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

Key Points Summary

• Ethereum currently dominates the RWA market due to its first-mover advantage, institutional experimental experience, deep on-chain liquidity, and decentralized architecture.
• A universal blockchain with faster and cheaper transactions, along with a dedicated RWA chain designed to meet regulatory requirements, is addressing the cost and performance limitations of Ethereum. These emerging platforms are positioned as next-generation infrastructure by offering superior technical scalability or built-in compliance features.
• The next phase of RWA growth will be led by chains that successfully integrate 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, and some research institutions have 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 increasing competition, Ethereum still maintains its dominant position in the RWA market. Specialized RWA blockchains have emerged, and some mature platforms in the DeFi space are also expanding into the RWA sector. Even so, 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 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

There are clear reasons why Ethereum has become the default platform for institutional tokenization. It was the first to introduce smart contracts and actively prepare 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 validate Ethereum's role 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 ) can meet regulatory requirements for data protection and compliance even in its private form (.

• A certain bank bond issuance ) in 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 investment bank's digital bond )2021 (: In collaboration with multiple banks, issued a digital bond worth 100 million euros on Ethereum. The bond is settled using a central bank digital currency issued by a certain central bank, highlighting Ethereum's potential in a fully integrated capital market.

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

For example, in 2018, a certain platform 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 a fund by a large asset management company, which is currently the largest tokenized fund issued on Ethereum.

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) 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 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 some platforms, as 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. Treasury bonds, stablecoin lending, and synthetic interest-generating dollar tools.

• A certain platform has accumulated a total locked value of over $600 million supported by its government bond-backed products ###TVL(.

• Another platform utilized the stablecoin liquidity from a certain DeFi protocol to purchase over $2.4 billion worth of real-world government bonds.

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

These examples indicate that Ethereum is not just a platform for asset tokenization. It provides a robust liquidity foundation capable of enabling real investment 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 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 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 provides significant advantages.

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

In response to these challenges, various Layer 2 scaling solutions have emerged. Major upgrades, including the merge of ) in 2022, 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 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 critical constraint.

Delays also present 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 may increase further, causing difficulties for time-sensitive financial operations.

More importantly, 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 uncertainty in transaction fees complicates business planning and may undermine the competitiveness of services based on Ethereum.

A certain platform has explained 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.

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

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

Even so, there are still signs of substantial progress. In the private lending sector, new tokenization initiatives are emerging. For example, on a certain Layer2, a platform has gained attention, accounting for over 18% of the activity in the field, second only to Ethereum.

At this stage, general-purpose blockchains are just starting to establish a foothold. Platforms like certain public chains, which have experienced rapid growth in their DeFi ecosystems, are now facing 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 the trust and compliance expectations of institutional investors.

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. 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 Dedicated 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 specifically optimized for the tokenization of real-world assets is on the rise.

The reasons for a dedicated blockchain for RWA are clear. The tokenization of real-world assets requires direct integration with existing financial regulations, making the use of generic blockchain infrastructure insufficient in many cases. Specific technical requirements ), especially regarding regulatory compliance ###, must be addressed from the ground up.

A key area is compliance processing. KYC and AML procedures are essential 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, and these networks can not only record ownership but also natively enforce regulatory requirements at the protocol level.

In response, some chains focusing on RWA have begun to offer on-chain compliance modules. For example, a certain chain 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. One protocol focuses on institutional lending and asset management, while another protocol focuses on