RWA Issuance vs. Liquidity: A Flow Analysis

The core market dynamic for tokenized real-world assets (RWA) is a clear split between issuance and secondary market activity. A new survey shows 53.8% of issuers prioritize capital formation and fundraising efficiency as their main reason for tokenization, while only 15.4% cite liquidity needs. This establishes capital formation as the primary driver, not liquidity demand.

The scale of this issuance is massive. Ethereum's tokenized RWA market cap has surged nearly 315% to $17 billion over the past year, driven by institutional players like BlackRock and JPMorgan. This represents a structural flow of capital into the asset class, not a speculative bubble.

Yet the broader DeFi sector tells a different story. While RWA value grows, DeFi's total value locked has plunged 25% over the past month to $94.84 billion. This divergence shows capital is rotating into RWA from other DeFi protocols, not retreating from crypto entirely. The thesis is clear: a structural flow exists from riskier DeFi yields into the perceived stability of tokenized treasuries and other RWAs.

The Liquidity Infrastructure Build

The flow of capital is now building the secondary market infrastructure that issuers have long promised. Major U.S. exchanges are moving to offer 24/7 trading for tokenized assets, with the CME Group launching 24/7 crypto derivatives trading on May 29 and the NYSE and Nasdaq developing platforms for 24/7 tokenized stock and ETF trading. This is a structural build-out of liquidity infrastructure. Even as many issuers themselves are still in a validation phase focused on capital formation.

The leading asset class for this new infrastructure is already massive. Tokenized U.S. Treasuries manage over $8.7 billion in digital assets, providing a yield-bearing, liquid anchor for the entire market. This scale creates a natural pool for the new trading platforms to serve, turning a promise of liquidity into a tangible, high-volume product.

The market is shifting from experimental pilots to standardized, institutional-grade products. This transition is being driven by major players like BlackRock and KKR, who are seeking yield and DeFi integration. The flow is clear: capital is moving into the issuance of these assets, and now it is building the infrastructure to trade them, creating a closed-loop system for institutional participation.

Catalysts and Flow Risks

The most immediate catalyst for the RWA capital formation flow is the launch of 24/7 crypto derivatives trading on the CME Group on May 29. This structural expansion of liquidity infrastructure, following the SEC and CFTC's push for always-on markets, will directly connect institutional capital to tokenized assets. With average daily volume for crypto futures and options up 46% year-on-year, the new trading window is poised to accelerate the flow of capital into the asset class by providing a familiar, regulated exit.

A key risk to this flow is the decoupling of token price from underlying asset value. As seen with utility tokens like ONDO, the market value is accruing to the instruments themselves, not the project tokens. Experts note that most RWA tokens are still utility tokens with no claim on the revenues flowing through the protocol. This creates a fundamental disconnect where strong asset growth does not translate to token performance, potentially dampening speculative interest and limiting a secondary market feedback loop.

The critical metric to monitor is the gap between represented asset value (RAV) and on-chain RWA value. RAV tracks assets that are tokenized but cannot move, while on-chain value measures actively traded assets. The divergence is stark: RAV grew just 0.51% to $372.97 billion last month, while distributed RWA value surged 8.68% to $24.84 billion. A widening gap indicates more capital is being locked into issuance than is actively trading, signaling potential future liquidity pressure if the secondary market infrastructure fails to keep pace.