Tokenization’s Growth Outpaces Liquidity: CONNECT Reveals Infrastructure Gaps

Supply Outpacing Demand in Tokenized Markets

The explosion of tokenized real-world assets hitting blockchain networks isn’t being matched by investor appetite, according to panelists at Cointelegraph’s CONNECT conference in Singapore. Alex Taaffe, chief revenue officer at trading firm GSR, noted that while tokenization has expanded access to previously restricted asset classes—including pre-IPO equities, commodities, and international stock markets—the market has yet to find equilibrium between issuers and buyers.

There’s a significant imbalance between supply and demand in the tokenized markets, Taaffe explained during the October 9 event. Every asset manager and issuer wants to conduct capital formation onchain, but investor demand hasn’t kept pace with the growing flood of tokenized offerings. Though liquidity is improving for these emerging asset classes, fragmentation across multiple blockchains and issuers continues to hamper trading efficiency.

Fragmentation Splits Liquidity Across Networks

The tokenization boom has scattered liquidity across numerous blockchain networks and tokenization platforms. When multiple issuers tokenize the same underlying asset separately, they create siloed liquidity pools that prevent efficient price discovery and trading, according to Lingling Jiang, a partner at investment firm DWF Labs. Despite this structural challenge, Jiang acknowledged that cryptocurrency liquidity infrastructure has matured considerably in recent years.

Panelists discussing onchain trading infrastructure identified a deeper problem: determining how much liquidity actually exists across blockchains is fundamentally a data challenge, not merely an execution one. Austin Federa, co-founder of DoubleZero, emphasized that moving liquidity between blockchain networks remains far more complex than traditional finance mechanisms, leaving traders uncertain about true market depth.

On the positive side, blockchain analytics firms are beginning to solve critical risk management issues. Miguel Morel, founder of analytics firm Arkham Intelligence, noted that trading desks can now use onchain data to identify counterparties and assess their creditworthiness, leading to tighter spreads and better customer pricing. Exchanges can also leverage this data to evaluate deposit origins and compliance status without requesting additional identity documentation from users.

User Experience: The Final Frontier for Stablecoin Adoption

While stablecoins have grown to a market capitalization of $306 billion—representing a 74% increase over the preceding twelve months—widespread consumer adoption hinges on seamless integration into daily life. Mike Silagadze, founder of ether.fi, highlighted a fundamental gap: in markets like Singapore, consumers may hold stablecoins but still cannot pay their bills with them, forcing a return to traditional banking.

The path forward requires stablecoins to function as naturally as existing payment apps. Yvonne Chia, head of communications at stablecoin issuer USDD, stressed that user experience must be the priority—making stablecoin usage intuitive enough that users don’t consciously recognize they’re using blockchain-based money. Ashna Vaghela of payments provider Mercuryo compared the goal to Apple Pay’s frictionless experience: transactions should complete within an application without exposing users to the underlying technology.

Regulatory fragmentation poses additional hurdles. Ilya Podoynitsyn, co-founder of FinHarbor, noted that payment providers must navigate different compliance rules across jurisdictions, requiring them to rebuild infrastructure and systems for each market—a costly and complex process that limits scalability.

As tokenized markets and stablecoin infrastructure mature, solving liquidity fragmentation and creating genuinely user-friendly payment experiences will be critical to onchain finance reaching mainstream adoption. Resolving these infrastructure gaps will be essential for blockchain-based assets to compete with traditional financial infrastructure.

Source: Cointelegraph. Not financial advice.