Converting high value assets like real estate, stocks, and private funds into digital tokens promises to democratize global investing, but simply putting an asset on a blockchain is not enough. While the technology allows for easier ownership transfer, it does not inherently create a thriving marketplace. Vladimir Tikhomirov, the founder of Theorem, recently pointed out that there are significant infrastructure gaps that must be filled before tokenized finance can reach its true potential.
The most pressing issue facing the industry today is a lack of liquidity. When investors buy tokenized assets without a functional secondary market, they often find themselves trapped in positions with long redemption periods. For these markets to actually work, there needs to be consistent secondary trading which enables accurate price discovery and better risk management. Relying solely on an issuer’s initial valuation isn’t sustainable; prices need to be refined through active open market competition to remain realistic.
Technical hurdles also persist regarding how these assets settle across different networks and borders. While managing multiple blockchains is becoming simpler thanks to arbitrage, navigating international regulatory frameworks remains a daunting task for many firms. At the same time, the nature of digital cash is evolving, with more participants moving away from standard stablecoins in favor of yield bearing tokenized US Treasury bills to make their capital work harder while it sits on chain.
Despite these challenges, the long term outlook for on chain markets remains optimistic because of the inherent advantages they offer over legacy systems. The ability to trade twenty four hours a day and utilize composable collateral provides a level of flexibility that traditional finance cannot match. However, this future depends entirely on whether developers can successfully build the essential lending protocols and exchange infrastructures required to support a truly liquid ecosystem.