFi protocols attempt to incentivize users to provide liquidity through liquidity mining and other means, these incentives often fail to attract and maintain stable liquidity pools for low-volume, non-homogeneous RWA tokens.
High on-chain transaction fees (Gas Fees), interoperability barriers between different blockchain networks, and other technical and operational issues further exacerbate the liquidity dilemma.
Path to Resolution: Building a Multi-Dimensional Bridge to Liquidity
With such severe challenges ahead, does the future of RWA look bleak? I don't think so. It emphasizes that liquidity issues can be resolved, but systematic innovation and construction must occur across multiple levels, including legal, market structure, financial instruments, and infrastructure. Here are some ideas for breaking the deadlock:
Embrace a "hybrid" market structure. Purely decentralized or centralized models both have drawbacks; a hybrid model combining both may be the best way forward. Specifically, regulated centralized platforms can be used for initial asset issuance, compliance review, and custody to ensure asset authenticity and legality. Then, through technological bridges, compliant tokens can be connected to open decentralized protocols for secondary market trading and circulation, which can meet regulatory requirements while leveraging the composability and automated market makers (AMM) of DeFi to create liquidity.
Explore "collateral as liquidity." Not all liquidity must come from directly selling assets; "collateralized lending" is a more ingenious approach. MakerDAO's exploration is quite enlightening; it is one of the largest decentralized stablecoin protocols and has begun using tokenized U.S. short-term Treasury bonds and other RWAs as collateral for the stablecoin DAI. This means that RWA holders do not need to sell their assets; they can borrow DAI by using them as collateral, obtaining the necessary liquidity. This "indirect liquidity" model is undoubtedly a perfect solution for assets suitable for long-term holding but occasionally needing capital turnover, such as real estate and private equity.
Strengthen the foundation and improve the ecosystem. The flowing water of liquidity needs a solid riverbed to support it. This includes: regulatory modernization: actively promoting regulatory innovation, such as utilizing the EU's DLT pilot regime framework, to appropriately relax access thresholds while protecting investors, allowing a broader group to participate. Establish more specialized data analysis platforms like RWA.xyz to provide standardized asset disclosures and third-party valuation reports, reducing information asymmetry.
Develop institutional-grade facilities: Design more attractive incentive schemes, such as distributing a portion of the income generated by the assets (like bond interest) to liquidity providers, encouraging them to inject vitality into the market. Build secure and reliable institutional-grade custody solutions and compliant tokenized securities exchanges to enhance market confidence and reduce trading risks.
In Conclusion
Returning to the initial question, "Can everything that is tokenized be sold smoothly?" The answer is: not yet, but there is hope for the future. While RWA tokenization technology has proven feasible, this is just the first step of a long journey. Building a mature, complete, and coordinated market ecosystem is the real challenge. Liquidity will not appear out of thin air; it must be carefully designed and nurtured. "Enhancing liquidity" must become the core and primary task of RWA project design. Only when regulatory barriers are broken, market islands are connected, and valuation black boxes are illuminated will the truly efficient and inclusive era of RWA trading arrive.
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