The Future of Onchain: The Age of Tokenization & The Token Identity Crisis

This report is the first part in a series designed to set the foundation, and explore the age of tokenization and the protocols attempting to bring us there. In future reports, we will be diving deeper into this thesis and these protocols. We hope you enjoy it!

Introduction

Hot take: the global backdrop & regulatory setup for crypto has never been more bullish.

Over the last several months, the SEC has dismissed case after case against crypto and DeFi. Additionally, avid crypto investor Paul Atkins recently confirmed as the new SEC chair gives reason to be optimistic on the industry in the long-term despite the near-term macroeconomic uncertainties (thanks, Donald).

Recent explosions in Stablecoin adoption and on-chain perpetual dexes have confirmed the growing appetite for 24/7 financial market access. The Nasdaq has recently announced plans to shift towards 24/7 trading hours (say goodbye to your weekends, TradFi suits). Pair this with Trump’s propensity to make massive decisions on weekends, as well as the record-breaking 41 trillion in global foreign investment, and the path forward for decentralized, on-chain applications has never been more clear:

Why wait for traditional finance markets to open in order to trade Trump’s Saturday headlines?
Why should the companies of tomorrow be limited only to yesterday’’s markets and private investors?
Why shouldn’t the average investor be able to easily access these opportunities?

Questions like these have given rise to a thesis surrounding what Felipe Montealegre has called “The Internet Financial System,” outlining that crypto and blockchain technology’s greatest strength lies in its global, decentralized, and permissionless moat.

The future of Onchain applications lies in bringing high-friction, high-barrier-to-entry financial vehicles to the blockchain for 24/7 cross-border trading for all. More specifically, the tokenization of private equity, securities, and commodity markets for every user to access. Robinhood’s CEO has even called tokenization “an investing revolution.” At first glance, this might appear to be what current RWA tokens seek to achieve, but this would be categorically false.

Most RWAs currently serve as proxies for the “real world asset” that backs their token. What I am referring to are the actual protocols and applications making it possible for us to trade these “real-world assets” and securities directly. These protocols will be enabling the future and thus should be pertinent to us in the present. As more and more of the largest, most successful companies remain private (the average age of private companies has increased from 6.9 years a decade ago to 10.7 years today), the upside will likely accrue to the protocols that enable us to trade them.

Source: CB Insights, TrendlineHQ

The Candidates

There are numerous protocols and projects positioning themselves as the “go-to” destination for asset tokenization. Ultimately, this sector will most likely be dominated by a select few protocols, as the legal tokenization of these assets will require substantial connections, capital, and lobbying power. Detailed below is a thorough review of how each protocol and chain enables legal, direct access to tangible assets, as well as their technical architecture and compliance process.

Securitize

Overview

Securitize is far and away the most established protocol in this sector: SEC chair Paul Atkins has even disclosed large investments in the platform. Securitize is the leading platform for tokenizing securities and taking care of their lifecycles on chain. Founded in 2017, Securitize can be credited with being one of the first entities to make real-world securities into digital assets. The securities, which range from equity, debt, funds, and others can be traded as tokens with full regulato