Can everything be tokenized? Can it really be sold? An in-depth look at the liquidity dilemma of RWA

Binance founder Zhao Changpeng (CZ) attended the “Crypto Finance Forum 2025” held at the University of Hong Kong and stated that RWA (Real-World Assets) are not as easy as imagined, especially non-financial RWA assets that are not highly tradable themselves may fall into liquidity shortages.

In the future, rental income from any property worldwide, fractional ownership of a rare artwork, or even a portion of returns from private equity loans can be easily traded like stocks. The grand vision depicted by “Tokenization of Real-World Assets (RWA)” is precisely this exciting blueprint. It aims to inject blockchain technology into traditional finance to break physical and geographical limitations. Originally cumbersome, non-standard, and illiquid assets like real estate, artworks, and private equity will be transformed into digital tokens that can be traded on-chain 24/7 with minimal friction, fully unlocking their liquidity potential.

A financial revolution seems poised to overturn Wall Street, just hearing about it gives that vibe. With rapid technological development, by mid-2023, between $24 billion and $25 billion worth of real-world assets (excluding stablecoins) have already been successfully moved onto the blockchain, involving 15 different blockchain ecosystems. Peeling back the fog of market valuation, and delving into the fundamental issues, reveals an awkward reality: everything can be tokenized, but can it really be sold? A comprehensive research report published in 2025 uses detailed data and case studies to ruthlessly expose a secret everyone in the RWA field knows: we have mastered the magic of digitizing everything, but the market to freely circulate these digital assets is not yet built. In the RWA story, liquidity sounds most enticing but remains the most critical bottleneck.

Illusion of Prosperity: A Hundred-Billion Market Built on “Piggy Banks”

At first glance, the data on the RWA market’s rapid growth may be astonishing. In just a few years, a new market worth hundreds of billions of dollars has emerged, seemingly proving the huge success of tokenization. But a closer look at its composition reveals that this prosperity is highly misleading. Currently, private credit and tokenized U.S. Treasuries dominate nearly the entire RWA market, occupying most of the market share.

The reason these assets dominate is simple: they are “on-chain savings accounts” exclusive to institutions and high-net-worth individuals. In DeFi, investors can buy tokenized money market funds issued by traditional financial giants like BlackRock (BUIDL), or hold tokenized U.S. Treasuries via platforms like OndoFinance to earn stable and attractive returns. The main appeal of these products is “yield generation” rather than “trading.” Investors tend to hold until maturity for interest, rather than frequently trading like cryptocurrencies. Despite their large market cap, the mainstream approach is “buy and hold,” a static model rather than the active secondary trading market many expect.

Ironically, in the RWA market, the asset classes most capable of benefiting from increased liquidity—such as real estate, artworks, and SME loans—account for only a tiny fraction. For example, tokenized real estate has a total market value of about $300 million, while niche categories like artworks and carbon credits hover around $100 million. This reveals a core contradiction: the most successful current application of tokenization technology is to package assets with relatively good liquidity or low volatility into digital form, rather than tackling the difficult task of structuring “illiquid” assets. Lavish digital vaults have been built, but most contain certificates of deposit rather than cash that can be traded at any time.

Cold On-Chain Data Proves: “High Market Cap, Low Activity” in RWA

If the macro market structure exposes problems, then micro on-chain data confirms the liquidity shortage in a more stark manner. Researchers analyze data from platforms like RWA.xyz and Etherscan, examining token holder distribution, monthly active addresses, and transaction frequency to sketch the real liquidity landscape.

Take the most prominent token—BlackRock’s BUIDL—as an example. It has consistently ranked first in market cap among RWA assets, with a total value of $2.42 billion and over $1.8 billion in monthly transfer volume. At first glance, these figures are impressive. But a closer look at other indicators reveals the reality: despite its large size, it has only 85 holders, and only about 30 addresses are active monthly. This indicates that most of the large fund flows occur between project teams and a handful of institutional investors during minting and redemption, with almost no open secondary market trading.

In the RWA space, phenomena of “high market cap, low activity” are common. Many tokens serving institutions have fewer than 10 active addresses per month. For example, Centrifuge’s TRSY (tokenized government bonds) has only 6 holders. A more straightforward study by scholar Swinkels analyzed residential real estate tokens issued on RealT and found that each token changes hands only once per year on average. In contrast, stocks in developed markets typically turn over multiple times annually. This near-stagnant turnover shatters the myth of “tokenization = high liquidity,” revealing that these so-called “liquid assets” on-chain resemble a dead pond.

However, there are exceptions. Although the overall RWA market is largely silent, tokenized gold products like PAXGold (PAXG) and TetherGold (XAUT) are lively. PAXG has over 69,000 holders, with more than 52,000 transfers per month. On-chain activity shows it has been traded for over five years with stable and continuous trading cycles, unlike the short-lived, sporadic bursts typical of other RWA tokens.

Why do gold tokens stand out? The answer lies not in gold itself but in its “market access.” Most RWA tokens are trapped in permissioned, fragmented trading environments. In contrast, PAXG and XAUT are listed on major centralized exchanges like Binance and Kraken, as well as decentralized platforms like Uniswap, with broad, permissionless trading channels. This significantly lowers participation barriers for retail and institutional investors, providing real-time price discovery and deep market depth. PAXG’s success reflects a fundamental issue in other RWA assets: the lack of an open, unified, and easily accessible trading market.

Invisible Chains of Liquidity: Four Structural Barriers

Why hasn’t bringing assets onto the blockchain delivered the expected liquidity? Behind this are four structural barriers that lock the liquidity door of RWA.

First barrier: Under the regulation of the “invisible wall,” most RWA tokens are legally classified as “securities” and must comply with strict securities laws. Issuers can only operate within heavy compliance thresholds. For example, only allowing participation through “Know Your Customer” (KYC) verification or by certified “qualified investors.” While the “whitelist” mechanism ensures compliance, it also severely limits the pool of potential buyers and sellers, stifling market breadth and depth. Investors must complete complex off-chain signing and identity verification processes before trading, making the process less frictionless than advertised.

Second barrier: The market exhibits a “fragmented island” phenomenon. Imagine if there were no centralized exchanges like NYSE or NASDAQ—stocks could only be traded across hundreds of disconnected small platforms. Currently, the RWA market faces a similar situation. Various decentralized exchanges (DEXs), alternative trading systems (ATS), and over-the-counter (OTC) networks fragment assets. Each platform is like a liquidity island. Without a unified central marketplace to aggregate order flow, price discovery is inefficient, and transaction costs are high.

Third barrier: Valuation faces a “black box” problem. How to accurately price a small on-chain portion of a specific property or a unique private loan? Unlike homogeneous crypto assets like Bitcoin, each RWA has unique risk, legal, and value characteristics, making fair valuation extremely difficult. Information asymmetry limits traders’ ability to reach consensus on asset value, leading to large bid-ask spreads. To compensate for this uncertainty and potential exit difficulties, investors often demand a “liquidity discount,” further depressing asset prices and creating a self-reinforcing “illiquidity spiral.”

Fourth barrier: In mature financial markets, “market makers” play a crucial role by continuously providing bid and ask quotes, ensuring market liquidity and narrowing spreads. Currently, in the RWA ecosystem, professional market makers are scarce, leading to a “role vacancy.” Although some DeFi protocols attempt to incentivize liquidity provision through liquidity mining, these incentives often fail to attract and sustain stable liquidity pools for low-volume, non-homogeneous RWA tokens.

High transaction fees (Gas Fees), interoperability issues across different blockchain networks, and other technical and operational challenges further exacerbate the liquidity dilemma.

Path to Breakthrough: Building Multi-Dimensional Bridges to Liquidity

Given these daunting challenges, is the future of RWA bleak? I don’t think so. I believe the liquidity problem can be solved through systematic innovation and construction across multiple layers—legal, market structure, financial tools, and infrastructure. Here are some ideas for breaking through:

• Embrace a “Hybrid” Market Structure: Purely decentralized or centralized models both have drawbacks. A hybrid approach combining the strengths of both may be the best solution. Specifically, regulated centralized platforms can be used for initial issuance, compliance review, and custody to ensure asset authenticity and legality. Then, through technological bridges, compliant tokens can be integrated into open decentralized protocols for secondary trading and circulation. This approach meets regulatory requirements while leveraging DeFi’s composability and automated market makers (AMMs) to create liquidity.

• Explore “Collateral as Liquidity”: Not all liquidity must come from direct asset sales. “Collateralized lending” is a more clever approach. MakerDAO’s exploration is insightful—it is one of the largest decentralized stablecoin protocols, and it has begun accepting tokenized U.S. short-term government bonds and other RWAs as collateral for DAI. This means RWA holders don’t need to sell assets; they can collateralize them to borrow DAI, obtaining necessary funds. This “indirect liquidity” mode is ideal for assets suitable for long-term holding but occasionally needing liquidity, such as real estate and private equity.

• Solidify Foundations and Improve Ecosystems: The vitality of liquidity requires a solid bedrock, including:

  • Regulatory Modernization: Actively promote regulatory innovation, such as utilizing frameworks like the EU Pilot Regime for DLT, to relax entry barriers while protecting investors. Establish more specialized data analysis platforms like RWA.xyz, providing standardized asset disclosures and third-party valuation reports to reduce information asymmetry.

  • Develop Institutional-Grade Facilities: Design more attractive incentive schemes, such as distributing part of the asset’s income (e.g., bond interest) to liquidity providers to encourage market vitality. Build secure, reliable institutional custody solutions and compliant tokenized securities exchanges to boost market confidence and reduce trading risks.

In Conclusion

Returning to the initial question: “Can everything that is tokenized be sold smoothly?” The answer is: not yet, but there is hope for the future. While RWA tokenization technology has proven feasible, this is only the first step of a long journey. Building a mature, complete, and coordinated market ecosystem is the real challenge. Liquidity won’t appear out of thin air; it must be carefully designed and cultivated. Elevating “liquidity enhancement” from a lofty ideal to a core and primary task in RWA project design is essential. Only when regulatory barriers are broken, market islands connected, and valuation black boxes illuminated will a truly efficient and inclusive RWA trading era arrive.