Original title: "From ripples to waves: The transformational power of tokenizing assets"
Written by: Anutosh Banerjee, Matt Higginson, Julian Sevillano, Matt Higginson
Compiled by: Chris, Techub News
Tokenized financial assets are starting from the pilot stage toward large-scale deployment. While adoption is not yet widespread, financial institutions involved in blockchain will have a strategic advantage.
Tokenization refers to the process of creating token assets on the blockchain network, which has become relatively mature after years of development. The benefits of tokenization include programmability, composability, and enhanced transparency. Tokenization can enable financial institutions to improve operational efficiency, increase liquidity, and create new revenue opportunities through innovative ways. These benefits are already being realized today, with the first applications adopting tokenization transacting trillions of dollars in assets on-chain every month. But so far tokenization itself still has some loopholes. Further integration of these technologies into traditional finance requires the cooperation of all relevant stakeholders, and to do so in a robust, secure and compliant manner. As infrastructure players move from proof-of-concepts to robust, large-scale solutions, there will be many opportunities and challenges in reimagining how financial services will work in the future (see “What is tokenization?”).
If we were asked to design the financial services of the future, we would probably design them to include many features of tokenized digital assets: 24/7 availability, instant liquidity of global collateral, equitable access, benefits from a common technology stack Composability and controlled transparency. BlackRock Chairman and CEO Larry Fink said in January 2024: "We believe that the next step will be the tokenization of financial assets, which means that every stock and every bond will be recorded in a On the ledger." More and more institutions are launching and expanding tokenized products, from tokenized bonds and funds to private equity and cash.
As tokenization technology matures and demonstrates considerable economic benefits, the digitization of assets now seems even more inevitable. But widespread adoption of tokenization is still far away. The current infrastructure is imperfect, especially in highly regulated industries like financial services. Therefore, we expect tokenization adoption to occur in multiple phases: The first phase will be driven by companies or projects that can demonstrate return on investment and have a certain scale. Next are companies or projects that have smaller markets, less obvious benefits, or need to solve more difficult technical challenges.
Based on our analysis, we estimate that total tokenized market capitalization could reach approximately $2 trillion by 2030 (excluding cryptocurrencies such as Bitcoin and stablecoins such as USDT), driven by strong investment in mutual funds, Adoption in bonds and exchange-traded notes (ETNs), loans and securitizations, and alternative funds. Under an optimistic scenario, this value could double to about $4 trillion.
In this article, we provide our perspective on tokenization adoption. We describe the current landscape of tokenization adoption (mostly focused on a limited set of assets), as well as the benefits and feasibility of broader tokenization. We then examine current use cases targeting meaningful market share and make the case for growth across different asset classes. For the remaining major financial asset classes, we examine the "cold start" problem and propose possible steps to resolve it. Finally, we consider the risks and rewards of first movers and provide a “call to action” for future financial market infrastructure participants.
Phased Tokenization
The pace and timing of tokenization adoption will vary across asset classes due to differences in expected returns, feasibility, time to impact and market participants’ risk appetite. We expect these factors will determine when tokenization will gain widespread adoption. Asset classes with larger market capitalizations, higher current value chain frictions, less mature legacy infrastructure, or less liquid liquidity are more likely to experience greater-than-expected gains from tokenization. For example, we believe tokenization is most feasible for asset classes with lower technical complexity and regulatory considerations.
Interest in tokenized investments is likely to be inversely proportional to the degree of fee richness gained from current inefficient processes, depending on whether functionality is handled in-house or outsourced, and how concentrated the major players and their fees are. Outsourced activities often achieve economies of scale, thereby reducing the incentive to disrupt. The speed of return on investment associated with tokenization can strengthen the business case, thereby increasing interest in pursuing tokenization.
Specific asset classes can lay the foundation for subsequent asset class adoption by introducing clearer regulation, more mature infrastructure and investment. Adoption will also vary by geography, influenced by the changing macro environment, including market conditions, regulatory frameworks and buyer needs. Finally, high-profile successes or failures can drive or limit further adoption.
The asset classes most likely to adopt tokenization
Tokenization is gradually advancing and is expected to accelerate as network effects increase. Given their characteristics, certain asset classes that adopt tokenization may become more commonplace within a decade or even sooner, with the total tokenized market potentially exceeding $100 billion in the future. We expect the most prominent categories to include cash and deposits, bonds and ETNs, mutual funds and exchange-traded funds (ETFs), and loans and securitizations. For many of these asset classes, adoption rates are already high, driven by the efficiencies and speed of value growth and greater technical and regulatory feasibility that blockchain brings.
We estimate that the total market for tokenized assets could reach approximately $2 trillion by 2030 (excluding cryptocurrencies and stablecoins), driven primarily by the assets in the chart below. We estimate the total market for tokenized assets to be between approximately $1 trillion and approximately $4 trillion. Our estimates exclude stablecoins, including tokenized deposits, wholesale stablecoins, and central bank digital currencies (CBDCs), to avoid double counting as these typically serve as corresponding cash in the settlement of transactions involving tokenized assets.
Mutual Funds
Tokenized Market Funds already have over $1 billion in assets, demonstrating investor demand for on-chain capital in a high interest rate environment. Investors can choose between funds managed by established firms such as BlackRock, WisdomTree and Franklin Templeton, or funds managed by Web3-native firms such as Ondo Finance, Superstate and Maple Finance. In a high interest rate environment, there may be continued demand for tokenized market funds, which may also offset the role of stablecoins as on-chain stores of value. Other types of mutual funds and ETFs can provide on-chain capital diversification options to traditional financial instruments.
Moving to on-chain funds can greatly increase their utility, including instant 24-hour settlement and the ability to use tokenized funds as payment instruments. As the scale of tokenized funds grows, more product-related and operational benefits will gradually emerge. For example, the composability of hundreds of tokenized assets enables highly customized investment strategies. Using data on a shared ledger reduces errors associated with manual reconciliation and increases transparency, thereby reducing operational and technology costs. While overall demand for tokenized money market funds depends in part on the interest rate environment, it is already seeing significant traction.
Loans and Securitizations
Blockchain-backed lending is still in its early stages, but some institutions are already starting to find success in this space: Figure Technologies is one of the largest non-bank home equity line of credit (HELOC) lenders in the United States , with initial loan amounts in the billions of dollars. Web3-native companies like Centifuge and Maple Finance, as well as others like Figure, have facilitated the issuance of over $10 billion in blockchain loans.
We expect greater adoption of tokenization of loans, especially in warehouse loans and on-chain loan securitization. Traditional loans are often characterized by complex processes and a high degree of centralization. Blockchain-backed lending offers an alternative with many benefits: Real-time on-chain data is stored in a unified master ledger, serving as the single source of data, promoting transparency and standardization throughout the loan lifecycle. Smart contract-powered payment calculations and simplified reporting reduce the cost and labor required. Shortened settlement cycles and access to wider capital pools can speed up deal flow and potentially lower costs for borrowers.
In the future, tokenizing borrowers’ financial metadata or monitoring their on-chain cash flow could enable fully automated, fairer and more accurate underwriting. As more loans move to private credit channels, incremental cost savings and speed are attractive benefits for borrowers. As overall digital asset adoption grows, so will the need for Web3 native companies.
Bonds and Exchange Traded Notes
Over the past decade, more than $10 billion in total face value tokenized bonds have been issued globally. Recent prominent issuers include Siemens, the City of Lugano and the World Bank, as well as other companies, government-related entities and international organizations. Additionally, blockchain-based repurchase agreements (REPOS) have been adopted, resulting in trillions of dollars in monthly transaction volume in North America, creating operational and capital efficiency value from existing flows.
Digital bond issuance is likely to continue because once it reaches a certain scale, its potential returns are very high and relatively difficult to achieve, partly due to the need in some regions to stimulate the development of capital markets. For example, in Thailand and the Philippines, tokenized bond issuance enables investor inclusion through small investments. While benefits to date have been primarily on the issuance side, the end-to-end tokenized bond lifecycle can be enhanced through data clarity, automation, embedded compliance (e.g., transferability rules encoded at the token level) and simplification Processes (such as asset servicing) achieve at least 40% improvement in operational efficiency. Additionally, lower costs, faster issuance or diversification can improve financing for smaller issuers through “just in time” financing (i.e. optimizing borrowing costs by raising specific amounts at specific times) and leveraging global capital pools to expand the investor base .
Key Points of Repurchase Agreements
Repurchase agreements, or “repos”, are an example where tokenization adoption can be observed. Broadridge Financial Solutions, Goldman Sachs and JPMorgan currently trade trillions of dollars in repurchase volume each month. Unlike some tokenization use cases, buybacks do not require tokenization of the entire value chain to realize substantial benefits.
Financial institutions improve operational efficiency and capital utilization efficiency through tokenized repurchase. From an operational perspective, smart contract-backed execution automates routine operational management (e.g., collateral valuation and margin replenishment). It reduces errors and settlement failures and simplifies disclosure; 24/7 instant settlement and on-chain data also improves capital efficiency through intraday liquidity for short-term borrowing and enhanced collateral usage.
Most buyback terms are 24 hours or longer. Intraday liquidity reduces counterparty risk, lowers borrowing costs, enables inert cash to be lent out at short notice, and reduces liquidity buffers. Real-time, 24/7, cross-jurisdictional collateral liquidity provides access to higher-yielding, high-quality liquid assets and enables optimal movement of these collaterals among market participants, maximizing their availability .
Following Phases
In the view of many market participants, tokenized assets with great potential are alternative funds, which may drive the growth of assets under management and simplify the work of fund management. Smart contracts and interoperable networks can make managing large-scale autonomous portfolios more efficient through automated portfolio rebalancing. They may also provide new sources of capital for private assets. Diversification and secondary market liquidity may help private funds access new capital from smaller retail and high-net-worth individuals. In addition, transparent data and automation on a unified master ledger can improve back-end operational efficiency. Several established companies, including Apollo and JPMorgan Chase, are conducting experiments to test portfolio management on the blockchain. However, in order to fully realize the benefits of tokenization, the underlying assets must also be tokenized.
For some other asset classes, adoption of tokenization may be slower, either due to feasibility issues such as meeting compliance obligations or a lack of adoption incentives from key market players (see Figure 2). These asset classes include publicly traded and unlisted stocks, real estate and precious metals.
Overcoming the cold start problem
The cold start problem is a common challenge when adopting tokenization. In the world of tokenized financial assets, issuance is relatively easy and replicable, but it can only achieve a certain scale if it can capture the needs of users: whether it is through cost savings, good liquidity, or greater compliance meet user needs in other aspects.
In fact, despite some progress in proof-of-concept experiments and single fund issuances, token issuers and investors still face the cold start problem: limited liquidity due to insufficient trading volume to establish a robust market Hindering the issuance process; Fear of losing market share may cause first movers to incur additional costs by supporting parallel issuances of traditional technologies;
For example, the tokenization of bonds, with new tokenized bond issuances announced almost every week. Although there are billions of dollars of tokenized bonds outstanding today, the returns are modest compared to traditionally issued bonds, and secondary trading volumes remain minimal. Here, overcoming the cold start problem requires building a use case where digital representation of collateral brings substantial benefits, including greater liquidity, faster settlement, and higher liquidity. Achieving real, sustained long-term value requires coordination across multifaceted value chains and broad participation by new digital asset class players.
Given the complexity of upgrading the underlying operating platforms of the financial services industry, we believe a Minimum Viable Value Chain (MVVC) (by asset class) is needed to support the scaling of tokenized solutions and overcome some of these challenges. To fully realize the benefits proposed in this article, financial institutions and partner institutions must collaborate on a common or interoperable blockchain network. This connected infrastructure represents a new paradigm and raises regulatory concerns and some feasibility challenges (see Figure 3).
目前，有多个项目正在努力为机构金融服务建立通用或互操作的区块链，包括新加坡金融管理局的「守护者计划」和「受监管结算网络」。2024 年第一季度，Canton Network 试点项目汇集了 15 家资产管理公司、13 家银行，以及多家托管机构、交易所和一家金融基础设施提供商，进行了模拟交易。该试点项目验证了传统上孤立的金融系统可以成功连接和同步，利用公共许可区块链，同时保持隐私控制。
虽然在公共和私有区块链上都有成功的例子，但尚不清楚哪种区块链将承载最多的交易量。目前，在美国，大多数受联邦监管的机构被劝阻使用公共区块链进行代币化。但在全球范围内，许多机构因为以太坊网络提供的流动性和可组合性而选择它。随着统一账本的不断建设和测试，公共网络与私有网络的争论远未结束。
前进的道路
将当前金融资产代币化的状态与其他颠覆性技术的兴起进行比较，可以看出我们仍处于采用的早期阶段。消费技术（如互联网、智能手机和社交媒体）和金融创新（如信用卡和 ETF）通常在出现后的前五年内表现出最快的增长（年增长率超过 100%）。随后，年增长率放缓至约 50%，最终在十多年后实现 10% 到 15% 的较温和复合年增长率。尽管早在 2017 年就开始了试验，但代币化资产的大规模发行直到最近几年才出现。我们对 2030 年的市值估计平均假设各资产类别的年复合增长率为 75%，第一波采用代币化的资产将引领这一潮流。
虽然期望代币化推动金融行业的转型是合理的，但对于能够「赶上浪潮」的先行者来说，可能会有额外的好处。先行者可以占据超大的市场份额（特别是在受益于规模经济的市场中），提高自身效率，设定格式和标准的议程，并受益于拥抱新兴创新的声誉光环。代币化现金支付和链上回购的早期采用者已经证明了这一点。
但更多的机构处于「观望」状态，等待更明确的市场信号。我们的观点是，代币化已经处于临界点，这表明一旦看到一些重要的标志，还处于「观望」状态的机构可能会让他们跟不上时代的步伐，重要的标志包括以下方面：
虽然我们尚未看到所有这些标志的出现，但我们预计代币化的采用浪潮将会很快到来。采用代币化将由金融机构和市场基础设施参与者领导，他们将集结起来占据领先地位。我们称这些合作为最低可行价值链（MVVC）。MVVC 的例子包括 Broadridge 运营的基于区块链的回购生态系统，以及摩根大通与高盛和纽约梅隆银行合作的 Onyx。
在未来几年内，我们预计会有更多的 MVVC 出现，以从其他用例中捕获价值，例如通过代币化现金实现即时企业对企业支付；资产管理人对链上基金的动态「智能」管理；或政府和公司债券的高效生命周期管理。这些 MVVC 可能会得到由现有公司和金融科技颠覆者创建的网络平台的支持。
对于先行者来说，既有风险也有回报：前期投资和投资新技术的风险可能相当大。先行者不仅受到关注，还需要开发基础设施并在传统平台上运行并行流程，这既耗时又耗资源。此外，在许多司法管辖区，与任何形式的数字资产互动的监管和法律确定性都不足，而关键的支持因素，如广泛提供的批发代币化现金和存款用于结算，尚未得到满足。
区块链应用的历史充满了此类挑战的失败者。这段历史可能会阻止那些在传统平台上按常规业务操作感觉更安全的现有公司。但是这种策略会带来风险，包括市场份额的重大损失。由于当前的高利率环境为一些代币化产品（如回购）提供了明确的用例，市场条件有可能迅速影响需求。随着代币化采用的标志出现，如监管明确性或基础设施成熟，数万亿美元的价值可以转移到链上，为先行者和颠覆者创造一个相当大的价值池（见图 4）。
短期内的行动路径
短期内，包括银行、资产管理公司和市场基础设施参与者在内的机构应评估其产品组合，并确定哪些资产最有可能从转向代币化产品中受益。我们建议思考代币化是否可以加速战略优先事项，如进入新市场、推出新产品和 / 或吸引新客户。是否有可能在短期内创造价值的用例？以及需要哪些内部能力或合作伙伴关系来抓住市场转型带来的机会？
通过将买卖双方的痛点与买家和市场条件对齐，利益相关者可以评估代币化在哪些方面对其市场份额构成最大的风险。但要实现全部收益，需要合作创建一个最低可行价值链。现在解决这些问题可以帮助现有参与者在需求激增时避免陷入尴尬的局面。
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