Tokenized Assets Face Supply-Demand Mismatch and Fragmentation Challenges, Industry Leaders Warn

Tokenized assets are rapidly opening up innovative trading opportunities across traditional and digital financial markets, yet the accelerating supply of real-world assets (RWAs) being brought onchain has yet to be matched by commensurate investor demand. This critical imbalance emerged as a central theme among industry executives during deep-dive discussions on market liquidity and structure.

Speaking during a panel dedicated to liquidity and market fragmentation at the CONNECT by Cointelegraph: Singapore Edition event on October 9, Alex Taaffe, chief revenue officer at prominent crypto trading firm GSR, pointed out that while execution environments are undeniably improving, the macro-level adoption metrics tell a more nuanced story. Taaffe noted that liquidity conditions are visibly improving across trading sectors for pre-IPO stocks, commodities, and global equities—asset classes that retail and institutional investors previously found exceptionally difficult to access. However, he emphasized that demand for fully tokenized RWAs has dramatically lagged behind the relentless pace at which new asset issuers are bringing products to market.

The event itself successfully brought together a diverse cohort of Web3 founders, institutional investors, and senior industry executives. Attendees participated in four rigorous panel discussions covering the overarching evolution of tokenization, next-generation stablecoin payment rails, onchain trading infrastructure, and venture capital exit strategies, alongside a closely watched startup pitch competition designed to spotlight emerging talent.

Addressing the structural roadblocks currently facing the sector, Taaffe elaborated on the core issue plaguing tokenized products. Specifically concerning real-world assets and fully tokenized instruments, he highlighted a pronounced supply and demand imbalance, noting that the market is currently flooded with supply. Every traditional asset manager and corporate issuer seemingly wants to execute capital formation directly onchain, creating a scenario where issuance outstrips the immediate capacity of market participants to absorb it. Furthermore, Taaffe warned that this proliferation of new asset issuers, coupled with a fractured landscape of competing blockchains, has severely worsened liquidity fragmentation across tokenized markets globally.

Lingling Jiang, a partner at DWF Labs, echoed these sentiments during the discussions, agreeing that fragmentation remains a stubborn structural challenge for the industry. She noted that the problem is acutely visible when different independent issuers tokenize the exact same underlying asset class, inadvertently creating isolated, non-communicating liquidity pools rather than a unified global market. Nevertheless, Jiang offered an optimistic perspective on the broader ecosystem, observing that cryptocurrency liquidity as a whole has matured and improved significantly over recent years, even if market participants and developers still have considerable work ahead to streamline operations.

Stablecoin Adoption Hinges on Everyday Payments

Moving from asset tokenization to currency infrastructure, the panel titled “Stablecoins at the Point of Sale: Cards, Wallets and the Race for Everyday Spend” tackled the ongoing friction preventing digital currencies from achieving ubiquitous consumer adoption. Mike Silagadze, founder and chief executive officer of ether.fi, argued that while stablecoins have undeniably revolutionized the speed and cost of moving capital across international borders, truly mass adoption remains strictly conditional. For stablecoins to cross the chasm into mainstream economic life, consumers must be able to use them effortlessly for mundane, everyday expenses rather than just speculative trading or cross-border settlements.

Silagadze drew attention to developed financial hubs like Singapore, where tech-savvy consumers might comfortably hold digital dollars like USDC in their wallets, yet still find themselves forced to rely on local fiat currency to pay routine utility bills and daily coffee runs. This disconnect underscores the persistent gap separating high-performance blockchain payment infrastructure from the realities of everyday financial services.

Yvonne Chia, head of communications at USDD, approached the challenge from a product design standpoint, asserting that if a stablecoin issuer truly wants to capture market share, they must prioritize the end user’s subjective perspective. According to Chia, user experience must remain the absolute North Star for developers. The ultimate strategic direction the industry must pursue is making it as seamless as possible for individuals to acquire, hold, and spend stablecoins to the point where the underlying technology completely fades into the background. Users should not have to consciously think about the fact that they are utilizing a stablecoin; it should simply function as a natural, invisible component of their everyday financial lives.

Reinforcing this user-centric thesis, Silagadze reiterated that the primary reason everyday people in many parts of the world still ignore stablecoins is simply that the technology does not plug cleanly into their daily routines.

Beyond consumer-facing usability, structural regulatory hurdles continue to complicate large-scale deployment. Ilya Podoynitsyn, co-founder and chief executive officer of FinHarbor, highlighted that payment providers are forced to navigate a patchwork of conflicting rules that vary wildly across different legal jurisdictions. This regulatory fragmentation compels infrastructure providers to constantly adapt their technical architectures and compliance frameworks to satisfy individual regional markets.

Adding to the discussion on user friction, Ashna Vaghela, chief customer officer at crypto payments provider Mercuryo, emphasized that making stablecoin transactions truly viable means making them as straightforward as pulling out Apple Pay, allowing users to complete purchases instantly without ever needing to switch applications. That entire friction-free experience, she noted, represents the core objective: financial technology should be entirely invisible to the end user.

These strategic debates unfolded against a backdrop of massive macroeconomic growth for the sector, with the global stablecoin market capitalization hovering around $306 billion. While this figure represents a modest 2% increase year-over-year, it follows a historic 74% expansion observed over the preceding twelve-month cycle, signaling that while growth has stabilized, the asset class commands systemic importance within the modern financial architecture.

Onchain Trading Faces Liquidity Fragmentation and Risk Management Challenges

As digital asset markets mature, professional trading platforms continue to grapple with fundamental difficulties regarding how to accurately map available liquidity across a dizzying array of disparate blockchain networks, all while keeping counterparty risks under tight control. These operational hurdles formed the core of the panel titled “What’s Still Missing in the Onchain Trading Stack in 2026.”

Austin Federa, co-founder of DoubleZero, explained that shifting liquidity dynamically between competing blockchain networks remains significantly more complex and friction-laden than equivalent operations in traditional financial markets. Describing the depth of the issue, Federa pointed out that fragmentation is far more than a simple trade execution problem—it is fundamentally a data visibility problem. He explained that it is surprisingly difficult for market participants to figure out with absolute certainty how much liquidity genuinely exists onchain at any given moment.

On the critical front of risk management and compliance, Miguel Morel, founder and chief executive officer of blockchain analytics firm Arkham Intelligence, detailed how sophisticated trading firms are beginning to leverage transparent onchain data to better evaluate counterparty risks. This capability is especially vital in emerging sectors like prediction markets, where certain participants frequently hold asymmetric informational advantages over the general public.

Morel explained that if a market maker knows precisely who is sitting on the other side of a trade and can accurately gauge their risk exposure, they can confidently offer a tighter spread. In turn, this operational transparency translates directly into better, more competitive pricing for everyday retail customers. Furthermore, Morel noted that the exact same granular blockchain data can assist centralized and decentralized exchanges alike in evaluating incoming customer deposits. By analyzing transaction histories, platforms can trace where funds originated and make informed compliance determinations without cumbersome administrative delays.

According to Morel, exchanges can utilize these onchain insights to instantly determine whether deposited funds are safe to deploy for immediate trading or whether they warrant referral for deeper compliance review, all without needing to explicitly request a passport or sensitive personal documents from the user.

Crypto Investors Face Tougher Exits as Markets Mature

While technology stacks evolve, structural liquidity bottlenecks have simultaneously complicated the exit landscape for early-stage crypto venture capital investors. Panelists addressing “The Exit Problem: How Investors Get Their Money Back” explored the shifting dynamics of liquidity in a maturing digital asset economy.

Pulkit Gupta of Nomad Capital noted that liquidity across broader crypto markets has experienced notable friction, with available capital remaining heavily concentrated within a handful of large-cap cryptocurrencies. For alternative tokens and smaller projects, Gupta admitted that securing clean exits has proven exceptionally difficult over recent months, despite his firm backing several high-profile projects featuring publicly traded tokens, such as Movement, Solayer, and Berachain.

Reflecting the broader shift toward long-term fundamental building, Sonia Shaw, chief executive officer of OneAsset, argued that the digital asset market has matured past the hyper-speculative cycles of the past, now forcing Web3 startups to demonstrate robust, sustainable business models. Recalling an era when certain investors routinely demanded liquidity events and exits within a compressed six-month window, Shaw asserted that the market simply does not operate that way anymore. She characterized this departure from rapid, speculative exits as a remarkably healthy sign of structural market maturation.

Aleksandr Nechaev, partner at Funders VC, underscored the unique operational difficulties presented by the relentless, breakneck pace of product and market evolution in the Web3 space. Nechaev noted that this extreme velocity makes a founder’s personal expertise, adaptability, and strategic judgment absolute centerpieces in any rational investment decision. The vital importance of founding teams navigating profound market uncertainty emerged as a dominant theme later in the day during the event’s startup pitch competition, which was proudly powered by Funders VC.