Tokenization of real-world assets (RWAs) is shifting from stablecoins to more complex financial instruments like U.S. treasuries and equities. Nathan Allman and Ian De Bode of Ondo Finance argue that the current traditional finance (TradFi) infrastructure is fragmented and inefficient, necessitating a transition to blockchain-based settlement. By utilizing a "wrapper" model—issuing debt securities collateralized by underlying assets—tokenized products gain permissionless transferability and DeFi composability while maintaining regulatory compliance. This approach bypasses the limitations of native tokenization, which often requires restrictive KYC-baked logic. As these assets integrate into decentralized lending protocols and 24/7 global markets, they offer a superior alternative to legacy brokerage systems, potentially creating a flywheel effect where on-chain liquidity and price discovery drive further adoption of tokenized securities across the global financial landscape.
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