Tokenized Assets Face Growing Pains as Supply Outpaces Demand and Liquidity Fragment Across Chains, Experts Say

Tokenized assets are rapidly reshaping the landscape of global financial markets, opening unprecedented trading opportunities across an array of asset classes. However, this expansion has brought a distinct structural imbalance to the forefront. According to industry leaders speaking at recent high-level forums, the rapidly growing supply of real-world assets (RWAs) being brought onchain has yet to be matched by commensurate investor demand.

Addressing attendees during a panel discussion on liquidity and market fragmentation at CONNECT by Cointelegraph: Singapore Edition, Alex Taaffe, the chief revenue officer at prominent crypto trading firm GSR, detailed the state of the market. Taaffe noted that while liquidity is visibly improving in trading sectors for pre-IPO stocks, commodities, and global equities—areas where everyday investors previously had restricted access—demand for fully tokenized RWAs simply has not kept pace with the sheer volume of assets being issued.

The event brought together an influential gathering of Web3 founders, institutional investors, and senior industry executives for a series of intensive panel discussions. These conversations tackled core themes shaping the modern financial ecosystem, ranging from tokenization and stablecoin utility to onchain trading infrastructure and venture capital exit strategies, alongside a competitive startup pitch showcase.

Elaborating on the core bottleneck facing the RWA sector, Taaffe emphasized that the market is currently experiencing a stark supply-and-demand mismatch. Every traditional asset manager and issuer, he observed, is eager to execute capital formation directly onchain, resulting in a massive influx of available product.

Compounding this issue, Taaffe pointed out that the proliferation of numerous asset issuers and a fragmented array of competing blockchains has further fractured liquidity across tokenized markets. Instead of consolidating into deep, unified pools, capital and trading activity are being stretched thin across a disjointed technological landscape.

Lingling Jiang, a partner at DWF Labs, echoed these concerns, agreeing that market fragmentation remains a persistent obstacle for the industry. This challenge is particularly acute when multiple different issuers tokenize the exact same underlying asset, inadvertently creating isolated liquidity pools that prevent markets from achieving optimal efficiency. Despite these structural hurdles, Jiang acknowledged that overall cryptocurrency liquidity has improved significantly over recent years, even as industry participants recognize that substantial work remains to build a more cohesive ecosystem.

Stablecoin Adoption Hinges on Everyday Payments

The challenge of bridging raw technological capability with real-world utility was a central theme during a subsequent panel titled "Stablecoins at the Point of Sale: Cards, Wallets and the Race for Everyday Spend." Mike Silagadze, the founder and CEO of ether.fi, argued that while stablecoins have undeniably revolutionized the efficiency of cross-border capital movement, their path to widespread consumer adoption ultimately depends on a much simpler metric: whether everyday people can effortlessly use them for mundane, daily expenses.

Silagadze drew attention to dynamic financial hubs like Singapore, where a tech-savvy consumer might comfortably hold digital dollars like USDC in a wallet, yet still find themselves forced to rely on traditional local fiat currency to pay routine bills and everyday expenses. This friction underscores a glaring gap that still exists between advanced blockchain payment infrastructure and the seamless expectations of everyday financial services.

Echoing this user-centric perspective, Yvonne Chia, head of communications at USDD, stressed that stablecoin issuers must prioritize the holistic user experience if they hope to capture the mainstream market. The ultimate trajectory for the industry, Chia explained, is to make acquiring, holding, and spending stablecoins so frictionless that users do not even consciously realize they are utilizing blockchain technology. It should simply blend into the background as an ordinary, unnoticeable part of their daily routine.

Addressing the stark reality of current adoption patterns, Silagadze noted that the primary reason people in many parts of the world still bypass stablecoins is simply because the technology does not yet plug fluidly into their day-to-day lives.

Beyond practical usability at the checkout counter, navigating a complex web of regulatory hurdles remains a formidable barrier to entry. Ilya Podoynitsyn, the co-founder and CEO of FinHarbor, highlighted that digital asset providers are perpetually forced to navigate stringent rules that vary wildly across different global jurisdictions. This regulatory patchwork compels companies to continuously adapt their technical infrastructure and compliance frameworks to satisfy individual, localized markets rather than operating under a unified global standard.

Adding to the industry perspective, Ashna Vaghela, chief customer officer at crypto payments provider Mercuryo, argued that executing a stablecoin transaction should eventually become as straightforward and ubiquitous as using Apple Pay, allowing users to complete purchases instantly without ever leaving an application or thinking about the rails underneath. The entire point of next-generation financial technology, Vaghela suggested, is complete and utter invisibility.

These debates unfolded against the backdrop of a maturing stablecoin economy. Total stablecoin market capitalization recently stood at approximately $306 billion, reflecting a modest year-over-year increase of about 2% following a staggering 74% surge during the preceding twelve-month period.

Onchain Trading Faces Liquidity Fragmentation and Risk Management Challenges

As the financial ecosystem grows more complex, crypto trading platforms continue to grapple with the difficulties of mapping available liquidity across an expanding array of independent blockchain networks, all while attempting to manage sophisticated counterparty risks. These themes took center stage during a panel exploring what elements are still missing from the onchain trading stack.

Austin Federa, co-founder of DoubleZero, explained that shifting liquidity dynamically between disparate blockchain networks remains significantly more arduous than moving capital within legacy financial markets. Describing the core pain point, Federa noted that market fragmentation is not merely an execution problem, but fundamentally a data problem, adding that it is remarkably difficult to ascertain with certainty how much liquidity genuinely exists across the broader onchain environment.

On the front of risk management and compliance, Miguel Morel, founder and CEO of blockchain analytics firm Arkham Intelligence, pointed out that trading firms can leverage transparent onchain data to accurately evaluate counterparty exposure. This capability is especially vital within prediction markets and decentralized trading venues, where certain sophisticated participants may hold informational advantages over general retail traders.

By understanding who sits on the opposite side of a transaction and thereby operating with reduced uncertainty, market makers can confidently offer tighter spreads, Morel explained, which ultimately translates into superior pricing for everyday customers. Furthermore, Morel emphasized that this same underlying blockchain data can empower centralized and decentralized exchanges alike to rigorously evaluate incoming customer deposits. By analyzing transaction histories, platforms can trace the precise origins of funds and make informed compliance decisions without introducing unnecessary friction.

Through advanced analytics, platforms can determine the provenance of capital without needing to collect intrusive personal documentation like physical passports, Morel noted. Exchanges can subsequently utilize these insights to decide whether to instantly clear deposited funds for trading or appropriately route them for a more thorough compliance review.

Crypto Investors Face Tougher Exits as Markets Mature

While technological infrastructure evolves, the shifting macro environment has also significantly complicated exit strategies for crypto venture capital investors. Panelists participating in a dedicated discussion titled "The Exit Problem: How Investors Get Their Money Back" explored how these pressures are altering the venture landscape.

Pulkit Gupta of Nomad Capital noted that liquidity conditions within broader crypto markets have proven exceptionally tight over recent months, with the majority of available capital heavily concentrated within the largest, most established cryptocurrencies. For alternative tokens and early-stage assets, securing a viable exit has become a remarkably challenging endeavor, Gupta remarked, even for established venture firms that have backed prominent projects with publicly traded tokens such as Movement, Solayer, and Berachain.

Echoing this observation regarding a structural shift toward longer-term investment horizons, Sonia Shaw, CEO of OneAsset, argued that the digital asset market has matured profoundly. This maturation demands that modern startups demonstrate robust, undeniable business fundamentals rather than relying purely on speculative momentum. Recalling an earlier era when some investors routinely anticipated rapid exits within a mere six-month timeframe, Shaw asserted that the market simply operates differently today, characterizing the departure from hyper-fast exits as a healthy and positive indicator of an institutionalizing industry.

Aleksandr Nechaev, a partner at Funders VC, further highlighted the distinct operational challenges introduced by the relentless pace of change affecting both underlying products and shifting market demands. The rapid velocity of transformation across the sector places a premium on the deep expertise and adaptability of founders, making leadership capabilities the central pillar of modern investment decisions. Navigating this profound uncertainty and observing how visionary founding teams handle unpredictable market cycles remained a central focal point throughout the remainder of the day’s events.