Ethereum's Dominance in the RWA Market: Who's the Next Contender?

This report analyzes Ethereum's dominant position in the real-world asset tokenization market, examines the structural challenges it faces, and explores which blockchain platforms are likely to lead the next phase of RWA growth.

Key Points Summary

• Ethereum is currently leading the RWA market due to its first-mover advantage, institutional experimental experience, deep on-chain liquidity, and decentralized architecture.

• A universal blockchain with faster and cheaper transactions, as well as an RWA-specific chain designed to meet regulatory requirements, is addressing the cost and performance limitations of Ethereum. These emerging platforms are positioning themselves as next-generation infrastructure by offering excellent technological scalability or built-in compliance features.

• The next phase of RWA growth will be led by a chain that successfully integrates three elements: on-chain regulatory compliance, a service ecosystem built around real-world assets, and meaningful on-chain liquidity.

1. Where is the RWA market currently growing?

The tokenization of real-world assets ( RWA ) has become one of the most prominent topics in the blockchain industry. Global consulting firms have released extensive market forecasts, and institutions have conducted in-depth analyses of emerging markets, highlighting the growing significance of this field.

RWA refers to the process of converting tangible assets like real estate, bonds, and commodities into digital tokens. This tokenization process requires blockchain infrastructure. Currently, Ethereum is the primary infrastructure supporting these transactions.

Despite the increasing competition, Ethereum still maintains a dominant position in the RWA market. Professional RWA blockchains have emerged, and some mature platforms in the DeFi space are also expanding into the RWA sector. Even so, Ethereum still accounts for over 50% of the total market activity, highlighting the solidity of its existing position.

This report examines the key factors that currently position Ethereum as a dominant player in the RWA market and explores the evolving conditions that could shape the next phase of growth and competition.

2. Why Can Ethereum Maintain Its Leading Position?

2.1 First-Mover Advantage and Institutional Trust

Ethereum has clear reasons for becoming the default platform for institutional tokenization. It was the first to introduce smart contracts and actively prepared for the RWA market.

With the support of an active developer community, Ethereum established key tokenization standards, such as ERC-1400 and ERC-3643, long before competing platforms emerged. This early foundation provided the necessary technical and regulatory basis for pilot projects.

As a result, many institutions began evaluating Ethereum before considering alternatives. Several notable initiatives from the late 2010s helped validate Ethereum's role in institutional finance:

• A large bank's blockchain project (2016-2017 ): To support enterprise use cases, the bank developed a permissioned fork of Ethereum. The launch of a digital currency for interbank transfers indicates that the architecture of Ethereum ( can meet regulatory requirements for data protection and compliance even in its private form ).

• A bond issuance by a French bank ( in 2019 ): A guaranteed bond worth 100 million euros was issued on the Ethereum public mainnet. This indicates that regulated securities can be issued and settled on public blockchains while minimizing the involvement of intermediaries.

• European Investment Bank Digital Bond ( 2021: The European Investment Bank ) EIB ( collaborated with multiple banks to issue a digital bond valued at 100 million euros on the Ethereum blockchain. The bond is settled using the central bank digital currency ) CBDC ( issued by the French central bank, highlighting the potential of Ethereum in a fully integrated capital market.

These successful pilot cases enhance the credibility of Ethereum. For institutions, trust is based on validated use cases and references from other regulated participants. Ethereum's track record continues to attract attention, forming a reinforced adoption cycle.

For example, in 2018, a certain digital securities company announced in official documents that it would build tools on Ethereum to manage the entire lifecycle of digital securities. This initiative laid the foundation for the eventual launch of a certain large asset management company's fund, which is currently the largest tokenized fund issued on Ethereum.

) 2.2 A platform for real capital flow

Another key reason why Ethereum continues to dominate the RWA market is its ability to convert on-chain liquidity into actual purchasing power. The tokenization of real-world assets is not merely a technical process. A fully functional market requires capital that can actively invest in and trade these assets. In this regard, Ethereum is the only platform that has deep and deployable on-chain liquidity.

This is evident on multiple platforms, all of which hold a large amount of tokenized funds on Ethereum. These platforms have attracted hundreds of millions of dollars by offering products based on tokenized U.S. Treasury bonds, stablecoin lending, and synthetic yield dollar tools.

• A certain platform has accumulated over 600 million USD in total locked value supported by its government bond products ###TVL(.

• Another platform utilized the liquidity of stablecoins from a certain DAO to purchase over $2.4 billion in real-world government bonds.

• There are platforms that have built a bankless yield infrastructure using their synthetic stablecoins on Ethereum, attracting institutional demand and DeFi liquidity.

These examples indicate that Ethereum is not just a platform for asset tokenization. It provides a robust liquidity foundation that enables real investment and asset management. In contrast, many emerging RWA platforms struggle to ensure capital inflows or secondary market activity after the initial token issuance phase.

The reason for this difference is clear. Ethereum has integrated stablecoins, DeFi protocols, and compliance-ready infrastructure. This has created a comprehensive financial environment where issuance, trading, and settlement can all take place on-chain.

Therefore, Ethereum is the most effective environment for converting tokenized assets into actual purchasing activities. This gives it a structural advantage that goes beyond simple market share.

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) 2.3 Establishing trust through decentralization

Decentralization plays a key role in building trust. The tokenization of real-world assets involves transferring the ownership and transaction records of high-value assets into a digital system. In this process, institutions focus on the reliability and transparency of the system. This is precisely where the decentralized architecture of Ethereum offers significant advantages.

Ethereum operates as a public blockchain, supported by thousands of independently running nodes across the globe. The network is open to anyone, with changes determined by participant consensus rather than centralized control. This avoids single points of failure, ensures resilience against hacking and censorship, and maintains uninterrupted uptime.

In the RWA market, this structure creates tangible value. Transactions are recorded on an immutable ledger, reducing the risk of fraud. Smart contracts enable trustless transactions without intermediaries. Users can access services, execute agreements, and participate in financial activities without centralized approval.

These features ### transparency, security, and accessibility ( make Ethereum an appealing choice for institutions exploring asset tokenization. Its decentralized system meets the key requirements for operating in high-risk financial environments.

3. Emerging Challengers Reshaping the Landscape

The Ethereum mainnet has proven the viability of tokenized finance. However, along with its success, it has also exposed structural limitations that hinder broader institutional adoption. Key barriers include limited transaction throughput, latency issues, and an unpredictable fee structure.

To address these challenges, multiple Layer 2 solutions have emerged. Significant upgrades, including the merge in ), Dencun in 2024, and the upcoming Pectra in 2025, have brought improvements in scalability. Nevertheless, the network still fails to match traditional financial infrastructure. For institutions requiring high-frequency trading or real-time settlement, these performance gaps remain a critical constraint.

Delays also bring challenges. The average block generation takes 12 seconds, and with the additional confirmations required for secure settlements, finality can often take up to three minutes. In cases of network congestion, this delay may increase further, causing difficulties for time-sensitive financial operations.

More importantly, the volatility of Gas fees remains a concerning issue. During peak times, transaction fees have exceeded 50 dollars, and even under normal circumstances, costs often rise above 20 dollars. This level of uncertainty in transaction fees complicates business planning and could undermine the competitiveness of services based on Ethereum.

A certain digital securities company illustrates this dynamic well. After encountering the limitations of Ethereum, the company expanded to other platforms while also developing its own chain. Although Ethereum played a crucial role in facilitating early institutional experiments, it now faces increasing pressure to meet the demands of a more mature and performance-sensitive market.

( The Rise of Fast, Efficient, and Cost-Effective Universal Blockchain 3.1

As the limitations of Ethereum become increasingly apparent, institutions are exploring alternative advantages in key performance bottlenecks such as trading speed, fee stability, and finality time to complement Ethereum's general-purpose blockchain.

However, despite ongoing collaboration with institutional participants, the actual number of tokenized assets on these platforms without stablecoins is still much lower compared to Ethereum. In many cases, tokenized assets launched on generic chains are still part of a multi-chain deployment strategy dominated by Ethereum.

Even so, there are still signs of substantial progress. In the private credit sector, new tokenization initiatives are emerging. For example, on a certain Layer 2, a platform has gained attention, accounting for over 18% of the activity in this area, second only to Ethereum.

At this stage, general blockchain is just beginning to establish a foothold. Platforms like certain public chains, which have experienced rapid growth in their DeFi ecosystems, now face a strategic question: how to translate this momentum into a sustainable position in the RWA field. Relying solely on excellent technical performance is not enough. To compete with Ethereum, it is necessary to provide infrastructure and services that can meet institutional investors' trust and compliance expectations.

Ultimately, the success of these blockchains in the RWA market will depend less on their raw throughput and more on their ability to deliver tangible value. The differentiated ecosystems built around the unique advantages of each chain will determine their long-term positioning in this emerging field.

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) The emergence of RWA dedicated blockchain

An increasing number of blockchain platforms are abandoning generic designs in favor of specialization in specific domains. This trend is also evident in the RWA field, where a wave of new dedicated chains optimized for the tokenization of real-world assets is emerging.

The reasons for a dedicated blockchain for RWA are clear. The tokenization of real-world assets requires direct integration with existing financial regulations, which makes it insufficient to use generic blockchain infrastructure in many cases. Specific technical requirements (, especially those surrounding regulatory compliance ), must be addressed from the ground up.

A key area is compliance processing. KYC and AML procedures are crucial for tokenized workflows, but these have traditionally been handled off-chain. This approach limits innovation, as it merely wraps traditional financial assets in a blockchain format without redesigning the underlying compliance logic.

The current transformation lies in fully transferring these compliance functions onto the chain. The demand for blockchain networks is growing, as these networks can not only record ownership but also natively enforce regulatory requirements at the protocol layer.

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