Beyond Tokenization: From On-chain to Liquidity: The Financialization of RWA

From BlackRock's entry, to Robinhood's self-developed public blockchain, to Nasdaq's layout of stock tokenization, the narrative of real-world assets (RWA) has long been a foregone conclusion. However, we must clearly recognize that moving stocks and bonds onto the blockchain is merely the first domino in this grand transformation. The true disruption lies not in what we can "buy" on the blockchain, but in what new species and new ways of playing we can "create" based on these assets carrying real-world value. This article aims to further explore what the next step for RWA is after tokenization, and why it is expected to usher in a DeFi summer-level narrative and innovation.

01 Tokenization is just the beginning

In essence, moving RWA assets such as US stocks and gold to the chain only completes the "digital packaging" of the assets, solving the problems of asset issuance and cross-regional circulation, but is far from releasing their true potential.

Imagine that a tokenized asset, if it can only be circulated statically in a wallet and cannot be used in combination, will lose the composability advantage of the blockchain. After all, in theory, the introduction of RWA can greatly improve asset liquidity and release new value through DeFi operations such as lending and staking. Therefore, it should have injected high-quality assets with real returns into DeFi, strengthening the value foundation of the entire crypto market. This is a bit like ETH before the DeFi Summer. At that time, it could not be loaned, used as collateral, or participated in DeFi. It was not until protocols like Aave gave it functions like "collateralized lending" that it released hundreds of billions of dollars in liquidity. For US stock tokens to break through this dilemma, they must replicate this logic and make the deposited tokens "live assets that can be mortgaged, traded, and combined."

For example, users can use TSLA.M to short BTC and use AMZNX to bet on the trend of ETH. Then these deposited assets are no longer just "token shells", but margin assets that are used. Liquidity will naturally grow from these real trading needs.

This is exactly what the move from RWA to RWAFi means. However, the real release of value requires far more than a single technological breakthrough, but a systematic solution, covering:

• Infrastructure layer: secure asset custody, efficient cross-chain settlement and on-chain liquidation;

• Protocol layer: standardized tools that facilitate rapid integration between developers and asset parties;

• Ecosystem layer: in-depth linkage and cooperation of various DeFi protocols such as liquidity, derivatives, lending, and stablecoins;

02  Bringing Real Assets to Life: The Financialization Path of RWA

So where is it stuck now?

The biggest problem in the current RWA token market is no longer the "lack of underlying assets" but the "lack of liquidity structure."

First, there is the lack of financial composability. In the traditional US stock market, abundant liquidity stems not from the spot market itself but from the trading depth fostered by derivatives like options and futures. These tools support price discovery, risk management, and leverage, fostering long-short speculation and diversified strategies, attracting continued institutional investment, and ultimately creating a virtuous cycle of "active trading → deeper market → more users." However, the problem is that the current US stock tokenization market lacks this crucial structural element: The TSLA and AAPL tokens purchased by users can mostly only be "held" but not truly "used." They cannot be used as collateral to borrow stablecoins on Aave, nor as margin to trade other assets on dYdX, let alone construct cross-market arbitrage strategies based on them.

Therefore, although these RWA assets have come to the chain, they are not yet "alive" in a financial sense. Their capital efficiency is far from being released, and the road to the vast DeFi world is blocked.

Note: They are TSLA.M of MyStonks, TSLAx of xStocks, and TSLAon of Ondo Finance.

Secondly, there is the fragmentation and fragmentation of liquidity. This presents a more thorny issue: different issuers, based on the same underlying asset (e.g., Tesla stock), have launched independent, incompatible token versions, such as MyStonks' TSLA.M, xStocks' TSLAx, and Ondo Finance's TSLAon. This "multiple token issuance" situation is reminiscent of the early difficulties of the Ethereum Layer 2 ecosystem—liquidity was fragmented into isolated islands, unable to converge into a single ocean. This not only significantly diluted market depth but also created significant obstacles for user and protocol integration, severely hindering the scalability of the RWA ecosystem. 03 How to Complete the Missing Pieces? How to resolve the above dilemma? The answer lies in building a unified and open RWAFi ecosystem, transforming RWA from a "static asset" into a composable and derivative "dynamic Lego brick." Therefore, Nasdaq's latest move is particularly worthy of attention. Once top traditional institutions like Nasdaq enter the market and issue official stock tokens, it will fundamentally resolve the trust issue at the source of assets. Then, within the RWAFi framework, a unified RWA asset can be "financialized" in various ways - through operations such as mortgage, lending, staking, and income aggregation, it not only generates cash flow but also introduces real-world value anchoring to the chain.

Importantly,this kind of financialization is not limited to highly liquid assets such as U.S. stocks and U.S. bonds. Even fixed assets with extremely poor liquidity and composability in the real world can be "activated."

We can imagine its potential through an example. Take real estate, an asset with extremely poor liquidity in the real world. Once it is standardized and introduced into the RWAFi framework, it is no longer "real estate" but becomes a highly dynamic financial component:

• Participate in lending: Use it as high-quality collateral to obtain low-interest financing on the chain and activate dormant capital;

• Automate income: Through smart contracts, monthly rental income is automatically and transparently distributed to each token holder in the form of stablecoins;

• Build structured products: Separating a property's "value-added rights" from its "rental income rights" and packaging them into two distinct financial products caters to investors with varying risk appetites. This "dynamic empowerment" breaks the inherent limitations of RWAs and infuses them with the higher-dimensional composability inherent in DeFi. Therefore, Nasdaq's stock tokenization is just the first domino to fall. Once they find success with US stock tokens, all kinds of assets, from real estate to commodities, will usher in a wave of on-chain integration. Therefore, the real explosion point in the future will not be these assets themselves, but the derivative ecosystem built around them—collateralization, lending, structuring, options, ETFs, stablecoins, income certificates… All of these familiar DeFi modules will be recombined and nested on standardized RWA to form a brand new "Real Return Finance (RWAFi)" system. If the DeFi Summer of 2020 was a "currency Lego" experiment centered around crypto-native assets like ETH and WBTC, then the next wave of innovation initiated by RWAFi will be a larger and more imaginative "asset Lego" game based on the entire real-world value. When RWA is no longer just an asset on the chain, but becomes the underlying building block of on-chain finance, a new round of DeFi Summer may also begin.