Original Title: "Ethereum's Dominance in the RWA Market: Who Will Take the Next Lead?"

Source: Tiger Research

Key Takeaways

Thanks to its first-mover advantage, past institutional experimentation, deep on-chain liquidity, and decentralized architecture, Ethereum currently leads the RWA market. However, general-purpose blockchains with faster and cheaper transactions, as well as RWA-specialized chains designed for regulatory compliance, are addressing Ethereum's limitations in cost and performance. These emerging platforms are positioning themselves as the next-generation infrastructure by offering superior technical scalability or built-in compliance capabilities.

The next phase of RWA growth will be driven 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 Growing Right Now?

The tokenization of real-world assets (RWA) has become one of the most prominent themes in the blockchain industry. Global consultancies like BCG have published extensive market forecasts, and Tiger Research has conducted in-depth analyses of emerging markets like Indonesia—highlighting the increasing importance of this sector.

So, what exactly is RWA? It refers to the conversion of tangible assets such as real estate, bonds, and commodities into digital tokens. This tokenization process relies on blockchain infrastructure. Currently, Ethereum serves as the primary infrastructure for supporting these transactions.

Source: rwa.xyz, Tiger Research

Despite growing competition, Ethereum continues to maintain its dominant position in the RWA market. Specialized RWA blockchains have emerged, and established platforms in the DeFi space like Solana are also expanding into the RWA sector. Even so, Ethereum still accounts for over 50% of total market activity, underscoring the robustness of its current position. This report examines the key factors underlying Ethereum's current dominance in the RWA market and explores the evolving conditions that could shape the next phase of growth and competition.

2. Why Does Ethereum Maintain Its Lead?

2.1. First-Mover Advantage and Institutional Trust

There are clear reasons why Ethereum has become the default platform for institutional tokenization. It pioneered smart contracts and actively prepared for the RWA market. Supported by a highly active developer community, Ethereum established key tokenization standards such as ERC-1400 and ERC-3643 long before competing platforms emerged. This early foundation provided the necessary technical and regulatory groundwork for pilot projects.

As a result, many institutions began evaluating Ethereum before considering alternatives. Several notable initiatives in 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 demonstrated that Ethereum’s architecture—even in its private form—could satisfy regulatory requirements for data protection and compliance.

· Société Générale’s Bond Issuance (2019): SocGen FORGE issued €100 million of covered bonds on Ethereum’s public mainnet. This demonstrated that regulated securities could be issued and settled on a public blockchain while minimizing intermediary involvement.

· European Investment Bank Digital Bond (2021): The European Investment Bank (EIB), in collaboration with Goldman Sachs, Santander, and Société Générale, issued a €100 million digital bond on Ethereum. This bond was settled using central bank digital currency (CBDC) issued by the Banque de France, underscoring Ethereum’s potential in fully integrated capital markets.

These successful pilots enhanced Ethereum’s credibility. For institutions, trust is built through validated use cases and references from other regulated participants. Ethereum’s track record continues to attract attention, forming a reinforcing cycle of adoption.

Source: Securitize

For instance, 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. A Platform for Real Capital Flow

One of the key reasons Ethereum continues to dominate the RWA (Real World Assets) market is its ability to convert on-chain liquidity into actual purchasing power. The tokenization of real-world assets is not just 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 significant tokenized BUIDL funds on Ethereum. These platforms have attracted hundreds of millions of dollars by offering products based on tokenized U.S. Treasury bonds, stablecoin-backed lending, and synthetic yield-generating dollar instruments.

· Ondo Finance has accumulated over $600 million in Total Value Locked (TVL) through its Treasury-backed products USDY and OUSG.

· Spark Protocol leverages DAI liquidity from MakerDAO to purchase more than $2.4 billion worth of real-world Treasury bonds.

· Ethena utilizes its synthetic stablecoins, USDe and sUSDe, on Ethereum to create a bankless yield infrastructure, attracting institutional demand and DeFi liquidity.

These examples show that Ethereum is more than just a platform for asset tokenization. It provides a robust liquidity foundation that enables genuine investment and asset management. In contrast, many emerging RWA platforms struggle to ensure capital inflows or secondary market activity after their initial token issuance phase.

The reasons for this disparity are clear. Ethereum has already integrated stablecoins, DeFi protocols, and compliance-ready infrastructure. This has created a comprehensive financial ecosystem where issuance, trading, and settlement can all occur on-chain. As a result, Ethereum is the most effective environment for converting tokenized assets into real-world economic activity. This gives it a structural advantage that extends beyond simple market share.

2.3. Building Trust Through Decentralization

Decentralization plays a pivotal role in establishing trust. The tokenization of real-world assets involves moving the ownership and transaction records of high-value assets into digital systems. In this process, institutions are primarily concerned with the reliability and transparency of the system. This is precisely where Ethereum's decentralized architecture provides significant advantages.

As a public blockchain, Ethereum operates through a network supported by thousands of independently run nodes worldwide. The network is open to anyone, and changes are determined by participant consensus rather than centralized control. As a result, it avoids single points of failure, ensures 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, which mitigates fraud risks. Smart contracts enable trustless transactions without the need for intermediaries. Users can access services, execute agreements, and participate in financial activities without requiring centralized approval. These attributes—transparency, security, and accessibility—make Ethereum an attractive choice for institutions exploring asset tokenization. Its decentralized system aligns with the critical requirements of operating in high-stakes financial environments.

3. Emerging Challengers Reshaping the Landscape

The Ethereum mainnet has demonstrated the feasibility of tokenized finance. However, its successes have also highlighted structural limitations that hinder broader institutional adoption. Key obstacles include limited transaction throughput, latency issues, and an unpredictable fee structure.

To address these challenges, Layer 2 Rollup solutions like Arbitrum, Optimism, and Polygon zkEVM have emerged. Significant upgrades, including The Merge (2022), Dencun (2024), and the upcoming Pectra (2025), have introduced scalability improvements. Nevertheless, the network has yet to rival traditional financial infrastructures. For instance, Visa processes over 65,000 transactions per second, a benchmark Ethereum has not yet achieved. For institutions requiring high-frequency trading or real-time settlement, these performance gaps remain a critical limiting factor.

Latency also presents challenges. Block generation takes an average of 12 seconds, and with the additional confirmations required for secure finality, settlement can take up to three minutes. During periods of network congestion, these delays can be exacerbated, creating difficulties for time-sensitive financial operations.

Moreover, gas fee volatility remains a persistent concern. At peak times, transaction fees have exceeded $50, and even during normal conditions, costs frequently rise above $20. This level of fee unpredictability complicates business planning and could undermine the competitiveness of Ethereum-based services.

Securitize perfectly illustrates this dynamic. After encountering Ethereum's limitations, the company expanded to other platforms like Solana and Polygon, while also developing its own chain, Converage. Although Ethereum played a crucial role in facilitating early institutional experiments, it is now under increasing pressure to cater to a more mature, performance-sensitive market.

3.1. The Rise of High-Speed, Cost-Effective General-Purpose Blockchains

As Ethereum's limitations become increasingly apparent, institutions are increasingly exploring general-purpose blockchains offering alternate advantages in key performance bottlenecks, such as transaction speed, fee stability, and finality time, to supplement Ethereum.

Source: rwa.xyz, Tiger Research

However, despite ongoing collaboration with institutional participants, the actual quantity of tokenized assets (excluding stablecoins) on these platforms remains substantially lower compared to Ethereum. In many cases, tokenized assets launched on general-purpose chains are still a part of multi-chain deployment strategies dominated by Ethereum.

Even so, there are signs of tangible progress. In the private credit sector, new tokenization initiatives are emerging. For instance, on zkSync, the Tradable platform has gained attention, accounting for over 18% of activity in this domain—second only to Ethereum.

At this stage, general-purpose blockchains are only just beginning to establish a foothold. Platforms like Solana, whose DeFi ecosystems have experienced rapid growth, now face a strategic question: how to translate this momentum into a sustainable position in the RWA (Real-World Asset) space. Superior technical performance alone is insufficient. Competing with Ethereum will require infrastructure and services that meet institutional investors' trust and compliance expectations.

Ultimately, the success of these blockchains in the RWA market will rely less on raw throughput and more on their ability to deliver tangible value. Differentiated ecosystems built around the unique strengths of each chain will determine their long-term positioning in this emerging field.

3.2. The Emergence of RWA-Focused Blockchains

An increasing number of blockchain platforms are shifting away from general-purpose designs, evolving instead toward domain-specific specialization. This trend is evident in the RWA sector as well, where a wave of new specialized chains optimized for real-world asset tokenization is taking shape.

Source: Tiger Research

The rationale for dedicated blockchains for RWA (Real World Assets) is clear. Tokenizing real-world assets requires direct integration with existing financial regulations, which makes generic blockchain infrastructures inadequate in many cases. Specific technical requirements—particularly around regulatory compliance—must be addressed from the ground up.

A key area is compliance processing. KYC (Know Your Customer) and AML (Anti-Money Laundering) procedures are critical to tokenization workflows, but these have traditionally been handled off-chain. This approach limits innovation because it merely wraps traditional financial assets in a blockchain format without rethinking the underlying compliance logic.

The shift now lies in moving these compliance functions fully on-chain. Demand is growing for blockchain networks that not only record ownership but also natively enforce regulatory requirements at the protocol level. In response, certain RWA-focused chains have begun implementing on-chain compliance modules. For instance, MANTRA includes decentralized identity (DID) features that enable compliance to be enforced at the infrastructure layer. Other dedicated chains are expected to follow a similar path.

Beyond compliance, many of these platforms 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 is dedicated to regulated securities. Instead of pursuing broad tokenization of widely held assets like sovereign bonds or stablecoins, these chains adopt vertical specialization as a competitive strategy.

That said, many of these platforms remain in their early stages. Some have not yet launched their mainnets, and most still face limitations in scalability and adoption. If generic blockchains are only beginning to gain traction 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 tokenized asset market represents less than 2% of its estimated potential, indicating that the industry is still in its infancy. Thus far, Ethereum's edge has primarily come from its early discovery of product-market fit (PMF). However, as the market matures and scales, the competitive landscape is expected to shift significantly.

Signs of this transformation are already apparent. Institutions are no longer solely focused on Ethereum. Both general-purpose and RWA-dedicated blockchains are being evaluated, and an increasing number of services are exploring custom chain deployments. Tokenized assets that were initially issued on Ethereum are now expanding into multi-chain ecosystems, breaking the monopoly structure of the past.

A critical turning point will be the application of on-chain compliance. For blockchain-based financial systems to represent true innovation, regulatory processes like KYC and AML must be conducted directly on-chain. If dedicated chains successfully provide scalable, protocol-level compliance and drive widespread industry adoption, the current market landscape could be significantly reshaped.

Equally important is the presence of actual purchasing power. Tokenized assets become investable only when there is active capital willing to acquire them. Regardless of the technology, without meaningful liquidity, the utility of tokenization is limited. Therefore, the next generation of RWA platforms must foster a robust service ecosystem built around tokenized assets and ensure strong liquidity participation for users.

In summary, the conditions for success are becoming increasingly clear. The next leading RWA platform is likely to be one that achieves the following three objectives:

· A fully integrated on-chain compliance framework

· A service ecosystem built around tokenized assets

· Deep and sustainable liquidity to facilitate real investment

The RWA market is still in its nascent stages. Ethereum has already validated the concept. The current opportunity lies with platforms that can offer better solutions—those that meet institutional requirements while unlocking new value within the tokenized economy.

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