this article is basically a curve of curiosity and it is focused on how asset ownership has been revolutionized by the Blockchain technologystatistics are derived from the DeFi Llama live analytics dashboardas at 27th August when the research was done, the RWA market on DeFi Llama looked like this:But before this volume was recorded, it was just a question,can we take traditional assets onchain?Now we have over $34B in onchain RWA market capital and about $31B in active Mcap with only a small fraction actually being used in DeFiThe story has changedWe’re far past putting a traditional asset on the blockchain; we’re now concerned with optimizing that asset onchain to become financial infrastructure by figuring out how much of the ownership relationship can be programmed2021By 3rd Sept 2021, the Total active Mcap (TaMcap) was $0, 2 days later, a TaMcap of $349.25M was recorded, with precious metals and carbon credits as the assets making up the active McapThis test phase was to see if physical commodities like gold and environmental assets could be represented as tokenized claimsPrecious metals were easy because they had standardized units and globally recognized valueHowever, for the carbon credits, it was a different experiment entirely, as they were merely environmental claims that existed traditionally, and they were able to prove that an asset does not need to be moved on-chain for its economic claim to be represented thereBefore all this, in April 2021, BENJI token was used to represent a share of the Franklin US Government Money Fund, which was launched on Stellar by Franklin TempletonHe used the Blockchain as a means to record ownership of the fundAn experiment I would describe as the beginning of tokenized ownershipLet’s drift off a littleWhen you buy a stock in traditional finance, there’s no place your name is written as “owner of the stock”There are layers of custody. A chain of ownershipLook at Apple Inc., for example:If you buy a share of Apple through a brokerage account ( a financial account set up with a licensed firm that allows you to buy and sell investments like stocks, bonds, etc.), this is what the ownership trail looks like;The transfer agent: people who maintain official records of transactionsCede & Co: the legal ownerDTC: the electronic vaultYour brokerage firm: a DTC participantYou (the beneficial owner)The transfer agent is in charge of issuing the stock from Apple Inc listing Cede & CO as the owner, and DTC holds the legal title to the physical asset in a central vault.Your broker, e.g. Bamboo claims a chunk of the shares, and then when you purchase a part of it your name is listed as a beneficial owner on the broker’s booksBut with the blockchain, it’s a completely different architecture2022The RWA market expandedOver $800M in TaMcap, a +400M on what was recorded in 2021Private credit onchain became a thingSeveral protocols like Maple and Goldfinch tried bringing credit markets onchain, while Centrifuge walked the path of loansTrying to bring credit markets onchain was a different thing entirelyWith tokenized Gold, a claim associated with a physical commodity is being represented but tokenized credit is basically representing a claim based on someone’s ability to repay in the futureNow there’s risk, legal agreements, underwritingBringing credit markets onchain was never going to eliminate these underlying relationships and protocols like Terra/Luna and Three Arrows Capital showed exactly thatIt was made clear that even though credit markets were now made transparent and transferable, the risk will always be there2023Crypto native yields were taking a dive, then tokenized treasuries brought very attractive yields for usersTokenized US Treasury products had a 752% increase from January to the end of the yearAssets onchain became very attractive economicallyWhat was more important in this stage of evolution was infrastructure, and several products came in with several approachesMatrixdock’s STBT employed a rebasing structure in which an increase in profit brought about an increase in the number of tokens heldBacked’s blB01 used a non-rebasing structure where the price appreciates instead of the token held increasingThese tokens became more than on-chain representation; they were financial infrastructureThe non-rebasing token was deemed ideal as collateral2024Institutions began to validate infrastructuresFrank Templeton introduced P2P transfers of BENJI between eligible shareholdersTransferability entered the gameBlackRock’s BUIDL launched with Securitize, showing the possibility that traditional finance institutions can use Blockchain infrastructures to distribute, settle, and manage their productsthe RWA market reached $3B by the end of 2024With tokenized gold products, representation, transferability, self-custody, redeemability, and composability were achieved2025The tokenized market became so broad, with products like Bonds, precious metals, private credit, crypto digital assets, and private equity spearheading the marketwith the TaMcap surpassing $16B, more than five times what it was in 2024tokenized assets became more than what you’d simply holdIt became;CollateralLiquidityCapital for yieldand so much more……This growth in the tokenized market has, however, revealed the limitations of tokenizationwith real estate, it was seen that a token can function while the real-world asset experiences operational problemsToken trading did not guarantee a properly maintained building; a landlord could still fail to keep his building habitableHis competence is not guaranteed, as property management cannot be tokenized2026A different problem has emergedThe market is over $39B nowStudying the DeFi Llama RWA dashboard taught me somethingA token being onchain doesn’t make it DeFi nativethere’s recorded roughly $4B in DeFi active TVL against over $39B in onchain RWAThe integration of these assets in the crypto financial system still has a long way to go as they still remain largely isolated from DeFiRWA ownership is a stack; it’s not “you own it or don’t”The stack includes:RepresentationEconomic exposureTransferabilitySelf custodyRedeemabilityLegal ownershipProgrammable ownershipThe relationship different products have with this stack depends on what they’re trying to offerMore markets are coming onchain ➔ ownership relationship is not necessarily fully decentralized ➔ DeFi integration is so behind the tokenized value of the marketThe RWA paradoxTokenization ≠ Ownership ≠ ComposabilityThe biggest change the RWA market would see with time is having about 80% of products that are onchain fully integrated in DeFiat this stage there are still question marks about where tokenization is right now despite the progress that has occurred in the past 5 yearswould tokenization ever be fully decentralized?can the underlying intermediaries be done away with?Can code eventually take the place of legal agreements?Maybe these assets will never be paired without these intermediaries; maybe they will,But whatever it is, the future of tokenization is an interesting one.