Ethereum's Dominance in the RWA Market: Who Will Take the Baton Next?

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 with its first-mover advantage, past institutional experiments, deep on-chain liquidity, and decentralized architecture.

• However, universal blockchains with faster and cheaper transactions, as well as RWA-specific chains designed to meet regulatory requirements, are addressing the cost and performance limitations of Ethereum. These emerging platforms are positioning themselves as next-generation infrastructure by offering superior technical 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 themes in the blockchain industry. Global consulting firms have released extensive market forecasts and conducted in-depth analyses of emerging markets—highlighting the growing importance of this field.

RWA refers to the process of converting tangible assets such as real estate, bonds, and commodities into digital tokens. This tokenization process requires blockchain infrastructure. Currently, Ethereum is the main infrastructure that supports these transactions.

Despite the increasingly fierce competition, Ethereum still maintains its dominant position in the RWA market. Professional RWA blockchains have emerged, and mature platforms in the DeFi space are also expanding into the RWA field. Nevertheless, Ethereum still accounts for over 50% of the total market activity, highlighting the solidity of its existing position.

This report examines the key factors behind Ethereum's current dominance in the RWA market and explores the evolving conditions that may shape the next phase of growth and competition.

2. Why can Ethereum maintain its leading position?

2.1. First-Mover Advantage and Institutional Trust

The reason why Ethereum has become the default platform for institutional tokenization is clear. It was the first to introduce smart contracts and actively prepared for the RWA market.

With the support of a highly 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 technological and regulatory basis for pilot projects.

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

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

• A certain bank bond issuance (2019: Issued a secured bond worth 100 million euros on the Ethereum public mainnet. This indicates that regulated securities can be issued and settled on a public blockchain, while minimizing the involvement of intermediaries.

• A certain bank's digital bond )2021: A certain bank collaborated with multiple banks to issue a digital bond worth 100 million euros on Ethereum. The bond is settled using the central bank digital currency issued by a certain country's central bank, highlighting Ethereum's potential in fully integrated capital markets.

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

For example, in 2018, a certain company announced 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 the company’s tokenized 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 just a technical process. A fully functioning market requires capital that can actively invest in and trade these assets. In this regard, Ethereum is the only platform with deep and deployable on-chain liquidity.

This is evident across 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 in total locked value through its government bond-backed products.

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

• A platform has established a bankless yield infrastructure on Ethereum using its synthetic stablecoin, attracting institutional demand and DeFi liquidity.

These examples indicate that Ethereum is not just a platform for asset tokenization. It provides a strong liquidity foundation capable of facilitating real investments 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 occur on-chain.

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

) 2.3. Establishing trust through decentralization

Decentralization plays a key role in establishing 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, the focus of institutions is on the reliability and transparency of the system. This is where the decentralized architecture of Ethereum provides significant advantages.

Ethereum operates as a public blockchain, supported by thousands of independently running nodes around the globe. The network is open to anyone, with changes determined by consensus among participants rather than centralized control. As a result, it 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.

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3. Emerging Challengers Reshaping the Landscape

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

To address these challenges, multiple Layer 2 scaling solutions have emerged. Significant upgrades, including the Merge, Dencun, and the upcoming Pectra, have brought improvements in scalability. Nevertheless, the network still falls short of traditional financial infrastructure. For example, a certain payment network processes over 65,000 transactions per second, a level that Ethereum has not yet reached. For institutions that require 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 needed for secure settlement, finality can often take up to three minutes. In cases of network congestion, this delay can further increase ------ which poses difficulties for time-sensitive financial operations.

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

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

( 3.1. The Rise of a Fast, Efficient, and Cost-effective General-purpose Blockchain

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

However, despite ongoing cooperation with institutional participants, the actual number of tokenized assets on these platforms that do not include stablecoins is still much lower compared to Ethereum, ). In many cases, the tokenized assets launched on general-purpose chains are still part of the Ethereum-dominated multi-chain deployment strategy.

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

At this stage, general-purpose blockchains have just begun to establish their foothold. Platforms like certain blockchains that 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 sector. Merely relying on outstanding technical performance is not enough. To compete with Ethereum, it is necessary to provide infrastructure and services that can meet the trust and compliance expectations of institutional investors.

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

The emergence of RWA dedicated blockchains

More and more blockchain platforms are abandoning generic designs in favor of specialized solutions for 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 tokenization workflows, but these are traditionally handled off-chain. This approach limits innovation, as it merely wraps traditional financial assets in a blockchain format without rethinking the underlying compliance logic.

The current shift is to fully transfer these compliance functions onto the blockchain. 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.

In response, some focused on RWA