Ethereum Dominates the RWA Market: Who Will Be the Next Leader?

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

Key Points Summary

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

• General-purpose blockchains with faster and cheaper transactions, along with RWA-specific chains designed for compliance, are addressing the cost and performance limitations of Ethereum. These new platforms position themselves as next-generation infrastructure by offering superior technical scalability or built-in compliance features.

• The next stage of RWA growth will be led by a chain that successfully integrates three elements: on-chain regulatory compliance, a service ecosystem built around RWA, 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, along with in-depth analyses of emerging markets, highlighting the growing significance of this field.

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

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

There are clear reasons why Ethereum has become the default platform for institutional tokenization. It was the first to introduce smart contracts and is actively preparing 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 to evaluate Ethereum before considering alternatives. Several notable initiatives from the late 2010s helped to validate the role of Ethereum 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 Ethereum's architecture (, even in its private form ), can meet regulatory requirements for data protection and compliance.

• A French 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.

• European Investment Bank Digital Bond ) 2021: The European Investment Bank ( EIB ) partnered with several major banks to issue a digital bond worth 100 million euros on Ethereum. The bond is settled using the central bank digital currency ( CBDC ) issued by the French central bank, highlighting Ethereum's potential in fully integrated capital markets.

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

For example, in 2018, a digital securities platform 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 fund by a certain asset management company, 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 real purchasing power. The tokenization of real-world assets is not just 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 with deep and deployable on-chain liquidity.

This is evident on several platforms, where they 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. Treasuries, stablecoin lending, and synthetic interest-bearing dollar tools.

• A financial platform has accumulated over $600 million in total locked value )TVL### through its treasury-backed products.

• Another protocol utilized liquidity from a stablecoin project to purchase over $2.4 billion in real-world government bonds.

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

These examples indicate that Ethereum is not merely a platform for asset tokenization. It provides a robust liquidity foundation capable of facilitating real investment and asset management. In contrast, many emerging RWA platforms struggle to ensure capital inflow 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 be conducted 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 simple 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, institutions focus on the reliability and transparency of the system. This is where the decentralized architecture of Ethereum offers significant advantages.

Ethereum operates as a public blockchain, supported by thousands of independently running nodes around the globe. The network is open to anyone, and changes are determined by participant consensus rather than centralized control. Thus, 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 attractive choice for institutions exploring asset tokenization. Its decentralized system meets the key requirements for operating in a high-risk financial environment.

3. Emerging Challengers Reshaping the Landscape

The Ethereum mainnet has proven the feasibility of tokenized finance. However, alongside 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, various Layer 2 Rollup solutions have emerged. Some significant upgrades have brought improvements in scalability. Nevertheless, the network still fails to compete with traditional financial infrastructure. For example, a certain payment network processes over 65,000 transactions per second, a level that Ethereum has yet to reach. For institutions requiring high-frequency trading or real-time settlement, these performance gaps remain a key constraint.

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

Moreover, the volatility of Gas fees remains a concerning issue. During peak periods, 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 digital securities platform 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.

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

As the limitations of Ethereum become increasingly apparent, institutions are exploring alternative advantages in key performance bottlenecks such as transaction speed, fee stability, and finality time to complement Ethereum's general 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 certain platform has gained attention, accounting for over 18% of the activity in this field, second only to Ethereum.

At this stage, general-purpose blockchains are just beginning to establish their foothold. Platforms like certain high-performance chains that have experienced rapid growth in the DeFi ecosystem now face a strategic question: how to convert 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 original throughput and more on their ability to provide tangible value. Differentiated ecosystems built around the unique advantages of each chain will determine their long-term positioning in this emerging field.

![Ethereum's Dominance in the RWA Market: Who is the Next Successor?])https://img-cdn.gateio.im/webp-social/moments-d5c2ecf422059047d235585476adc8d9.webp###

( The Emergence of RWA-Specific Blockchains

More and more blockchain platforms are abandoning generic designs in favor of specialized designs 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 needs to be directly integrated with existing financial regulations, which makes it insufficient to use generic blockchain infrastructure in many cases. Specific technical requirements ), especially those related to 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 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 shift is to fully transfer these compliance functions onto the chain. The demand for blockchain networks is growing, as these networks can not only record ownership but also enforce regulatory requirements natively at the protocol level.

In response, some focused on RWA