Ethereum's Dominance in the RWA Market: Who is the Next Successor?

Key Points Summary

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

• A general blockchain with faster and cheaper transactions, as well as RWA dedicated chains designed to meet regulatory requirements, is 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 supporting these transactions.

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

This report examines the key factors that currently give Ethereum a dominant position 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 prepare 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 technical and regulatory groundwork for pilot projects.

Therefore, many institutions began evaluating Ethereum before considering alternatives. Several notable initiatives from the late 2010s helped to validate Ethereum's role in institutional finance:

• A large bank's blockchain project ( 2016-2017: In order 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 can meet regulatory requirements for data protection and compliance even in a private form.

• A certain bank in France issued bonds )2019: A guaranteed bond worth 100 million euros was issued 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 investment bank's digital bond (2021 ): The bank has collaborated with multiple financial institutions to issue a digital bond worth 100 million euros on Ethereum. The bond is settled using the central bank digital currency issued by the Banque de France, 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 cycle.

For example, in 2018, a blockchain company announced in official documents that it would build tools on Ethereum to manage the full lifecycle of digital securities. This initiative laid the foundation for the eventual launch of the largest tokenized fund currently 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 that has deep and deployable on-chain liquidity.

This is evident on 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 US Treasury bonds, stablecoin lending, and synthetic yield dollar tools.

• A financial platform has accumulated a total locked value of over 600 million US dollars through its treasury bond-backed products )TVL###.

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

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

These examples indicate that Ethereum is more than just a platform for asset tokenization. It provides a robust liquidity foundation that enables 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 take place on-chain.

Therefore, Ethereum is the most effective environment for converting 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 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 provides significant advantages.

Ethereum operates as a public blockchain, supported by thousands of independently running nodes worldwide. The network is open to anyone, with changes decided by consensus among participants rather than centralized control. As a result, it avoids single points of failure, ensuring resilience against hacking attacks and censorship, while maintaining 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 of transparency, security, and accessibility make Ethereum an attractive choice for institutions exploring asset tokenization. Its decentralized system meets the key requirements for operating in high-risk financial environments.

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 barriers include limited transaction throughput, latency issues, and an unpredictable fee structure.

To address these challenges, multiple Layer 2 Rollup solutions have emerged. Significant upgrades, including the merge in ), Dencun in 2024, and the upcoming Pectra in 2025, have brought improvements in scalability. Nevertheless, the network still fails to match traditional financial infrastructure. For institutions requiring 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 required for secure settlement, finality can often take up to three minutes. In cases of network congestion, these delays can increase further, posing difficulties for time-sensitive financial operations.

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

A certain blockchain company has illustrated this dynamic very 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 is now facing increasing pressure to meet the demands of a more mature and performance-sensitive market.

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) 3.1. The Rise of Universal Blockchain that is Fast, Efficient, and Cost-Effective

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

However, despite ongoing collaboration 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 Ethereum-dominated multi-chain deployment strategies.

Even so, there are signs of substantive progress. In the private credit sector, new tokenization initiatives are emerging. For example, on a certain Layer 2 platform, a trading 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 public chains that have experienced rapid growth in their DeFi ecosystems are now facing a strategic question: how to transform this momentum into a sustainable position in the RWA space. Merely relying on excellent 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 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.

( 3.2. The Emergence of RWA-Specific Blockchains

More and more blockchain platforms are abandoning generic designs in favor of specialization in 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 RWAs are clear. The tokenization of real-world assets requires direct integration with existing financial regulations, which makes the use of general blockchain infrastructure insufficient 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 have traditionally been handled off-chain. This approach limits innovation, as it merely packages 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, and these networks can not only record ownership but also natively enforce regulatory requirements at the protocol level.

In response, some chains focused on RWA have begun to offer on-chain compliance modules. For example, a certain blockchain includes decentralized identity )DID( functionality, supporting compliance at the infrastructure layer. Other specialized chains are expected to follow a similar path.

In addition to compliance, many such platforms leverage deep domain expertise to target specific asset classes. Some platforms focus on institutional lending and asset management, while others focus on trade financing or regulated securities.