Asset Classes Being Tokenized - The Landscape

Tokenized US Treasury Bills have emerged as the clear winner in the RWA race, growing from nearly zero in early 2023 to over $7 billion by late 2025—a 7,000% increase.

Why Treasuries?

THE PARADOX EXPLAINED:

Question: Why tokenize treasuries—already the most liquid asset?
Answer: It's not about making treasuries liquid. It's about:

- DeFi protocols needed yield-bearing collateral
- Stablecoins offered 0%
- Treasuries offer 4-5% risk-free
- Tokenized treasuries = yield + on-chain utility

- DeFi lending needs safe collateral
- Better than volatile crypto
- Enables "real yield" strategies
- Example: Ethena uses BUIDL as USDe backing

- Treasuries are not securities (they're government debt)
- Clearer legal framework
- Lower regulatory risk for issuers
- Easier institutional adoption

- No physical custody required
- Standard documentation
- Daily liquidity (T-bills roll frequently)
- Minimal operational complexity

Market Leaders:

TOKENIZED TREASURY LANDSCAPE (December 2025):

┌─────────────────────┬───────────┬─────────┬──────────────────┐
│ Product             │ AUM       │ Share   │ Primary Chain    │
├─────────────────────┼───────────┼─────────┼──────────────────┤
│ BlackRock BUIDL     │ $2.9B     │ 40%     │ Ethereum (multi) │
│ Franklin BENJI      │ $750M     │ 10%     │ Stellar          │
│ Ondo OUSG           │ $400M     │ 6%      │ Multi-chain      │
│ Ondo USDY           │ $250M     │ 4%      │ Multi-chain      │
│ OpenEden TBILL      │ $120M     │ 2%      │ Multi (incl XRPL)│
│ Hashnote USYC       │ $400M     │ 6%      │ Ethereum         │
│ Mountain USDM       │ $200M     │ 3%      │ Ethereum         │
│ Others              │ $2B+      │ 29%     │ Various          │
└─────────────────────┴───────────┴─────────┴──────────────────┘

Total: ~$7-8 billion
YoY Growth: 250%+

Investment Characteristics:

TYPICAL TOKENIZED TREASURY PRODUCT:

Underlying: Short-dated US T-bills (4-12 weeks)
Yield: 4.0-5.0% APY (varies with Fed rates)
Fees: 0-0.50% management fee
Net Yield: 3.5-5.0%
Minimum: $100-$100,000 (varies by product)
Liquidity: Daily redemption (24-48 hours)
Regulatory: Varies (some SEC-registered, some offshore)

- Fidelity SPAXX: 4.98% yield, 0.42% fee
- iShares SHV: 5.2% yield, 0.15% expense ratio
- T-bill direct: ~5.25% yield, no fee

VERDICT:
Tokenized treasuries often have LOWER net yields than traditional.
Premium is for on-chain utility, not better economics.

Closely related to treasuries, tokenized money market funds (MMFs) represent institutional-grade cash management brought on-chain.

Key Examples:

TOKENIZED MONEY MARKET FUNDS:

- First tokenized MMF on XRPL
- Part of £3.8B Lux fund
- Ripple invested $5M
- Institutional focus

- One of earliest (2021)
- $750M AUM
- Stellar-based
- Retail accessible

- Technically a tokenized fund
- Holds treasuries and repo
- Largest by far

Value Proposition:

WHY TOKENIZE MONEY MARKET FUNDS?

- Reach new distribution (crypto-native investors)
- Operational efficiency (reduced admin)
- 24/7 subscription/redemption
- Global access without local setup

- Yield-bearing alternative to stablecoins
- Institutional credit quality
- Regulatory familiarity
- DeFi composability

- Real yield (not inflationary)
- Safe collateral base
- Reduces reliance on algorithmic stables
- Bridges TradFi and DeFi

Beyond treasuries, other fixed income is being tokenized more slowly:

CORPORATE BOND TOKENIZATION:

- Much smaller than treasuries (~$500M)
- Higher complexity (credit analysis, ratings)
- Less standardized than government debt
- Early pilots from banks

- Siemens: €60M digital bond (2023)
- HSBC: HK$600M digital bond
- Various European issuances under DLT regimes

- Credit risk assessment
- Ratings integration
- Covenant monitoring
- Default procedures

XRPL Position in Fixed Income:

XRPL FIXED INCOME FOOTPRINT:

- OpenEden TBILL: Treasury bill exposure
- Archax/abrdn: Money market fund
- Ondo integration: Multi-chain treasury access

- Additional treasury products expected
- Potential corporate bond expansion

- Ethereum dominates (BlackRock, most others)
- Stellar has Franklin Templeton lock-in
- XRPL growing but small share
- Compliance features attractive for fixed income

---

Private credit—loans to businesses, trade finance, receivables—represents the largest category of tokenized RWAs by total value locked, despite receiving less attention than treasuries.

PRIVATE CREDIT MARKET:

Total Tokenized: $14-18 billion
Market Share: 58% of all tokenized RWAs

- Treasuries: High visibility, lower TVL
- Private credit: Lower visibility, higher TVL
- Figure alone: $12B+ in tokenized HELOCs

- Treasuries get headlines (BlackRock, retail access)
- Private credit gets volume (institutional, B2B)

Key Platforms:

PRIVATE CREDIT LEADERS:

- Home Equity Lines of Credit (HELOCs)
- Built on Provenance blockchain
- Dominates this category single-handedly
- Institutional product

- On-chain lending to institutions
- Corporate loans, DeFi treasuries
- Higher yields (8-15%)
- Higher risk

- Trade finance focus
- Real-world receivables
- Multi-chain deployment
- DeFi integration

- Emerging market loans
- Developing world credit access
- Higher risk/reward
- Impact investing angle

TYPICAL STRUCTURE:

- Lender originates loan (HELOC, business loan, etc.)
- Standard underwriting process
- Off-chain legal documentation

- Loan packaged into tokenized structure
- SPV (Special Purpose Vehicle) often used
- Tokens represent claims on loan pool
- Smart contract governs distributions

- Tokens sold to investors
- Can be institutional or DeFi protocols
- Secondary trading possible

- Borrower makes payments
- Payments distributed to token holders
- Default handling off-chain
- Liquidation if necessary

EXAMPLE - FIGURE HELOC:

Original Loan: $500,000 HELOC to homeowner
Tokenization: Loan packaged with others into pool
Tokens: Represent fractional ownership of pool
Yield: 8-12% depending on tranche
Risk: Home equity backs the loans
Liquidity: Secondary market on Provenance
```

RISK FACTORS:

- Borrowers may default
- Recovery rates vary by collateral
- Credit analysis essential
- Rating agencies less present

- SPV may not isolate risk perfectly
- Legal jurisdiction matters
- Enforcement mechanisms untested
- Smart contract ≠ legal contract

- Secondary markets thin
- May not exit at fair value
- Underlying loans are illiquid
- Tokenization doesn't magically create liquidity

- Centralized platforms can fail
- Maple had credit events (2022-2023)
- Goldfinch had defaults
- Due diligence on platform essential

YIELD ANALYSIS:

• Senior tranches: 6-10%

• Mezzanine: 10-15%

• Junior/First-loss: 15-25%

• Similar yields

• Tokenization doesn't increase returns

• May improve access (lower minimums)

• May improve transparency

XRPL PRIVATE CREDIT POSITION:

- Limited direct activity
- Focus on treasury products first
- Some trade finance discussions

- Compliance features useful for regulated credit
- Low costs good for high-volume transactions
- Settlement speed valuable for trade finance

- Provenance dominates via Figure
- Ethereum has Maple, Centrifuge ecosystems
- Would need major originator partnership

Verdict:
Private credit is not XRPL's current focus.
Treasury and payments receive priority.
Long-term opportunity exists but requires strategy shift.

Gold represents the clear leader in commodity tokenization:

TOKENIZED GOLD MARKET:

- Tether Gold (XAUT): $1.6B
- Paxos Gold (PAXG): $500M
- Others: $400M+

- Physical asset with standard specifications
- Global demand and recognition
- Existing custody infrastructure
- Regulated custodians available
- No yield (simplifies structure)

How Tokenized Gold Works:

TYPICAL STRUCTURE:

- Held in vaults (London, Switzerland, etc.)
- Audited regularly
- Insured
- 1 token = 1 troy ounce (typically)

- Issued by regulated entity
- Backed 1:1 by physical gold
- Redeemable for physical (with minimums)
- Tradeable 24/7

- PAXG: 0% creation fee, 0.02% transfer fee
- XAUT: 0.25% purchase fee
- Storage/custody: Built into spread

- GLD: 0.40% expense ratio
- Tokenized: ~0.15-0.25% effective cost
- Advantage: Marginal, plus 24/7 trading

BEYOND GOLD:

- Meld Gold (XRPL partnership): In development
- Smaller market than gold
- Similar structure

- Very early stage
- Complex storage/delivery
- Futures-based approaches explored

- Theoretical interest
- Practical challenges (perishability, quality)
- Minimal actual tokenization

- Growing interest
- Toucan Protocol, KlimaDAO
- Controversy over quality/additionality
- Not traditional commodity

CHALLENGES FOR NON-GOLD:

1. Storage complexity
2. Quality variations
3. Delivery logistics
4. Smaller investor interest
5. Existing futures markets adequate

XRPL COMMODITY TOKENIZATION:

- Meld Gold: Physical gold and silver
- Australian-regulated
- XRPL as primary platform

- Low transaction costs (high-volume trading)
- Built-in DEX (immediate liquidity)
- Compliance features (institutional grade)
- Ripple partnership (credibility)

- Ethereum dominates (PAXG, most others)
- XRPL could capture niche
- Meld Gold is proof of concept
- Need more issuers to scale

---

Real estate has always been the poster child for tokenization potential:

THE BULL CASE:

Market Size: $330+ trillion globally
Illiquidity Premium: 5-15% discount for illiquidity
Minimums: Often $100K-$1M+
Fragmentation: Millions of properties, no central market

- Fractional ownership: $100 minimums
- Global access: Any investor, any property
- Liquidity: 24/7 trading
- Transparency: On-chain ownership

Estimated Value Unlock:
If 50% illiquidity premium reduction:
$330T × 50% tokenizable × 2.5% premium reduction
= ~$4 trillion value creation

Despite enormous theoretical potential, real estate tokenization has badly lagged:

ACTUAL MARKET (December 2025):

Total Tokenized Real Estate: $500M - $1B
vs. Total Addressable Market: $330+ trillion
Penetration: 0.0003%

WHY SO LITTLE?

- Property law varies by jurisdiction
- Title systems don't recognize blockchain
- Need SPV/legal wrapper for each property
- Cost per property: $50K-200K legal setup
- Makes small properties uneconomical

- Usually classified as securities
- Accredited investor restrictions (US)
- Cross-border complications
- Each jurisdiction different

- Property management still offline
- Tenant relations, maintenance, insurance
- Governance of fractional owners
- Decision-making for improvements

- Need liquidity for investors to buy
- Need investors for liquidity
- Most tokenized properties barely trade
- "Liquid" real estate remains illiquid

- REITs already provide fractional exposure
- More liquid, more regulated
- Why tokenize vs. just buy REIT?

ACTIVE REAL ESTATE TOKENIZATION:

- US residential properties
- Fractional ownership tokens
- Rental income distribution
- Secondary trading available
- Mostly crypto-native investors

- Similar to RealT
- US rental properties
- Lower minimums ($50)
- Rental yield focus

- Land registry integration
- Dubai government partnership
- XRPL-based
- Proof of concept stage

- Commercial real estate focus
- Higher minimums
- Institutional target

- Most projects small ($1-10M per property)
- Rental residential dominates
- Commercial lags further
- Geographic concentration

XRPL REAL ESTATE POSITION:

- Ctrl Alt pilot (Dubai)
- Land registry modernization
- Ripple Custody integration
- Proof of concept stage

- Compliance features (KYC/AML built-in)
- Low costs (many small transactions)
- Institutional credibility
- Government partnership approach

- Ethereum has more projects
- Legal issues blockchain-agnostic
- Need more than tech to solve problems
- Long sales cycles for real estate

Realistic Assessment:
Real estate tokenization will remain small (<$10B)
through 2027-2028 regardless of blockchain.
XRPL's advantage: Government/institutional approach
may eventually scale better than retail-first.

The ability to tokenize stocks and equity interests faces significant regulatory hurdles:

TOKENIZED EQUITIES LANDSCAPE:

Current State: <$1 billion tokenized
Why So Small? Securities regulations

WHAT EXISTS:

• Securitize: SEC-registered platform

• Private placement tokens

• Accredited investors only

• Limited secondary trading

• Mirror Protocol (defunct): Synthetic stocks

• Synthetix: Synthetic assets

• Not actual equity ownership

• Regulatory gray area

• Backed Finance (Switzerland): Tokenized TSLA, etc.

• Very early stage

• Regulatory arbitrage

• Mostly European focus

REGULATORY BARRIERS:

• Stocks are securities (Howey Test clear)

• Registration or exemption required

• Broker-dealer requirements

• Transfer agent rules

• Custody requirements

• Tokenized equities legal but expensive

• Mostly used for private placements

• Public equity tokenization very limited

• Regulatory change needed for scale

Tokenized fund interests show more promise than direct equity:

FUND TOKENIZATION:

- Securitize MI4: Multi-asset institutional fund
- Centrifuge JAAA: AAA-rated fund
- Various hedge fund tokens

- Professional management handles complexity
- Single token = diversified exposure
- Existing fund regulations apply
- Manager handles compliance

- Archax/abrdn MMF already on XRPL
- Fund tokenization is growth area
- Compliance features well-suited
- Institutional relationships key

EMERGING TOKENIZATION CATEGORIES:

- Toucan Protocol, KlimaDAO
- Controversial (quality concerns)
- Regulatory uncertainty
- Climate narrative

- Music royalties (Royal)
- Patent rights (early)
- Revenue share models
- Complex valuation

- Masterworks (art shares)
- Not fully tokenized (paper shares)
- High fees (1.5% annual, 20% profit)
- Illiquidity persists

- Player contract tokenization
- Very early/theoretical
- Regulatory complexity

- Solar farms, wind projects
- Revenue-producing assets
- ESG angle
- Limited actual tokenization

---

EVALUATION CRITERIA:

- Can ownership be cleanly tokenized?
- Standard vs. bespoke documentation?
- Cross-border complications?

- Is classification clear?
- Are there established frameworks?
- Cross-jurisdictional consistency?

- Can the asset be managed on-chain?
- Is there physical custody complexity?
- Can compliance be programmed?

- Do investors want this tokenized?
- What problem does it solve?
- Is there DeFi utility?

- How good are current solutions?
- Are ETFs/funds adequate?
- Is tokenization really better?

TOKENIZATION SUITABILITY SCORES:

┌─────────────────┬───────┬─────────┬───────┬────────┬─────────┬───────┐
│ Asset Class     │ Legal │ Reg     │ Ops   │ Demand │ Altern. │ Total │
├─────────────────┼───────┼─────────┼───────┼────────┼─────────┼───────┤
│ US Treasuries   │ 95    │ 90      │ 95    │ 90     │ 70      │ 89    │
│ Money Markets   │ 90    │ 85      │ 95    │ 85     │ 65      │ 85    │
│ Gold            │ 90    │ 85      │ 90    │ 80     │ 70      │ 84    │
│ Private Credit  │ 75    │ 70      │ 75    │ 85     │ 60      │ 74    │
│ Corp Bonds      │ 70    │ 70      │ 75    │ 70     │ 75      │ 72    │
│ Fund Interests  │ 65    │ 65      │ 80    │ 70     │ 70      │ 69    │
│ Real Estate     │ 40    │ 45      │ 50    │ 80     │ 65      │ 52    │
│ Public Equity   │ 60    │ 35      │ 70    │ 60     │ 90      │ 57    │
│ Private Equity  │ 50    │ 40      │ 55    │ 75     │ 55      │ 53    │
│ Art/Collect.    │ 35    │ 40      │ 40    │ 60     │ 40      │ 42    │
└─────────────────┴───────┴─────────┴───────┴────────┴─────────┴───────┘

Score interpretation:
80+: Well-suited, active tokenization
60-80: Moderate fit, selective opportunities  
40-60: Challenged, structural barriers
<40: Poor fit, fundamental issues

XRPL COMPETITIVE ADVANTAGE BY ASSET CLASS:

STRONG FIT (XRPL advantages meaningful):
┌─────────────────────┬────────────────────────────────┐
│ Asset Class         │ Why XRPL Fits                  │
├─────────────────────┼────────────────────────────────┤
│ Money Market Funds  │ Compliance features, low cost  │
│ Treasury Products   │ Settlement speed, DEX          │
│ Regulated Securities│ Freeze/clawback for compliance │
│ Trade Finance       │ Speed, cross-border, low cost  │
└─────────────────────┴────────────────────────────────┘

MODERATE FIT:
┌─────────────────────┬────────────────────────────────┐
│ Commodities         │ DEX liquidity, Meld Gold proof │
│ Fund Tokens         │ Institutional features         │
│ Corporate Bonds     │ Settlement, compliance         │
└─────────────────────┴────────────────────────────────┘

WEAKER FIT:
┌─────────────────────┬────────────────────────────────┐
│ Real Estate         │ Legal issues platform-agnostic │
│ Private Equity      │ Ethereum ecosystem deeper      │
│ Art/Collectibles    │ NFT ecosystems elsewhere       │
│ Synthetic Assets    │ Smart contracts needed         │
└─────────────────────┴────────────────────────────────┘

The tokenization market is highly concentrated: treasuries and private credit represent 90%+ of activity, while theoretically better candidates (real estate, PE) have minimal adoption. This concentration reflects fundamental economic reality—tokenization adds most value where legal/regulatory simplicity exists, not where illiquidity is greatest. For XRPL specifically, the near-term opportunity is in treasury products, money market funds, and regulated securities where compliance features provide differentiation. Real estate and exotic assets may eventually tokenize, but expecting this to drive near-term value is unsupported by evidence.

Assignment: Evaluate three different asset classes for tokenization suitability using a structured framework.

Requirements:

• Successful: Treasuries, MMFs, or Gold
• Emerging: Private Credit, Corporate Bonds, or Commodities
• Challenged: Real Estate, Equities, or Alternative Assets

Part 2: Detailed Evaluation of Each (60%)
For each asset class, provide:

• Total tokenized value (with sources)

• Key platforms/products

• Growth trajectory

• Blockchain distribution

• Legal Simplicity

• Regulatory Clarity

• Operational Fit

• Market Demand

• Existing Alternatives

Provide specific justification for each score.

• Which XRPL features are relevant?

• Competitive position vs. other chains

• Barriers to XRPL adoption

• Realistic growth potential

• Why does the successful asset class work while the challenged one doesn't?

• What would need to change for the challenged asset to succeed?

• What lessons does this teach about tokenization value creation?

• Which of these three represents the best opportunity for growth?

• What would you monitor to track progress?

• How does this inform XRPL investment thesis?

• Data accuracy with citations (25%)

• Rigor of scoring justification (25%)

• Quality of comparative analysis (25%)

• Investment insight (25%)

Time Investment: 2 hours
Value: Framework for evaluating any new tokenization opportunity you encounter

1. Market Reality Question:

Based on current tokenization market data, which statement is most accurate?

A) Real estate represents the largest tokenized asset class due to its enormous addressable market
B) Treasuries and private credit together represent over 90% of tokenized RWAs
C) Tokenized equities are the fastest-growing category due to retail demand
D) Commodity tokenization leads because gold has proven demand

Correct Answer: B
Explanation: Despite real estate's theoretical potential ($330T market, high illiquidity), it represents only 2% of tokenized RWAs. Private credit (58%) and treasuries (~34%) dominate, together accounting for 92% of the market. This concentration reflects that tokenization success depends on legal/regulatory simplicity, not market size. Real estate's complexity has limited adoption despite years of effort.

2. Treasury Dominance Question:

Why have US Treasury Bills become the leading tokenized asset class despite being already highly liquid?

A) Treasury tokenization reduces fees compared to Treasury ETFs
B) Tokenized treasuries provide yield to DeFi protocols seeking safe, on-chain collateral
C) SEC requires all Treasury investments to be tokenized by 2026
D) Treasury tokenization eliminates counterparty risk present in traditional markets

Correct Answer: B
Explanation: The demand driver isn't making treasuries more liquid—they're already the world's most liquid asset. The demand comes from DeFi protocols needing yield-bearing collateral that's safer than volatile crypto. Stablecoins pay 0%; tokenized treasuries pay 4-5%. This makes them ideal backing for stablecoin protocols (like Ethena using BUIDL) and collateral for DeFi lending. Treasury ETFs actually often have lower fees than tokenized alternatives—the premium is for on-chain utility.

3. Real Estate Analysis Question:

What is the primary reason real estate tokenization has failed to achieve significant scale despite over a decade of industry attention?

A) Blockchain technology isn't mature enough to handle real estate transactions
B) Investors prefer physical real estate ownership to tokenized fractional ownership
C) Legal complexity requires expensive, bespoke documentation for each property, making tokenization uneconomical for most properties
D) Real estate generates insufficient yield to attract tokenization platforms

Correct Answer: C
Explanation: The barrier isn't technology or investor preference—it's legal complexity. Property law varies by jurisdiction, title systems don't recognize blockchain, and each property needs its own legal wrapper (typically an SPV). Setup costs of $50K-200K per property make tokenization uneconomical for most properties. Even tokenized, real estate remains operationally complex (management, maintenance, governance). Technology can't solve these fundamental legal and structural issues.

4. Private Credit Question:

Figure has tokenized over $12 billion in HELOCs (Home Equity Lines of Credit). What does this demonstrate about tokenization value creation?

A) Real estate tokenization is actually succeeding, just in a different form
B) Tokenization works best for standardized, repeatable asset classes where operational efficiency scales
C) HELOCs are the only asset class that benefits from tokenization
D) Private credit tokenization has higher returns than traditional lending

Correct Answer: B
Explanation: Figure's success demonstrates that tokenization works best where standardization enables scale. HELOCs are relatively standardized (same documentation, similar risk profiles, established underwriting), allowing Figure to process thousands of loans through the same tokenization infrastructure. This contrasts with real estate where each property is unique. The lesson: tokenization efficiency compounds with standardization and volume. Returns are similar to traditional lending—the advantage is operational.

5. XRPL Positioning Question:

Based on asset class analysis, which tokenization category represents the strongest near-term opportunity for XRPL?

A) Real estate, because XRPL's compliance features enable fractional ownership
B) Money market funds and treasuries, where compliance features, low costs, and institutional relationships align with XRPL's strengths
C) Private credit, because Figure's success proves the model works
D) Tokenized equities, because Ripple's regulatory clarity opens US markets

Correct Answer: B
Explanation: XRPL's demonstrated traction (Archax/abrdn, OpenEden, Ondo) is in money market funds and treasury products. These asset classes align with XRPL's strengths: compliance features (freeze, clawback, authorized trust lines) matter for regulated funds; low transaction costs support high-volume trading; existing institutional relationships (Ripple Custody clients) provide distribution. Private credit is dominated by Provenance/Figure; real estate's challenges are legal, not technical; equities face regulatory barriers regardless of platform.

For Next Lesson:
Lesson 3 will examine the technical infrastructure behind tokenization—the blockchains, platforms, and standards that make it work. Understanding this tech stack helps evaluate which platforms are best positioned for different use cases.

End of Lesson 2

Total words: ~5,900
Estimated completion time: 60 minutes reading + 2 hours for deliverable exercise