Pantera Capital: Q1 2026 Tokenization Status Report

Authors: Franklin Bi · Ally Zach · Danning Sui

Compiled by: Jiahua, ChainCatcher

This report is written by the Pantera Capital research team, with data sourced from RWA.xyz, DeFiLlama, and public protocol documents. For the complete interactive data dashboard, see here.

Every major bank has its own tokenization strategy. But how much of it is real infrastructure? How much is just "putting newspapers online"? (In the early days of the internet, newspapers merely copied and pasted printed articles onto their websites. The speed increased, the coverage expanded, but the product itself did not change.)

We built the "State of Tokenization" data dashboard and the Tokenization Progress Index (TPI) to explore this further.¹

I · Executive Summary

The State of Tokenization Today: The "Putting Newspapers Online" Phase

$320.6 billion tracking market capitalization, a significant increase from approximately $200.6 billion in 2024.

2.04 average composite TPI score (out of 5), covering 542 rated online assets.

77.6% are still in the "Wrapper" layer, 11.1% in the mixed layer, and 2.7% in the native layer.

Tokenization is one of the core narratives in the institutional crypto space for 2026. Every major bank, custodian, and asset management company now has a tokenization strategy.

However, market activity itself cannot tell us whether tokenized assets are truly unlocking the full potential of blockchain or merely wrapping traditional infrastructure in a digital shell.

This report examines 593 tokenized assets across 11 asset classes, tracking a market capitalization of approximately $321.1 billion.

We use Pantera Capital's Tokenization Progress Index (TPI) to score 542 active assets. This framework is built around three dimensions of on-chain maturity: issuance and redemption, transferability and settlement, complexity and composability. Each dimension is assessed on a scale of 1 to 5, with the average forming the composite TPI score.²

The overall market average composite TPI is 2.04 (out of 5). According to our layered framework, approximately 77.6% of tracked assets belong to the "Wrapper" layer, 11.1% reach the "Mixed" layer, and only 2.7% enter the "Native" layer.

This framework does not aim to deny the current Wrapper layer products. In many cases, they reflect what current clients, issuers, and regulators can accept: familiar structures, stricter controls, and incremental efficiency improvements in distribution, settlement, and access.

The purpose of the TPI is not to negate this starting phase but to identify where on-chain systems begin to substantively replace off-chain processes and where tokenized assets start to unlock functionalities that traditional infrastructure struggles to provide.

The early stage of internet media was newspapers copying and pasting articles onto websites. The publishing speed increased, and the reach expanded. But the format was exactly the same; the same product changed only its distribution channel.

No one anticipated what internet-native media would actually look like: podcasts, algorithmically recommended information streams, interactive visualizations, creator platforms—these forms could not exist in the print era.

Tokenization is currently in its "putting newspapers online" phase. The $321 billion market has proven that assets can be distributed on-chain. But it has yet to produce the native financial tools that will define the true future of tokenization: programmable compliance, autonomous collateral management, real-time yield optimization, embedded governance, and the ability to break down assets into risk and income streams.

These products cannot come from off-chain original "wrapping"; they must be created natively on-chain.

What drove the internet out of the "putting newspapers online" phase was not ideology but product pressure: faster feedback loops, new user behaviors, new monetization models, and content forms that could only exist in the new medium.

The evolution path of tokenization may be similar. The next phase will not be defined merely by "putting more assets on-chain" but by creating financial products that are "better because they are on-chain": they support continuous settlement, can optimize collateral in real-time, allow programmable yield distribution, embed compliance in code, and split ownership, cash flows, and risks into entirely new financial building blocks.

² TPI scores are used solely to assess the technical and structural maturity of tokenization and do not represent views on the investment value, valuation, or performance prospects of any underlying assets.

II · State of Tokenization Data Dashboard

To track the progress of tokenization moving out of the "newspaper phase," we launched the "State of Tokenization" dashboard, which is updated quarterly.

This dashboard integrates structured market data from sources such as RWA.xyz and DeFiLlama, combined with Pantera's Tokenization Progress Index methodology and asset-level scoring, providing an interpretable analysis layer that showcases how tokenization evolves across issuers, platforms, asset classes, and jurisdictions.

Market Map: Organizes tokenized assets by value and TVL, covering industries, platforms, and chains, showing where the market has gained the most traction and where value is concentrated.

Ecosystem Overview: Explore assets, platforms, and market classifications in an interactive map.

Tokenization Progress Index (TPI): Scores each asset across the dimensions of issuance and redemption, transferability and settlement, complexity and composability, showing which stage of tokenization maturity assets, value, and TVL are in.

Six Key Findings Defining the Gap Between Hype and Maturity

1. Issuance is Mainly Constrained (91.1%)

The average score for issuance and redemption is only 1.82, the lowest among the three TPI dimensions. Of the 542 rated assets, 494 still score 1 or 2, indicating that administrator-controlled minting and custodian-intervened exits remain the norm.

Low issuance thresholds and constrained redemptions characterize the current market.

2. Transferability Improves Faster than Issuance (37.8%)

Transferability and settlement is the strongest dimension, with an average score of 2.29; 205 assets have reached a score of 3, indicating a growing middle ground where assets can circulate on-chain, even if the chain is not yet the sole authoritative ledger.

However, only 35 assets (6.5%) achieve scores of 4 or 5, and on-chain sovereign settlement remains scarce.

3. DeFi Composability is Highly Concentrated (12.0%)

Only 65 of the 542 rated assets reach a complexity and composability score of ≥3, indicating a threshold for substantial DeFi integration.

Stablecoins dominate in absolute value (approximately $26.4 billion currently locked in DeFi); in terms of category penetration, private credit (21.4%) and actively managed strategies (19.6%) have the highest proportion of on-chain active value among non-stablecoin categories.

4. Stablecoins Have Achieved True Scale Operations (2.67)

The composite TPI for stablecoins averages around 2.67, significantly higher than the market average, making them the only asset class with both large economic scale and substantial on-chain utility.

In contrast, other categories remain in early stages, even if some categories are growing rapidly.

5. The Market is Widening but Not Deepening (168)

168 new assets launched in 2025, compared to only 78 in 2024. Total tracked value increased from approximately $200.6 billion in 2024 to $313.7 billion in 2025, and to about $320.6 billion in the latest 2026 snapshot.

The coverage of tokenization is indeed expanding, but the speed of new issuances still outpaces the true depth of infrastructure development.

6. Scale and Progress are Starting to Synchronize

At the asset class level, a visible directional relationship has emerged between market value and average TPI: larger categories tend to have slightly higher maturity.

However, this relationship remains shallow. Capital is beginning to tilt towards stronger on-chain structures, but most of the market still clusters in the low to mid-progress range rather than true native designs.

III · Background and Motivation

Every Bank Has a Tokenization Strategy, but Few Are Building Infrastructure

BlackRock's BUIDL fund surpassed $2 billion AUM in April 2025. Franklin Templeton's FOBXX has been operating on-chain since 2021. JPMorgan's Kinexys processes billions of dollars in transactions daily. Headlines depict a rapidly transforming industry.

But these headlines measure surface metrics. A tokenized asset that operates on a permissioned chain, requires manual OTC redemptions, cannot be transferred without issuer approval, and lacks DeFi integration is functionally identical to a traditional security with a blockchain receipt attached.

Tokenization adds a data layer but does not change the actual operation of the asset.

This report introduces a framework to distinguish early tokenization from functionally more native on-chain market infrastructure.

We built a database of 593 tokenized assets, integrating the best publicly available information from sources such as DeFiLlama and RWA.xyz³, and used a unified scoring framework to evaluate all assets with visible market value.

We score each asset based on three dimensions of on-chain maturity to answer a practical question: how far has the tokenization market come? In which areas does it still remain in the early "putting newspapers online" phase?

In this sense, this report is less about asking whether tokenization is real and more about identifying which products are still digital replicas of traditional finance and which are beginning to develop functionalities that only an on-chain market can support.

The target audience is digital asset executives at banks and wealth management firms who are facing the decision of whether to "build or buy" tokenization infrastructure. The data in this report should help them benchmark their products against the market and identify where true competitive moats are forming.

It is also a resource for crypto-native builders, helping them assess which asset classes and lifecycle stages have the largest gaps between current states and possibilities.

IV · Methodology

The Lifecycle of Assets

We model the lifecycle of tokenized assets as a linear process. It begins with "Originate & Structure," which involves off-chain legal setups (entity formation, SPV/trust, registration).

This stage is currently not included in scoring, not because it is unimportant, but because it varies too much across different jurisdictions and has not stabilized enough to score consistently across the entire market.

In the long run, this situation will change. As regulations become clearer and market structures standardize, legal design will become a more meaningful differentiator between tokenized products.

Over time, the degree to which ownership, transfer restrictions, bankruptcy handling, and redemption rights are natively reflected in legal frameworks will become as important as the on-chain mechanisms themselves. Currently, we view legal structures as important background while focusing TPI on operational dimensions that can be more clearly compared across different assets.

Three Dimensions of the Tokenization Progress Index (TPI)

From these three key stages, we assess the autonomy and on-chain native degree of the following aspects:

• Issuance and Redemption: Can assets be minted and exited through more autonomous and symmetrical on-chain mechanisms?
• Transferability and Settlement: Is the chain the authoritative management and settlement layer, or merely a mirrored record of off-chain ledgers?
• Complexity and Composability: Can assets be utilized on-chain through smart contract infrastructure and achieve composability with yield?

Figure 1. Lifecycle of Tokenized Assets and TPI Dimensions

The three scored stages from left to right are: Minting and Burning (the birth and death of tokens), Trading and Transferring (how liquid it is, who holds the authoritative ledger), Deploying and Earning (how strong the supporting autonomous infrastructure is, how deeply it integrates with DeFi).

TPI scores each asset across three independent dimensions, each rated from 1 to 5. The dimensions are designed to be orthogonal: a token can score high on transferability but low on composability, and vice versa. The composite score is the average of the three.

Each dimension builds on the previous one—you cannot deposit a token into Aave if you cannot first transfer it to the Aave contract.
Scoring Criteria: Defining Each Level

The goal is not to score complexity itself but to isolate the parts of tokenization where on-chain systems truly begin to replace off-chain processes.

Each scoring criterion aims to capture different forms of progress: whether issuance and exit have become more symmetrical, whether the chain has become the authoritative layer for circulation and settlement, and whether assets can be deployed to programmable on-chain infrastructure.

Issuance and Redemption

Table 1. Issuance and Redemption Scoring Criteria

Table 2. Transferability and Settlement Scoring Criteria

Table 3. Complexity and Composability Scoring Criteria

Three Levels: Wrapper Layer, Mixed Layer, and Native Layer

To make the TPI more interpretable at the market level, we categorize assets into three major tiers based on the average composite score across the three dimensions.

The goal of this classification is to translate individual scores into a more intuitive perspective, showing where tokenized assets actually stand on the path from simple digital wrapping to truly native on-chain financial products.

We use the average composite TPI score of the three dimensions as the basis for layering:

Table 4. Three Tiers of Tokenization

These thresholds do not imply that maturity progresses at a completely uniform pace. They provide a practical way to summarize how much has truly moved on-chain in the asset lifecycle.

• Wrapper Layer: Tokens primarily serve as digital receipts for underlying assets, while the underlying assets are still managed, redeemed, and controlled off-chain. The chain may improve distribution or visibility but is not the authoritative operational layer.
• Mixed Layer: Certain parts of the lifecycle have moved on-chain, such as issuance, transfer, settlement, or limited composability, but key functions still rely on off-chain intermediaries, legal processes, or manual controls.
• Native Layer: Assets are designed to operate primarily on-chain. Issuance, transfer, settlement, and at least part of ongoing management are governed by smart contracts, with minimal reliance on off-chain operational infrastructure.

This layered framework should be viewed as an interpretive layer above the TPI rather than a replacement for the underlying dimension scores. Two assets may be in the same tier for different reasons: one may be strong in transferability but weak in redemption, while another may be highly composable but still face operational constraints in other areas.

Tier labels help summarize where the market stands; dimension scores explain why.

⁴ Any asset examples mentioned in this report are for illustrative purposes only and should not be understood as investment advice or recommendations to buy or sell any securities or tokens.

V · Data Analysis

593 Assets, 11 Categories, $320.6 Billion Tracked

The following analysis covers 542 of the total 593 assets that have been rated (51 newly added assets are pending scoring as they are in pilot and announcement stages).

Asset-level data comes from RWA.xyz, DeFiLlama, protocol documents, and public news and research sources. TVL and AUM data are sourced from RWA.xyz and DeFiLlama, as of the first quarter of 2026.

Network deployment data is based on contract verification on Etherscan, Solscan, Polygonscan, and Basescan. By integrating these sources, we unify a range of market value metrics (including bridged token market capitalization, AUM, and on-chain or active market value) into a market value layer.

We then correlate this market layer data with broader metadata on issuers, sponsors, platforms, jurisdictions, and news, processed with LLM assistance.

We also snapshot DeFiLlama's "DeFi Active TVL" metric as a measure of on-chain productive TVL for discussions in the DeFi composability section, inspired by the work of Nexus Data Labs.

Standardizing asset category classification is one of the most challenging parts of building this dataset. By coordinating classifications from multiple sources, we consolidate the market into the following 11 asset categories:

The market is in the wrapping phase, transitioning to the mixed layer

Approximately 77.6% of tracked assets belong to the Wrapper layer, only 11.1% reach the Mixed layer, and just 2.7% enter the Native layer. In other words, tokenization has achieved scale at the characterization level, but has not yet done so at the complete on-chain functionality level. The focus remains off-chain, even as an increasing number of assets begin to take substantial steps down this path.

Stablecoins are the clear exception and the most mature category, with 14% of assets within the category achieving native layer scoring. They have the deepest mixed layer group and the largest share of the native layer, followed by actively managed strategies and private credit.

U.S. Treasuries, commodities, and private equity show early signs of developing more mixed layer structures, but overall, the focus remains on the Wrapper layer.

RWA infrastructure is viewed as a special category.

It is not an asset class in the strict sense with comparable market capitalization to other categories, but we still score these entries using TPI based on available information. It also includes most upcoming pilot projects and announcements, indicating that a significant amount of infrastructure and legal frameworks are still being built around the RWA ecosystem.

Below, we summarize the 51 unscored assets in the dataset, primarily pilot projects and announcements of RWA issuances. Most are concentrated in the RWA infrastructure category, with a wide geographical distribution.

Asset Issuance and Market Scale Hit New Highs in 2025

168 new tokenized assets launched in 2025, a 115% increase from 78 in 2024. The acceleration from 2023 to 2025 reflects institutional FOMO, with every major participant eager to launch tokenized products.

However, the composite TPI did not rise proportionately. The market is widening but not deepening. Most new entrants are replicating the primary Wrapper layer model rather than pushing the boundaries of tokenized asset capabilities.

The data clearly shows that issuances are concentrated in a few categories rather than evenly distributed across the market. In the last two full issuance years in the dataset (2024 and 2025), private credit leads all asset classes with 48 issuances, followed closely by stablecoins with 46, then real estate with 36 and U.S. Treasuries with 32.

In terms of value, even as issuances diversify, the market continues to expand rapidly: total tracked value increased from approximately $200.6 billion in 2024 to $313.7 billion in 2025, currently standing at about $320.6 billion in the latest 2026 snapshot.

This means the market has added approximately $120.5 billion since 2024, with about 60% growth, reinforcing the view that tokenization is expanding not only in the number of assets but also in total value at a significant compound growth rate.

Stablecoins Hold $293 Billion, Accounting for 91.6% of Total Market Value

Stablecoins dominate the tokenized asset value by an order of magnitude, accounting for over $293 billion (about 92%) of the total traceable market size of $320.6 billion. Driven by institutional demand for on-chain yield, U.S. Treasuries have grown to about $12 billion.

Commodities have also surged to approximately $7.1 billion, but the rise in this category reflects the increase in gold prices in 2025 itself: existing tokenized gold products have appreciated due to the underlying asset's value increase, rather than solely from new assets being brought on-chain.

However, long-tail asset classes—private equity, real estate, corporate bonds—remain small in terms of AUM. The market's value is concentrated in the asset classes that have reached on-chain maturity earliest, rather than in those with the most institutional announcements.

Institutions Drive U.S. Treasuries to $12 Billion, Becoming the Second Largest On-Chain Asset

Tokenized U.S. Treasuries (referred to as "Treasuries" in this report) represent one of the most notable success stories in institutional tokenization—from near-zero growth in 2021 to about $12 billion in 2026.

The growth has been exponential, likely reinforced by the compression of DeFi yields in recent months, in some cases falling below U.S. Treasury yields, making tokenized Treasuries a more attractive place to park funds on-chain.

Despite rapid growth, TPI analysis indicates that most Treasury products remain in the early stages, belonging to the primary Wrapper layer, utilizing custodian-intervened redemptions and off-chain preferred ledger structures.

This growth is increasingly anchored by large, well-known institutions rather than driven by long-tail experiments. In our dataset, the largest tokenized Treasury products come from the following institutions:

BlackRock (BUIDL, approximately $2.1 billion, issued through Securitize)

Franklin Templeton (FOBXX/BENJI, approximately $1 billion, issued through Franklin Templeton Benji Investments)

Janus Henderson/Anemoy (approximately $1 billion, issued through Centrifuge)

WisdomTree (WTGXX, approximately $752 million, issued through its own digital fund channel)

Fidelity (FDIT, approximately $162 million, issued through Fidelity Investments)

This indicates that tokenized Treasuries have become the clearest beachhead in institutional tokenization: a major financial company is willing to place familiar short-duration dollar products into a category on-chain, even if deeper native functionalities have not yet fully manifested.

Institutional footprints are also beginning to extend beyond Treasuries.

In private credit, Apollo appears in the dataset through the Apollo Diversified Credit Securitize Fund (approximately $131 million), and Janus Henderson/Anemoy also appears through structured credit products in the Centrifuge ecosystem.

In the stablecoin space, Société Générale's FORGE EURCV is an early case of a large bank's native tokenized cash product.

The broader pattern is that large institutions are entering tokenization not through fully native on-chain financial structures but through familiar products, relying on specialized issuance partners like Securitize, Centrifuge, and Libeara to bring these products on-chain.

Growth Divergence: Some Asset Classes Approach Saturation, While Others Are Just Starting

The growth curves at the category level indicate that tokenization is not a linear adoption story but a cyclical process. The RWA market has existed in some form for years, but the downturn in 2022 clearly showed that they were not insulated from the broader crypto contraction.

The current cycle is worth noting for how quickly momentum recovers after hitting a bottom: since that low point, the total value of most major asset classes has resumed an upward trend, indicating that tokenization is moving from sporadic experimentation to a more enduring market structure.

Stablecoins and actively managed strategies are the earliest and fastest-growing segments in this rebound, although their growth trajectory now seems to be slowing after a particularly strong previous year.

In contrast, private equity and commodities are the strongest-growing categories over the past two years, both showing no significant signs of momentum decay.

Tokenized stocks and U.S. Treasuries are newer developments that emerged only after 2022, but their curves now appear flatter relative to the initial breakout, which may indicate that these categories are rapidly approaching saturation.

Real estate and non-U.S. sovereign debt still appear to be in the early stages of the adoption cycle: their growth histories are shorter, and it is too early to determine whether they represent a lasting trend, but both are potential areas where value bases are still forming.

Corporate bonds, appearing at the top of the chart only in 2025, are the newest category but have the largest hype based on growth rates.

This sequence is currently almost invisible, as it has just appeared in the data, but the direction of development is encouraging, starting from such a small base, and could be one of the most promising emerging segments with significant upside potential.

Market Size and TPI Scores Begin to Move in Sync

The scatter plot below maps each asset class by its average composite TPI score (x-axis) against its total locked value (y-axis, logarithmic scale). The latest market structure indicates that market size and tokenization progress are no longer moving independently.

At the asset class level, a visible positive relationship has emerged: the largest categories tend to also have higher average TPI scores. Stablecoins lead on both dimensions, while Treasuries also match scale with stronger tokenization progress than most non-stablecoin categories.

At the other end, real estate and private equity are lower in both value and tokenization progress, reinforcing their high dependence on off-chain legal, custodial, and service processes. However, this relationship remains directional rather than linear.

Categories like commodities and private credit have accumulated meaningful value but have not correspondingly leaped into truly high TPI areas. In other words, capital is beginning to favor designs with stronger structures, but the speed of scale is still outpacing complete on-chain maturity.

91% of Tokenized Assets Still Subject to Approval Restrictions in Issuance and Redemption

The score distribution across dimensions still shows the market concentrated in the low range, with issuance and redemption remaining the most obvious bottleneck.

In the latest dataset, of the 542 rated assets, 494 (91.1%) still score 1 or 2 in the issuance dimension, indicating that administrator-controlled minting and custodian-intervened exits remain the norm. Only 13 assets (2.4%) score 4 or 5, and truly autonomous or symmetrical minting/burning models are still rare.

Transferability and Settlement shows more dispersion: 205 assets (37.8%) have reached a score of 3, indicating a growing middle ground where tokens can circulate on-chain but the chain is not yet the sole authoritative record.

Complexity and Composability is compressed even more severely. 394 assets (72.7%) still score 2, with only 21 assets (3.9%) reaching scores of 4 or 5, reinforcing the judgment that most tokenized products remain simple wrappers rather than deeply programmable on-chain financial primitives.

Private Credit Leads with 64.3% DeFi Utilization

When we break down TPI scores by asset class, stablecoins lead across all three dimensions, with transferability and settlement particularly standing out at 3.2, reflecting multi-chain deployment and increasingly on-chain dominant ledger structures.

Tokenized stocks and Treasuries follow closely, with relatively balanced scores across dimensions. At the bottom of the rankings, real estate and private equity have composite scores below 1.5, reflecting their platform closures and purely off-chain structures.

Among all asset classes, only 10.6% reach a complexity and composability score of 3 or higher (i.e., the threshold for substantial DeFi integration). This confirms that most tokenized assets primarily exist as distribution wrappers on-chain rather than as productive financial building blocks.

Stablecoins still dominate in absolute value, with approximately $26.4 billion currently locked in DeFi, far exceeding all other categories.

But a more revealing signal is the penetration rates within each category, with the latest data pointing to a more surprising direction: private credit has become the category with the highest degree of DeFi composability in the dataset, with 64.3% of total market value represented as active DeFi TVL, followed by actively managed strategies at 19.0%.

In contrast, stablecoins rank much lower on this metric, at only 9.0%, despite their overwhelming absolute scale.

An important nuance is that these two signals measure different things. The TPI chart is asset-level averages, while DeFi utilization is measured in dollars. Therefore, categories like private credit may not have high average TPI scores, but their DeFi penetration is very high.

One reason is concentration. In private credit, DeFi usage is primarily attributed to a small number of protocols and products. For example, Maple's syrupUSDT and syrupUSDC together account for about two-thirds of the active DeFi TVL in that category. This means that while the composability of private credit is real, this asset class has not yet been widely integrated on-chain.

But another major reason seems to be the nature of the assets themselves. These successful private credit products are yield-generating tools that accept stablecoins as collateral, naturally fitting into DeFi yield strategies, especially in scenarios where users can cycle them through multi-layer DeFi vaults to increase leverage and compound returns.

In this sense, the utilization of private credit is not just a story of issuer concentration; it also indicates that more native on-chain architectures can enhance utility. These assets provide a form of yield that is distinctly different from the core crypto beta, making them particularly useful in on-chain portfolio construction.

Actively managed strategies also exhibit a similar pattern. This category ranks second in DeFi composability, but usage is highly concentrated in a few products.

The Superstate Crypto Carry Fund alone accounts for about 80% of the category's matched active DeFi TVL, with the remainder coming from a limited number of additional products, including Re Protocol reUSDe, Midas mBASIS, and Resolv Liquidity Provider Token.

In contrast, larger categories like U.S. Treasuries and commodities have only 3.2% and 2.5% of their category value utilized in DeFi, while real estate and corporate bonds are essentially at zero.

Stablecoins remain the most important DeFi building block in absolute value, but most of the stablecoin supply is still held outside of productive DeFi, serving as cash-like inventories for payments, trading, capital management, and settlement.

That said, the lower DeFi utilization rate of stablecoins is not because their status as DeFi collateral is not mature enough, but because their utility nature drives them into circulation rather than locking them in vaults as investment assets.

Meanwhile, private credit and yield-oriented actively managed strategies showcase the attributes of investment tools and are increasingly accepted as collateral on-chain.

Tokenization is More Concentrated than It Appears

Continuing the discussion, the tokenization market is more concentrated than it appears on the surface. Even excluding stablecoins, the top 5 issuing platforms account for about 50% of all rated assets.

Securitize (focusing on institutional-grade issuance) leads with $2.7 billion in assets across multiple asset classes, followed by Maple (credit and Treasuries), Tether Holdings (gold commodities), and Ondo (multi-asset classes).

There are significant differences in TPI scores across platforms: Ondo averages 2.3, Securitize 1.6, while some platforms (Robinhood, MetaWealth) score 1.0, indicating pure Wrapper layer tokenization.

In terms of geographical distribution (including stablecoins), the British Virgin Islands dominate with $191.5 billion (of which $185 billion is contributed by USDT's registration, which moved to El Salvador in 2025), followed by Bermuda ($76.1 billion, 24%) and the U.S. ($23.6 billion, 7%).

Notably, the average composite TPI for U.S.-registered assets is 2.0, while assets registered in the British Virgin Islands/Liechtenstein (typically Reg S issuances) cluster at lower scores.

The regulatory environment seems to correlate with the manner of tokenization: SEC-regulated products tend to lean towards Wrapper layer models, while DeFi-native protocols registered in crypto-friendly jurisdictions push towards higher TPI scores.

TPI Chain Analysis: When Permissioned Chains Mean Lower Native Levels

The current dataset indicates that network architecture has a substantial impact on tokenization progress.

Public chains with deeper composability and broader secondary market functionalities tend to have higher average TPI scores: Optimism and Base are close to the highest levels in the current sample, around 2.6 and 2.5, while Ethereum and Solana cluster around 2.3.

In contrast, more operationally constrained environments like the XRP Ledger are close to 2.0 in the current dataset.

Canton Network provides an enlightening case. This is a permissioned chain supported by Digital Asset and used by Goldman Sachs and BNY Mellon, with products on Canton averaging a composite TPI of about 1.75, below the market average of 2.04.

This is not an execution failure; rather, it is a structural result of design philosophy and market demand. Institutional-grade permission places compliance and control above on-chain autonomy.

Canton validates an argument: permissioned chains structurally produce lower maturity tokenization, even with the most mature institutions backing them.

VI · Tokenization Strategy Handbook

Wrap, Connect, Compose, Native

Most tokenization strategies are designed as cost-cutting projects: compressing back-end processes, shortening settlement windows, automating reconciliation workflows, and converting savings into profit and loss statements. This is a legitimate path to activating tokenization benefits, but it is also the narrower one.

The broader path is to leverage tokenization to establish new distribution channels and new revenue streams: products that reach global pools of capital and types of investors that traditional infrastructure cannot efficiently serve.

The TPI framework maps to four stages of this journey. What the framework itself does not show are the strategic inflection points embedded within. The first stage is a forced cost, not a choice. The second to fourth stages are where institutions truly decide what type of business they are building.

Stage One: Wrap (TPI 1-2)

Some describe the first stage as the "zero to one moment" of institutional tokenization. A more accurate description is to view it as a v0.1 version: a necessary foundation but not a product.

The amount of work required to reach the first stage is still substantial. Issuers often cannot launch even a basic wrapping product without rebuilding their compliance architecture. Securities registration, transfer agent arrangements, custodial frameworks, KYC/AML workflows, broker relationships, tax reporting, investor qualification reviews, and disclosure regimes may all need to be remapped to tokenized tools.

Legal opinions need to be rewritten. Auditors need to readjust. Compliance committees need to sign off on a novel architecture. This helps explain why 88% of rated assets in this report remain in the first stage.

But the first stage is just the foundation. It establishes an on-chain presence rather than on-chain utility. Token wrapping serves as a digital receipt, and its lifecycle still relies on off-chain infrastructure. The chain marginally improves distribution and visibility but does not fundamentally change the operation of the asset.

The risk of the first stage is not failing to achieve it. The risk is remaining there forever while the market's focus shifts to stages that certain first-stage architectures cannot reach.

Stage Two: Connect (TPI 2-3)

The second stage is where tokenization strategies begin to differentiate, and it is where the most critical decisions in the entire handbook are made: are you optimizing for cost savings or building for new growth?

The cost-saving path views the second stage as an internal efficiency project, which is a true reflection of most institutional tokenization projects in 2026. Dual ledger systems replace purely off-chain architectures, and whitelisted transfers enable controlled secondary markets. If successful, institutions gain real backend efficiency gains and report them as margin expansion.

It retains existing distribution channels, maintains existing client relationships, and delivers quantifiable efficiency gains to justify the investment rationale. This is a defensive strategy, but it also has a ceiling.

The growth path views the second stage as a new platform layer to reach and create entirely new markets. Oracle integrations, foundational smart contract governance, and gradual loosening of on-chain transferability are not internal efficiency improvements.

They expand distribution to new clients, bringing tokenized assets into new pools of capital and laying the groundwork for composability in the third stage. Tools produced from this path are designed from day one to be accepted as collateral in on-chain lending protocols like Morpho, integrated into DeFi yield vaults, and referenced by automated market makers like Uniswap.

Stage Three: Compose (TPI 3-4)

Composability is the threshold for tokenized assets to become financial building blocks. They can be staked as collateral in Morpho or other on-chain lending protocols, allocated to risk management vaults managed by companies like Gauntlet or Steakhouse, and integrated into structured products, generating yield curves that do not exist in traditional markets by combining with other on-chain assets.

Assets evolve from being held on-chain to being actively used on-chain.

The data in this report has already shown where this is happening. Private credit's DeFi utilization rate is 64.3%, led by Maple's syrupUSDT and syrupUSDC, which were designed from inception to be accepted as collateral and cycled through multi-layer vaults as yield-generating tools.

Actively managed strategies reach 19.0%, led by the Superstate Crypto Carry Fund. These are tokenized products designed for composability from the outset, accepting the burden of compliance reengineering, and are now achieving distributions that first and second-stage assets cannot reach.

Only 12% of the market has reached the third stage. This serves as both a benchmark for how difficult it is to get to this point and a measure of how wide the moat is once issuers cross this threshold.

The third stage is also where new distribution channels that do not exist in traditional finance emerge: on-chain capital pools. Stablecoin balances held by DeFi-native investors, DAO treasuries, crypto-native funds, and protocols with idle capital form a capital pool that fundamentally does not participate in traditional capital markets.

These capitals reach through composability rather than broker networks or institutional sales teams. An issuer that achieves composability can gain access to this pool; one that remains in the first or second stage cannot.

However, the composability that makes tokenized assets more useful on-chain may also create new channels for the transmission of financial risk. Recent market pressures surrounding the KelpDAO hacking incident have highlighted concerns about collateral quality, cross-chain bridge security, and pooled collateral design, how they can trigger rapid risk-off behavior and TVL contraction.

The lesson is not that we should avoid composability, but that deeper composability raises the standards for risk management. As tokenized assets are more widely accepted as collateral, the market will need stronger collateral transparency, better isolation frameworks, real-time monitoring, and clearer stress testing practices.

We manage 100% digital asset AUM at Franklin Templeton from a crypto-native audience. These clients did not exist before we launched these products and began expanding through these channels. It opens up a whole new audience, and the inflow of funds is accelerating.

This is an expansion of financial services into a new model that is more directly consumer-facing. The industry has traditionally been built on intermediary models, but now individuals, quasi-institutional families, and institutions themselves want to use these channels to run their models and businesses. This is a truly front-facing expansion.

------Sandy Kaul, Executive Vice President and Head of Innovation at Franklin Templeton

Stage Four: Native (TPI 4-5)

Stages one to three are about gradually migrating existing off-chain assets' lifecycles on-chain. The fourth stage begins on-chain. Issuance, redemption, custody, settlement, and governance are designed as on-chain primitives from day one. Permissionless minting and burning. On-chain sovereign ledgers. Autonomous risk engines, liquidation cascades, and governance operate without human intermediaries.

Today, only DeFi-native protocols fully occupy this tier: MakerDAO's USDS, Aave's GHO, and a few other projects. These examples may seem far removed from institutional tokenization.

For current digital asset executives, the relevant question is not whether you will launch the next USDS. Rather, it is how the evolution from current wrapping to future native product creation will occur, what will drive this shift, and where competitive pressures will come from.

Consider how products like BlackRock's BUIDL will evolve from their current forms. BUIDL is currently a tokenized share class of an off-chain money market fund. Shares are minted by administrators, redeemed through transfer agents on a T+1 basis, and transfers are limited to whitelisted addresses. This is a first-stage wrap.

The second-stage version of the product relaxes transfer restrictions among a broader set of qualified investors and shortens the redemption window.

The third-stage version allows tokens to be used as collateral in Morpho, with real-time oracle pricing and integrated risk management coverage: still administratively issued but productive on-chain. Each of these steps is critical for the product roadmap.

The fourth-stage version no longer has an off-chain master ledger. The tokenized shares are the shares. Interest accumulates per block rather than distributed monthly. Fund products programmatically rebalance among underlying tools based on yield curves and liquidity signals. Compliance is executed by the tokens themselves at each transfer, rather than through post-hoc review processes.

The same logic applies to various asset classes:

• Tokenized Treasuries, today wrapped around short-duration dollar products, can evolve into on-chain yield tools where coupon accumulation, principal management, and secondary liquidity are native functions. In the fourth stage, duration and coupon components can be separated and traded independently, as economically similar to Treasury strips, but structurally impossible without programmable infrastructure.

• Tokenized private credit, already the most composable non-stablecoin category, can evolve towards native creation, with loan books directly underwritten and managed on-chain, featuring programmatic tranching, autonomous collateral management, and ongoing market-based pricing transparency, replacing quarterly NAV reports.

• Tokenized corporate bonds, still in the early Wrapper layer, can evolve into tools where coupon flows continuously reach holders, with covenant enforcement operating on smart contract logic, and default trigger conditions executable without a trustee. The underlying credit risk remains the same, but the operational infrastructure is fundamentally different.

The fourth stage is not an independent universe entered after completing the third stage. In fact, the fourth stage is essentially where stablecoins are today. It is the logical endpoint of the growth path described in the second stage.

VII · Conclusion and Outlook

Outcomes Matter More than Wrapping

The industry has successfully proven that assets can be represented on-chain, but it has yet to demonstrate that on-chain representation fundamentally changes how these assets operate. The gap between tokenization announcements and true tokenization maturity remains significant.

The next phase of market maturity will not be defined by how much value is tokenized but by utility metrics and real demand:

• How quickly are settlements actually completed, measured in milliseconds?
• How low are transfer costs relative to the dollar value transferred?
• How many on-chain wallets hold the asset?
• How much transfer and trading volume is generated daily?
• How much value is actively deployed in DeFi?

Institutions investing in true infrastructure depth—autonomous issuance, on-chain sovereign ledgers, and protocol-level composability—will establish the moats that define the next wave of true utility and demand.

A core lesson of this report is that tokenization should not be judged by whether assets are placed on the blockchain but by whether it truly delivers the benefits that blockchain infrastructure is supposed to provide.

The initial promise of asset tokenization is straightforward: assets that can circulate and settle 24/7, operate cross-border, reduce operational friction, lower intermediary costs, and broaden access for retail and institutional investors.

The market has made real progress in characterization and distribution, but the data shows that tokenization has largely not yet achieved these goals. Many products are on-chain in form but not in function.

We need to resist the impulse to simply replicate traditional financial infrastructure and mirror it on-chain. We need to recognize what is unique about on-chain finance and blockchain technology, which is disintermediation.

The rules designed to promote safety and reduce risk in an intermediary-centric system need to evolve as the market becomes peer-to-peer, self-custodied, and operates through more decentralized networks.

------Maxwell Stein, Director of Digital Assets at BlackRock

The Most Valuable Use Cases Need Redesign, Not Replication

Many current tokenized products still too closely replicate traditional market structures. This limits yield.

In some use cases, the point of tokenization is not simply to rebuild an existing off-chain workflow on the blockchain but to eliminate the need for parts of that workflow.

Custody is a good example. If funds can be held and conditionally released by trusted smart contract infrastructure, then tokenization should not just create a digital version of custody; it should reduce reliance on the layers of intermediaries that custody has historically required.

More broadly, the market still needs to shift from on-chain wrapping around traditional processes to structures designed around the unique advantages of blockchain: programmability, atomic settlement, continuous markets, and shared state.

The Wrapper Layer Market is Not a Failure but a Regulatory Balance

This is partly a design consequence. In many cases, the products at the current Wrapper layer stage reflect what existing clients, issuers, and regulators actually want: familiar structures, stricter controls, and incremental efficiency improvements in distribution and settlement.

91% of assets are still restricted in issuance and redemption, not simply lagging behind; they are a rational output of a market that still assumes intermediary-controlled processes.

When the rules around securities issuance, custody, and redemption are built around licensed entities as gatekeepers, issuers default to administrator-controlled minting and custodian-intervened exits because that is the way to keep them within regulatory boundaries.

Geographical data reinforces this: U.S.-registered assets have an average composite TPI of 2.0, SEC-regulated products tend to lean towards Wrapper layer models, while DeFi-native protocols registered in more lenient jurisdictions push towards higher scores.

Regulation is not only slowing the pace of tokenization; it is actively shaping the types of tokenization being built. As long as the rules assume intermediary-controlled workflows, even the most mature institutional issuers will continue to produce primary Wrapper layer products, regardless of how much capital or engineering talent they deploy.

Infrastructure bottlenecks and regulatory bottlenecks are not two separate issues; they are expressions of the same constraint at different layers of the tech stack.

Better Distribution Will Not Create Demand for Weak Assets

Blockchain can lower barriers to entry, improve portability, and expand global distribution, but it cannot create demand where none exists.

Some tokenized products seem to be built on the assumption that putting assets on-chain will automatically make them more attractive investments. This is unlikely to hold true. If the underlying assets lack appeal, have poor liquidity, or are structurally weak off-chain, tokenization alone will not solve the problem.

In this sense, tokenization should be understood as an upgrade in distribution and infrastructure rather than a substitute for asset quality. The strongest tokenized products will be those that combine two elements: attractive underlying assets and significantly better on-chain user experiences.

Opaque Asset Classes Stand to Benefit Most from On-Chain Transparency

Some of the most interesting long-term opportunities may lie in markets that remain structurally opaque in traditional finance. Corporate bonds are a good example. They are still in the early stages of tokenization but are worth close attention because the underlying market is fragmented, difficult to analyze, and historically susceptible to information gaps.

The same logic extends to certain areas of private credit, where periodic concerns about valuation, quality, and concentration are difficult to address in systems with limited transparency.

Tokenization will not eliminate credit risk, but it can make the surrounding infrastructure more readable. If issuance, ownership, transfer activities, collateral status, and even certain elements of credit reporting become more transparent on-chain, tokenization can contribute not only to efficiency but also to a more robust and observable financial system.

"The Debate of Perpetual Contracts vs. Tokenization"

A more useful perspective is that both tokenization and perpetual contracts are helping modernize the capital markets tech stack, and together they may achieve the disaggregation of assets into their underlying economic components. Perpetual contracts separate price discovery from ownership and shareholder rights.

Tokenization retains claims to the underlying assets while improving programmability and transferability. Combined with prediction markets and other crypto-native primitives, these tools can enable increasingly granular risk exposures: not just broad asset classes but selected cash flows, business lines, or risk factors.

This is a much broader shift than simply asking, "Is perpetual contracting better than tokenization?"

At the same time, the rise of perpetual contracts linked to real-world exposures is a real trend worth noting.

We have already seen early cases of assets (particularly commodities) being "perpetual contracted" through mechanisms like HIP-3. Ondo is also launching the upcoming Ondo Perps alongside its Global Markets product.

The signal is clear: perpetual contracts will not replace tokenized spot assets, but the market may expand in both directions simultaneously: tokenization for ownership and settlement, perpetual contracts for liquid, around-the-clock, leveraged price exposure.

Final Thoughts

If today's tokenization is still in the "putting newspapers online" phase, the more important question is what will drive it beyond that phase.

The internet did not remain in the era of copying articles. Three forces drove the evolution from digitizing print to native forms: distribution channels became around-the-clock, native interactive primitives emerged, and production costs collapsed.

What followed was not a faster newspaper but entirely new categories of products: podcasts, algorithmically recommended streams, live broadcasts, creator platforms, real-time markets—none of which have counterparts in print media and could not exist in previous media.

The same forces are at work on tokenization. Atomic settlement and 24/7 liquidity represent the "around-the-clock" transformation. Smart contracts and composability are the native interactive primitives. Permissionless issuance is the collapse of production costs, a structural shift from "only registered issuers can create securities" to anyone being able to deploy financial logic on-chain.

These are not incremental improvements to existing products; they are prerequisites for products that cannot exist as wrappers.

What will that world look like?

In that world, the financial instruments that are forcibly bundled in traditional finance will be disaggregated, allowing credit risk, duration exposure, coupon income, and governance rights to be separated, priced, and traded independently.

Real-time auto-rebalancing collateral, requiring no manual intervention. Compliance logic embedded in the assets themselves, jurisdictional and transfer restrictions executed in code rather than manually at the edges. Yield streams autonomously optimized across lending protocols, liquidity pools, and staking venues. Governance rights that can be delegated, sold, or conditionally activated.

Entirely new asset classes supported by cash flows that were previously uninvestable. These cannot come from off-chain original wrapping; they must be created natively on-chain.