Fragmented RWA Markets Incurring $600M–$1.3B Annually Due to Cross-Chain Frictions

In a recent study, RWAio estimates that fragmented tokenized real-world asset (RWA) markets are wasting between $600 million and $1.3 billion each year in fees and pricing discrepancies, as assets are spread across various blockchain platforms like Ethereum and Polygon.

Key Takeaways

Fragmentation in tokenized RWA markets costs between $600 million and $1.3 billion annually.
Research from RWAio, with insights from 17 companies including Coinbase and Franklin Templeton, reveals inefficiencies due to assets on multiple blockchains.
The market for tokenized real-world assets has exceeded $36 billion, covering sectors such as private credit and U.S. Treasury debt.
Price gaps for identical assets between blockchains range from 1% to 3%, while transfer costs can hit 2% to 5% per transaction.
Ethereum holds 52% of the tokenized asset value, and Polygon manages 62% of tokenized bonds.

Chart showing RWA fragmentation costs across blockchains.

Overview of Fragmentation in RWA Markets

According to the data analytics platform RWAio, the market for tokenized real-world assets has reached more than $36 billion. This includes various financial instruments, such as private credit, U.S. Treasury debt, and commodities.

RWAio's findings highlight a serious concern: identical assets are often available at different prices across various blockchain networks, resulting in price discrepancies ranging from 1% to 3%. This fragmentation leads to inefficiencies that can significantly impact investors. When transferring assets from one blockchain to another, investors can face additional costs ranging from 2% to 5% per transaction due to fees and slippage.

The Role of Ethereum and Polygon in the Market

In the analysis, RWAio noted that Ethereum currently holds 52% of the total value of tokenized real-world assets, demonstrating its dominance in this emerging sector. Meanwhile, Polygon has emerged as a major player, managing 62% of the tokenized bonds, further showcasing the critical role various blockchains play in this market.

The report underscores the operational challenges that the tokenized asset sector faces as traditional financial instruments begin to leverage blockchain technology. As this sector continues to grow, addressing these inefficiencies will be vital for enhancing the market's overall functionality and investor confidence.