Supply-Demand Imbalance Hinder Tokenized Real-World Assets as Crypto Industry Grapples with Liquidity and Exit Challenges

Tokenized assets are rapidly opening up exciting new trading opportunities across traditional and decentralized financial markets. However, the rapidly growing supply of real-world assets (RWAs) being brought onchain has yet to be matched by commensurate investor demand. This critical friction point was a central theme highlighted by Alex Taaffe, chief revenue officer at prominent crypto trading firm GSR, during recent high-level industry discussions.

Speaking on a specialized panel dedicated to liquidity and market fragmentation at CONNECT by Cointelegraph: Singapore Edition on Oct. 9, Taaffe explained that while trading liquidity is clearly improving for pre-IPO stocks, commodities, and global equities—asset classes that retail and institutional investors previously struggled to access—demand for fully tokenized RWAs has simply failed to keep pace with the sheer volume of assets being issued.

The high-profile event successfully brought together a wide cross-section of Web3 founders, institutional investors, and seasoned industry executives for a series of four in-depth panel discussions. These sessions covered critical market vectors including tokenization dynamics, stablecoin payment systems, onchain trading infrastructure evolution, and venture capital exit strategies, alongside a competitive startup pitch showcase.

Addressing the structural state of the market, Taaffe noted that specifically regarding RWAs and fully tokenized assets, a noticeable supply and demand imbalance currently plagues the sector. According to the GSR executive, every major asset manager and corporate issuer seemingly wants to execute capital formation directly onchain, resulting in an overabundance of issuance against a more cautious or developing buyer base.

Furthermore, Taaffe pointed out that the proliferating number of asset issuers and distinct blockchain networks has compounded the issue, driving further fragmentation of liquidity across newly minted tokenized markets.

Lingling Jiang, a partner at digital asset investment firm DWF Labs, echoed these concerns, agreeing that market fragmentation remains a persistent challenge for the ecosystem. She highlighted that the issue becomes particularly acute when multiple different issuers tokenize the exact same underlying asset, inadvertently creating isolated liquidity pools rather than a unified, highly liquid market.

Despite these structural hurdles, Jiang emphasized that overall cryptocurrency market liquidity has improved significantly over recent years, even as industry participants acknowledge that considerable work remains to build more cohesive infrastructure.

Stablecoin Adoption Hinges on Everyday Payments

Moving from tokenized equities and real-world assets to currency rails, the discourse shifted toward the practical realities of stablecoin integration. During a panel titled "Stablecoins at the Point of Sale: Cards, Wallets and the Race for Everyday Spend," industry leaders debated the transition of stablecoins from cross-border institutional tools to consumer-grade payment methods.

Mike Silagadze, founder and chief executive officer of ether.fi, argued that while stablecoins have undeniably revolutionized the ease of moving money across international borders, broader mainstream adoption ultimately depends on whether everyday consumers can seamlessly use them for routine, day-to-day expenses.

Silagadze pointed to developed financial hubs like Singapore as a prime example, noting that local consumers might comfortably hold digital assets like USDC yet still find themselves needing traditional local fiat currency to pay routine utility bills and everyday expenses. This friction underscores a persistent gap between advanced blockchain payment infrastructure and the fluid requirements of everyday consumer financial services.

Weighing in on the consumer perspective, Yvonne Chia, head of communications at USDD, stressed that if a stablecoin issuer truly wants to capture market share, they must center their strategy around the end user’s direct perspective. For Chia, the paramount objective is prioritizing user experience to the point where interacting with blockchain rails becomes completely frictionless.

Chia explained that the overarching direction the industry should move toward is making it as effortless as possible for the average user to acquire, hold, and spend stablecoins. Ideally, the process should reach a point where utilizing a stablecoin does not even consciously cross the user’s mind, seamlessly blending into the background of their regular, everyday financial lives.

Reinforcing this sentiment, Silagadze reiterated that the primary reason stablecoins are still widely ignored for retail purchases in many parts of the world is simply because they fail to plug naturally into a person’s daily routine.

Beyond everyday consumer usability, regulatory hurdles continue to complicate large-scale deployment. Ilya Podoynitsyn, co-founder and CEO of FinHarbor, highlighted that service providers are continually forced to navigate a complex patchwork of rules that differ wildly across various international jurisdictions. This regulatory fragmentation compels payment providers to continuously adapt their underlying technological infrastructure and compliance frameworks to satisfy individual regional markets.

Adding to the discussion on user interface and experience, Ashna Vaghela, chief customer officer at crypto payments provider Mercuryo, suggested that stablecoin payments should ideally become as straightforward and invisible as utilizing Apple Pay. Users should be able to complete complex financial transactions instantaneously without ever needing to leave a designated application or understand the underlying ledger mechanics.

According to Vaghela, invisibility is the ultimate goal, representing the core point of consumer-facing fintech innovation.

This widespread push for retail integration coincides with a massive expansion in scale. At the time of the discussions, the total global stablecoin market capitalization stood at approximately $306 billion. This figure marked a modest 2% increase year-over-year, following a massive historical surge of roughly 74% growth across the preceding 12-month cycle.

Onchain Trading Faces Liquidity Fragmentation and Risk Management Challenges

As decentralized finance and onchain execution mature, crypto trading platforms continue to encounter severe operational hurdles regarding how they identify available liquidity across disparate blockchain networks and effectively manage counterparty risks. These themes took center stage during a panel appropriately titled "What’s Still Missing in the Onchain Trading Stack."

Austin Federa, co-founder of DoubleZero, explained that moving liquidity between multiple distinct blockchain networks remains significantly more difficult and cumbersome than executing equivalent transfers in traditional financial markets. Federa emphasized that liquidity fragmentation is far more than a mere execution bottleneck; it constitutes a fundamental data problem. He noted that it is actually remarkably difficult for market participants to accurately calculate how much liquidity truly exists onchain at any given moment.

On the risk management front, Miguel Morel, founder and CEO of blockchain analytics firm Arkham Intelligence, pointed out that modern trading firms can increasingly leverage transparent onchain data to accurately assess counterparty risks. This capability is especially vital within burgeoning sectors like prediction markets, where certain participants may occasionally possess a distinct informational advantage over others.

Morel asserted that if a market maker knows precisely who is on the other side of a trade and can accurately measure their risk exposure, they can comfortably offer a tighter spread. In turn, this operational transparency directly translates to better, more competitive pricing for everyday customers.

Furthermore, Morel explained that this exact same foundational blockchain data can empower centralized and decentralized exchanges to rigorously evaluate incoming customer deposits. By inspecting transaction histories, platforms can intelligently assess the exact origin of funds and streamline internal compliance workflows.

Without needing to force users through burdensome administrative processes like requesting a physical passport, exchanges can understand where incoming deposits originate from. Morel noted that platforms can then leverage this real-time information to autonomously determine whether to immediately permit trading with the deposited funds or flag them for a more thorough compliance review.

Crypto Investors Face Tougher Exits as Markets Mature

Shifting the focus from trading infrastructure to institutional investment lifecycles, liquidity bottlenecks have visibly complicated exit strategies for crypto venture capital investors. Panelists exploring "The Exit Problem: How Investors Get Their Money Back" detailed the evolving realities of securing returns in a maturing asset class.

Pulkit Gupta of Nomad Capital shared that liquidity across the broader cryptocurrency markets has been particularly constrained over recent months, with the vast majority of available trading volume aggressively concentrated in larger, more established cryptocurrencies rather than smaller altcoin projects.

Gupta admitted that for venture capitalists invested heavily in altcoins, securing a clean and profitable market exit has proven to be an exceptionally difficult endeavor. His firm has previously backed a number of prominent crypto projects featuring publicly traded tokens, including Movement, Solayer, and Berachain.

Echoing this broad structural shift toward much longer-term investment horizons, Sonia Shaw, CEO of OneAsset, noted that the cryptocurrency market has matured significantly. This maturation now forces early-stage startups to demonstrate robust, verifiable business fundamentals rather than relying purely on speculative hype. Recalling an era when certain institutional investors naively expected a full liquidity exit within a mere six-month window, Shaw bluntly remarked that the market simply does not operate that way anymore.

Shaw characterized this definitive industry-wide move away from rapid, speculative exits as an overwhelmingly positive indicator of true market maturity.

Providing an investor’s perspective, Aleksandr Nechaev, partner at Funders VC, highlighted the unique operational challenges presented by the relentless, breakneck speed of change across both emerging products and target markets.

Nechaev observed that the rapid pace of technological evolution makes a founder’s raw expertise and psychological ability to navigate extreme uncertainty the absolute central pillar of sound investment decision-making. Themes regarding disruptive change and how founding teams manage unpredictable market cycles remained a focal point of discussion throughout the remainder of the day, prominently showcased during the event’s dedicated pitch competition powered by Funders VC.