Tokenization's Reality Check: Why On-Chain Assets Aren't Automatically Liquid, According to PBW Experts
At Paris Blockchain Week, industry leaders from Ondo Finance and Tether clarified that tokenizing illiquid assets like real estate doesn't automatically create secondary market liq
The burgeoning narrative around tokenization often paints a picture of instant liquidity for even the most illiquid assets. However, industry veterans at Paris Blockchain Week recently offered a crucial reality check: simply putting an asset on-chain doesn't magically unlock a vibrant secondary market.
Dispelling the Liquidity Myth
During a panel discussion moderated by Cointelegraph CEO Yana Prikhodchenko, leading voices from the crypto finance sector pushed back against the pervasive misconception that tokenizing assets like private credit or real estate inherently makes them easier to trade. Oya Celiktemur, Ondo Finance's sales director for EMEA, articulated this sentiment clearly, stating, “I think there’s still this idea that tokenizing something illiquid will somehow magically make it a liquid asset, which is just not true.” She underscored that these asset classes were never liquid to begin with, and the act of tokenization doesn't alter their fundamental market dynamics.
Francesco Ranieri Fabracci, head of tokenization expansion at Tether, echoed this perspective. He emphasized that liquidity isn't an automatic byproduct of on-chain representation. Fabracci suggested that only a select group of instruments, such as bonds, money market funds, and stablecoins, are genuinely poised to achieve consistent liquidity within tokenized markets. This distinction is vital for investors and builders alike, separating hype from practical market realities.
RWA Growth: A Closer Look Beyond the Headlines
The discussion at PBW comes at a pivotal time for the tokenized real-world asset (RWA) sector, which has seen explosive growth. Data from RWA.xyz reveals the market expanded from $8.8 billion on April 16, 2025, to approximately $29.9 billion by April 16, 2026—a more than threefold increase in just one year. This impressive figure, however, requires careful interpretation.
A significant portion of this growth has been concentrated in assets that are already standardized and widely traded in traditional finance. Tokenized US Treasury Debt and commodities have consistently dominated the market share, indicating that much of the RWA sector's expansion is driven by the on-chain representation of inherently liquid assets. This trend highlights a key takeaway for market participants: while the overall market value is soaring, it doesn't necessarily reflect a newfound liquidity for traditionally illiquid assets.
Illiquid Assets Still Seek Their Market
In contrast, categories typically associated with lower liquidity, such as tokenized real estate and private equity, remain comparatively smaller, despite showing strong percentage growth. Tokenized real estate grew from about $35 million to $296 million, and private equity from nearly $60 million to $223 million. While these figures represent substantial percentage increases, their absolute values are still modest compared to the broader RWA market.
Other segments like asset-backed credit and corporate credit also saw sharp increases in outstanding value. This indicates a rising issuance across a wider range of instruments, which is a positive sign for the sector's diversification. However, as the PBW panelists stressed, an increase in outstanding value primarily reflects issuance volume, not necessarily the depth or activity of secondary market trading. For traders and investors, this means differentiating between the availability of tokenized assets and their actual tradability.
Implications for the Crypto Community
This nuanced perspective from Paris Blockchain Week provides critical insights for anyone involved in the RWA space. For investors, it's a reminder to look beyond headline growth figures and assess the underlying liquidity characteristics of any tokenized asset. For builders and protocols, the challenge remains to develop robust secondary market infrastructure, regulatory frameworks, and genuine market demand that can support active trading for truly illiquid assets, rather than relying solely on the act of tokenization itself. The next phase of RWA evolution will likely hinge on solving this liquidity puzzle, moving beyond mere issuance to foster deep, efficient secondary markets.
Key points: Tokenization alone does not guarantee liquidity for traditionally illiquid assets like real estate or private credit. • The significant growth in the tokenized Real-World Asset (RWA) market is largely driven by the on-chain representation of already liquid assets, such as US Treasuries and commodities. • Investors should distinguish between the issuance volume of tokenized assets and the actual secondary market liquidity when evaluating investment opportunities. • Building robust secondary market infrastructure and fostering genuine market demand are crucial next steps for unlocking liquidity in truly illiquid tokenized assets.
