Original Title: (Ethereum's Dominance in the RWA Market: Who Will Take the Baton Next?)
Original Source: Tiger Research
Key Takeaways
Ethereum, with its first-mover advantage, past institutional experiments, deep on-chain liquidity, and decentralized architecture, currently leads the RWA market. However, general-purpose blockchains with faster and cheaper transactions, as well as RWA-specific chains designed for regulatory compliance, are addressing Ethereum's cost and performance limitations. These emerging platforms are positioning themselves as next-generation infrastructure by offering superior technical scalability or built-in compliance features.
The next phase of RWA growth will be led by chains that successfully integrate three elements: on-chain regulatory compatibility, a service ecosystem built around real-world assets, and meaningful on-chain liquidity.
1. Where is the RWA market currently growing?
The tokenization of real-world assets (RWAs) has become one of the most prominent themes in the blockchain industry. Global consulting firms like BCG have released extensive market forecasts, and Tiger Research has conducted in-depth analyses of emerging markets such as Indonesia—highlighting the growing importance of this field.
So, what exactly are RWAs? They refer to the process of converting tangible assets such as real estate, bonds, and commodities into digital tokens. This tokenization process requires blockchain infrastructure. Currently, Ethereum is the primary infrastructure supporting these transactions.
Source: rwa.xyz, Tiger Research
Despite increasing competition, Ethereum still maintains its dominant position in the RWA market. Specialized RWA blockchains have emerged, and mature platforms like Solana are also expanding into the RWA domain. Nevertheless, Ethereum still accounts for over 50% of total market activity, highlighting the robustness of its existing position. This report examines the key factors behind Ethereum's current dominance in the RWA market and explores the evolving conditions that may shape the next phase of growth and competition.
2. Why Does Ethereum Remain in the Lead?
2.1. First-Mover Advantage and Institutional Trust
Ethereum has become the default platform for institutional tokenization for clear reasons. It was the first to introduce smart contracts and actively prepared for the RWA market. With strong support from a highly active developer community, Ethereum established key tokenization standards, such as ERC-1400 and ERC-3643, long before competing platforms emerged. This early groundwork provided the necessary technical and regulatory foundation for pilot projects.
As a result, many institutions begin evaluating alternatives before considering Ethereum. Several notable initiatives from the late 2010s helped validate Ethereum's role in institutional finance:
· JPMorgan's Quorum and JPM Coin (2016-2017): To support enterprise use cases, JPMorgan developed Quorum, a permissioned fork of Ethereum. The launch of JPM Coin for interbank transfers demonstrates that Ethereum's architecture—even in private form—can meet regulatory requirements for data protection and compliance.
· Societe Generale issued a €100 million secured bond on the Ethereum public mainnet in 2019: SocGen FORGE demonstrates that regulated securities can be issued and settled on public blockchains while minimizing the involvement of intermediaries.
· European Investment Bank Digital Bond (2021): The European Investment Bank (EIB) collaborated with Goldman Sachs, Santander Bank, and Societe Generale to issue a €100 million digital bond on Ethereum. This bond was settled using central bank digital currency (CBDC) issued by the Banque de France, highlighting Ethereum's potential in fully integrated capital markets.
These successful pilot cases enhance Ethereum's credibility. For institutions, trust is built on verified use cases and references from other regulated participants. Ethereum's track record continues to attract attention, forming a reinforced adoption loop.
Source: Securitize
For example, in 2018, Securitize announced in official documents that it would build tools on Ethereum to manage the full lifecycle of digital securities. This initiative laid the groundwork for the eventual launch of BlackRock's BUIDL fund, which is currently the largest tokenized fund issued on Ethereum.
2.2. Platforms for Real Capital Flow
Another key reason why Ethereum continues to dominate the RWA market is its ability to convert on-chain liquidity into real purchasing power. The tokenization of real-world assets is not merely a technical process. A fully functioning market requires capital that can actively invest in and trade these assets. In this regard, Ethereum is the only platform with deep and deployable on-chain liquidity.
Source: rwa.xyz, Arkham, Tiger Research
This is evident in platforms like Ondo, Spark, and Ethena, all of which hold substantial amounts of tokenized BUIDL funds on Ethereum. These platforms have attracted hundreds of millions of dollars by providing products based on tokenized U.S. Treasury securities, stablecoin-based lending, and synthetic earning dollar tools.
· Ondo Finance has accumulated over $600 million in total value locked (TVL) through its Treasury-backed products USDY and OUSG.
· Spark Protocol utilized DAI liquidity from MakerDAO to purchase over $2.4 billion worth of real-world Treasury securities.
· Ethena has established a bankless yield infrastructure on Ethereum using its synthetic stablecoins USDe and sUSDe, attracting institutional demand and DeFi liquidity.
These examples demonstrate that Ethereum is not just a platform for asset tokenization. It provides a robust liquidity foundation capable of facilitating real investments and asset management. In contrast, many emerging RWA platforms struggle to ensure capital inflow or secondary market activity after the initial token issuance phase.
The reasons for this differentiation are clear. Ethereum has integrated stablecoins, DeFi protocols, and compliance-ready infrastructure. This has created a comprehensive financial environment in which issuance, trading, and settlement can all occur on-chain. As a result, Ethereum is the most effective environment for converting tokenized assets into actual purchasing activities. This gives it a structural advantage that goes beyond mere market share.
2.3. Building Trust Through Decentralization
Decentralization plays a crucial role in building trust. The tokenization of real-world assets involves transferring ownership and transaction records of high-value assets into a digital system. In this process, institutions focus on the reliability and transparency of the system. This is where Ethereum's decentralized architecture provides a significant advantage.
Ethereum operates as a public blockchain, supported by thousands of independently running nodes worldwide. The network is open to anyone, with changes determined by participant consensus rather than centralized control. Thus, it avoids single points of failure, ensuring resilience against hacking and censorship, and maintains uninterrupted uptime.
In the RWA market, this structure creates tangible value. Transactions are recorded on an immutable ledger, reducing the risk of fraud. Smart contracts enable trustless transactions without intermediaries. Users can access services, execute agreements, and participate in financial activities without centralized approval. These features—transparency, security, and accessibility—make Ethereum an appealing choice for institutions exploring asset tokenization. Its decentralized system meets the critical requirements for operating in high-risk financial environments.
3. Emerging Challengers Reshaping the Landscape
The Ethereum mainnet has demonstrated the feasibility of tokenized finance. However, with success, it has also exposed structural limitations that hinder broader institutional adoption. Key obstacles include limited transaction throughput, latency issues, and unpredictable fee structures.
To address these challenges, Layer 2 Rollup solutions such as Arbitrum, Optimism, and Polygon zkEVM have emerged. Major upgrades, including The Merge (2022), Dencun (2024), and the upcoming Pectra (2025), have brought improvements in scalability. Nevertheless, the network has yet to match traditional financial infrastructure. For instance, Visa processes over 65,000 transactions per second, a level Ethereum has not yet reached. These performance gaps remain a key constraint for institutions requiring high-frequency trading or real-time settlement.
Delays also pose challenges. Block generation takes an average of 12 seconds, and with additional confirmations required for secure settlement, finality can often take up to three minutes. In cases of network congestion, this delay may increase further—causing difficulties for time-sensitive financial operations.
More importantly, the volatility of gas fees remains a concerning issue. During peak times, transaction fees have exceeded $50, and even under normal circumstances, costs often rise above $20. This level of fee uncertainty complicates business planning and may undermine the competitiveness of Ethereum-based services.
Securitize exemplifies this dynamic well. After encountering Ethereum's limitations, the company expanded to other platforms like Solana and Polygon while also developing its own chain, Converage. While Ethereum played a crucial role in facilitating early institutional experiments, it now faces growing pressure to meet the demands of a more mature and performance-sensitive market.
3.1. The Rise of Fast and Efficient General-Purpose Blockchains
As Ethereum's limitations become increasingly apparent, institutions are exploring alternatives that offer advantages in key performance bottlenecks such as transaction speed, fee stability, and finality time to complement Ethereum's general-purpose blockchain.
Source: rwa.xyz, Tiger Research
However, despite ongoing collaboration with institutional participants, the actual number of tokenized assets (excluding stablecoins) on these platforms remains significantly lower compared to Ethereum. In many cases, tokenized assets launched on general-purpose chains are still part of a multi-chain deployment strategy dominated by Ethereum.
Nevertheless, signs of substantial progress are emerging. In the private credit space, new tokenization initiatives are surfacing. For instance, on zkSync, the Tradable platform has gained attention, accounting for over 18% of activity in the sector—second only to Ethereum.
At this stage, general-purpose blockchains are just starting to establish a foothold. Platforms like Solana, which has experienced rapid growth in its DeFi ecosystem, now face a strategic question: how to translate this momentum into a sustainable position in the RWA space. Merely relying on superior technical performance is not enough. To compete with Ethereum, they need to provide infrastructure and services that meet institutional investors' trust and compliance expectations.
Ultimately, the success of these blockchains in the RWA market will depend less on raw throughput and more on their ability to provide tangible value. The differentiated ecosystems built around each chain's unique strengths will determine their long-term positioning in this emerging space.
3.2. The Emergence of RWA-Specific Blockchains
An increasing number of blockchain platforms are abandoning general designs in favor of domain-specific specialization. This trend is also evident in the RWA space, with a wave of newly constructed dedicated chains optimized for the tokenization of real-world assets emerging.
Source: Tiger Research
The rationale for RWA-specific blockchains is clear. Tokenizing real-world assets requires direct integration with existing financial regulations, which makes using general-purpose blockchain infrastructure insufficient in many cases. Specific technical requirements—especially around regulatory compliance—must be addressed from the ground up.
A key area is compliance processing. KYC and AML procedures are critical for tokenization workflows, yet these have traditionally been handled off-chain. This approach limits innovation, as it merely wraps traditional financial assets in blockchain format without redesigning the underlying compliance logic.
The current shift is to fully migrate these compliance functions on-chain. The demand for blockchain networks is growing—networks that can not only record ownership but also enforce regulatory requirements natively at the protocol level. In response, some RWA-focused chains have begun to offer on-chain compliance modules. For example, MANTRA includes decentralized identity (DID) functionality that supports compliance execution at the infrastructure level. Other dedicated chains are expected to follow a similar path.
In addition to compliance, many such platforms also leverage deep domain expertise to target specific asset classes. Maple Finance focuses on institutional lending and asset management, Centrifuge specializes in trade finance, and Polymesh concentrates on regulated securities. These chains do not broadly tokenize widely held assets like sovereign bonds or stablecoins but instead adopt vertical specialization as a competitive strategy.
That said, many of these platforms are still in early stages. Some have not yet launched mainnets, and most remain limited in scale and adoption. While general-purpose chains have only just begun to gain attention in the RWA space, dedicated chains are still at the starting line.
4. Who Will Lead the Next Phase?
Ethereum's dominance in the RWA market is unlikely to persist in its current form. Today, the market for tokenized assets is less than 2% of its estimated potential, indicating that the industry remains in its early stages. So far, Ethereum's advantage has primarily stemmed from its early discovery of product-market fit (PMF). However, as the market matures and scales, the competitive landscape is expected to undergo significant changes.
Signs of this shift are already apparent. Institutions are no longer focused solely on Ethereum. Both general-purpose and RWA-specific blockchains are being evaluated, and an increasing number of services are exploring the deployment of customized chains. Tokenized assets initially issued on Ethereum are now expanding into a multi-chain ecosystem, breaking previous monopolistic structures.
A key turning point will be the application of on-chain compliance. For blockchain-based finance to represent true innovation, regulatory processes like KYC and AML must be executed directly on-chain. If dedicated chains successfully provide scalable, protocol-level compliance and drive widespread industry adoption, the current market landscape could be significantly disrupted.
Equally important is the presence of actual purchasing power. Tokenized assets only become investable when there is active capital willing to acquire them. Regardless of technology, without meaningful liquidity, the utility of tokenization is limited. Thus, the next generation of RWA platforms must cultivate a robust service ecosystem built on tokenized assets and ensure strong liquidity participation for users.
In short, the conditions for success are becoming increasingly clear. The next leading RWA platform is likely to be one that achieves the following three points:
· A fully integrated on-chain compliance framework
· An ecosystem of services built on tokenized assets
· Deep and sustainable liquidity to facilitate real investments
The RWA market is still in its infancy. Ethereum has already validated the concept. The opportunity now lies with those platforms that can offer superior solutions—those that meet institutional requirements while unlocking new values in the tokenized economy.
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