Beyond Tokenization: RWA and the Quest for True On-Chain Liquidity

Tokenizing real-world assets (RWA) has crossed the hype cycle into production. Government securities, money market funds, credit, and trade finance now live on public chains. Yet one problem remains stubbornly unsolved: true on-chain liquidity.

Issuers can mint tokens. Institutions can subscribe. But can investors enter and exit positions 24/7, at transparent prices, with predictable settlement and composable utility? That is the mark of liquidity. This article looks at what’s working, what’s not, and what needs to change for RWA to behave like crypto-native assets without compromising regulatory or legal integrity.

The state of RWA: beyond pilots

A growing set of high-quality, regulated products now exists on-chain:

• Tokenized U.S. Treasuries and cash equivalents from major asset managers, including BlackRock’s on-chain fund on Ethereum, which demonstrated institutional-grade issuance, custody flows, and on-chain settlements in 2024. See BlackRock’s announcement for details and ongoing reporting in its newsroom.
• Franklin Templeton’s on-chain U.S. Government Money Fund, with tokenized share balances and on-chain transfer mechanics aligned to traditional fund operations.
• Tokenized treasuries and short-duration products offered via composable structures in DeFi, such as Ondo Finance’s tokenized funds enabling on-chain treasury exposure with gated access for qualified users.
• Private credit and trade finance via platforms including Centrifuge and Maple Finance, bringing receivables, loans, and credit pools into smart contract rails while embedding investor protections.
• DAO treasuries allocating to yield-bearing RWA with transparent on-chain accounting, a trend tracked by researchers and dashboards such as RWA.xyz.

For a snapshot of market size and segment breakdowns, see the research hubs by 21.co and the live dashboards on RWA.xyz, which track tokenized treasuries, money market funds, and private credit adoption.

Authoritative resources:

• BlackRock tokenized fund press release (anchor link in the paragraph above).
• Franklin Templeton’s on-chain money fund overview and policy materials at Franklin Templeton Digital Assets.
• Centrifuge protocol overview and institutional documentation.
• Maple Finance’s institutional credit markets and pool architecture.
• Market trackers and research summaries at RWA.xyz and 21.co research.

What “true on-chain liquidity” really means

In crypto, liquidity means more than “someone holds the token.” It implies:

• Continuous, two-sided markets: depth at tight spreads, not just periodic primary issuance.
• Predictable settlement: atomic or near-instant finality with dependable redemption and delivery timelines.
• Composability: the ability for assets to be used in DeFi (collateral, margin, structured products) without legal or technical dead ends.
• Interoperability: assets and identities moving across chains or domains without breaking compliance guarantees.
• Transparent pricing: robust oracles and microstructure capable of handling NAV-based instruments, accrued yield, fees, and corporate actions.

Tokenization solves representation. Liquidity requires legal clarity, cash settlement rails, identity frameworks, market makers, standardized interfaces, and risk-managed oracles to work together.

Frictions that still throttle liquidity

• Legal rights and settlement finality: Token holders must have enforceable claims to underlying assets. Jurisdictional fragmentation and transfer restrictions (often required) can limit secondary market depth. Standards such as ERC‑3643 aim to codify permissioning and transfer constraints while preserving composability.
• Compliance gates and identity: Whitelisting flows, KYC/AML, and accreditation checks often live off-chain. Mapping those to wallet-bound credentials while preserving privacy is essential. The W3C Verifiable Credentials model and zero-knowledge attestations are increasingly used for compliant, privacy-preserving access control.
• Chain fragmentation: Institutional RWAs may sit on multiple L1s/L2s. Cross-chain standards like Chainlink CCIP and institutional bridging policies are necessary to prevent stranded liquidity while maintaining compliance guarantees.
• Pricing and oracles: Many RWAs are NAV-based and update once per day, while crypto trades continuously. Oracle frameworks from providers such as Pyth Network and Chainlink must incorporate NAV methodologies, market halts, accrued yield, and fee accounting.
• Cash leg and intraday liquidity: True delivery-versus-payment often requires tokenized money. Efforts such as JPMorgan’s Onyx and the New York Fed’s Regulated Liability Network experiments point to tokenized deposits as a scalable cash leg. Central bank and industry research from the BIS on a “unified ledger” provides a blueprint for integrated asset-cash settlement.
• Regulatory uncertainty: Regions are normalizing rules, but coverage is uneven. The EU’s DLT Pilot Regime is an important live framework for tokenized market infrastructures, and Singapore’s Project Guardian continues to run real pilots for tokenized funds, FX, and repo under regulatory supervision.

Recommended references:

• ERC‑3643 for permissioned tokens and compliant transfer restrictions.
• W3C Verifiable Credentials standard for interoperable identity.
• Chainlink Cross-Chain Interoperability Protocol overview.
• Pyth Network documentation and feed design.
• JPMorgan Onyx product overview.
• New York Fed Innovation Center’s RLN initiative.
• BIS “unified ledger” blueprint.
• ESMA’s DLT Pilot Regime resources.
• MAS Project Guardian initiative page.

Design patterns that unlock on-chain liquidity in 2025

• Shared settlement and programmability: A “unified ledger” approach, where assets, cash, and identity attestations co-exist on a common programmable substrate (or well-bridged subnets), reduces reconciliation frictions and enables atomic DvP. BIS’s research outlines how this can deliver robust settlement with policy controls.
• Permissioned DeFi with verifiable credentials: Composable pools that only admit credentialed wallets preserve DeFi benefits while meeting compliance. This pattern shows up in Project Guardian pilots and is increasingly aligned with VCs and zk-KYC.
• Standardized vaults and lifecycle hooks: ERC‑4626 provides a consistent interface for tokenized yield-bearing instruments. ERC‑7540 introduces asynchronous vault operations that better fit real settlement cycles for off-chain assets.
• Compliant transfer standards: ERC‑3643 (and similar) encode transfer rules, investor categories, and jurisdictional constraints directly in token contracts, improving secondary market reliability for allowlisted participants.
• Interoperable messaging and risk controls: Cross-chain messaging with on-chain circuit breakers, rate limits, and attestation thresholds (e.g., CCIP) can support compliance-preserving mobility without sacrificing safety.
• Oracle-aware microstructure: NAV-aware AMMs or hybrid RFQ/orderbook designs can provide real-time pricing around a published NAV with embedded safeguards for stale data, corporate actions, and market halts.

Market microstructure: building actual depth

Tokenized funds and credit instruments differ from volatile crypto pairs. Practical approaches include:

• Primary-secondary flywheels: Predictable issuance/redemption windows anchored to T+0/T+1 timelines, complemented by secondary RFQ desks and AMMs with NAV guardrails.
• Inventory-backed market making: Designated liquidity providers with transparent mandates and inventory buffers reduce slippage. On-chain disclosures about inventory and spread policy help align expectations.
• Oracle-integrated rebalancing: AMMs can incorporate NAV feeds plus accrued yield to adjust curve parameters, reducing mispricing during quiet periods.

These patterns are already visible in working pilots under regulators such as MAS and within tokenized fund products by established managers.

The cash leg: tokenized money is the catalyst

Settling the asset leg on-chain is only half the equation; the cash leg must also be programmable. Tokenized bank deposits and regulated payment tokens enable intraday repo, securities lending, and DvP with finality. Industry initiatives like JPMorgan Onyx, public-private experiments such as the New York Fed’s RLN, and policy research around a unified ledger indicate a likely path where regulated liabilities interoperate with tokenized securities on shared rails.

Security, custody, and UX: the overlooked bottleneck

The best market design fails if participants cannot securely hold or authorize transactions. RWAs frequently require:

• Wallet-bound credentials for allowlisting and investor categorization.
• Clear-signing to prevent transaction mismatch.
• Multi-chain support for portfolios spanning multiple L2s.
• Offline policies for treasury operations and administrator keys.

For organizations and power users, a hardware wallet forms the final trust boundary. OneKey’s open-source approach, secure element protection, and clear signing across major chains make it a practical fit for RWA workflows that involve allowlisted DeFi, periodic rebalances, and governance actions. If your compliance stack uses verifiable credentials or operates permissioned pools, ensure your signing device integrates cleanly with your access-control provider and supports the chains you rely on.

What to watch in 2025

• Scaling of tokenized deposits and regulated payment tokens to power intraday DvP and repo across L2s and permissioned pools.
• Wider adoption of ERC‑4626/7540 vault patterns and ERC‑3643-style transfer rules for harmonized secondary markets.
• Expansion of Project Guardian-style pilots to multi-asset settlement and cross-border fund distribution.
• Formalization of on-chain disclosures: audit trails, proof-of-reserves, and lifecycle events as machine-readable data.
• Institutional cross-chain policy: standardizing how allowlists and credentials port between rollups without re-KYC.

A pragmatic checklist

For issuers:

• Choose a compliant legal wrapper and define on-chain/off-chain claim mechanics.
• Publish clear issuance/redemption SLAs and custody flows.
• Adopt standards (ERC‑4626/7540 and ERC‑3643) to maximize composability and compliance.
• Implement robust oracle design for NAV, halts, and corporate actions.
• Provide market structure: designated market makers, RFQ endpoints, or NAV-aware AMMs.

For buyers:

• Verify the legal claim to the underlying, redemption mechanics, and audit rights.
• Understand the allowlisting process and wallet credentialing model.
• Review fees, slippage policies, and any liquidity commitments.
• Confirm oracle dependencies and emergency controls.
• Use battle-tested signing devices and operational controls for admin and treasury keys.

Conclusion

Tokenization was step one. True on-chain liquidity requires coherent legal claims, programmable cash, interoperable identity, standardized vaults, and market microstructure that respects how RWAs actually behave. The foundations are being laid in public markets and regulator-led pilots. As these rails harden, the line between “traditional” and “on-chain” finance will blur — not because of marketing, but because the liquidity will be real.

If you’re preparing to allocate to tokenized treasuries, money funds, or credit, evaluate your key management early. A reliable hardware wallet with open-source firmware, clear signing, and multi-chain support — such as OneKey — helps ensure your access credentials, governance, and treasury operations remain secure while you plug into permissioned DeFi and institutional liquidity rails.