Ethereum's Dominance in the RWA Market: Analysis of Future Development Trends

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.

• However, general-purpose blockchains that allow for faster and cheaper transactions, as well as RWA dedicated chains designed specifically for regulatory compliance, are addressing the cost and performance limitations of Ethereum. These new platforms are positioning themselves as the 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. Current Growth of the RWA Market

The tokenization of real-world assets ( RWA ) has become one of the most prominent themes in the blockchain industry. Global consulting firms have made extensive predictions about the market, highlighting the increasing importance of this field.

RWA refers to the conversion of 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 a dominant position in the RWA market. Professional RWA blockchains have emerged, and mature DeFi platforms are also expanding into the RWA space. Nevertheless, Ethereum still accounts for over 50% of total market activity, highlighting its solid position.

This report examines the key factors that currently position Ethereum as a dominant player in the RWA market and explores the evolving conditions that may shape the next phase of growth and competition.

2. Reasons Why Ethereum Remains at the Forefront

2.1 First-Mover Advantage and Institutional Trust

Ethereum has clear reasons for becoming the default platform for institutional tokenization. It was the first to introduce smart contracts and is actively preparing for the RWA market.

With the support of an active developer community, Ethereum established key tokenization standards such as ERC-1400 and ERC-3643 before the emergence of competing platforms. This early foundation provided the necessary technical and regulatory basis for pilot projects.

As a result, many institutions began evaluating Ethereum before considering alternatives. Several notable initiatives from the late 2010s validated Ethereum's role in institutional finance:

• JPMorgan's Quorum and JPM Coin ( 2016-2017: To support enterprise use cases, JPMorgan developed Quorum, a permissioned fork of Ethereum. The launch of JPM Coin for interbank transfers indicates that the Ethereum architecture can meet data protection and compliance regulatory requirements.

• Société Générale bond issuance ) 2019: SocGen FORGE issued €100 million of secured bonds 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.

• European Investment Bank Digital Bond (2021: The European Investment Bank, in collaboration with Goldman Sachs, Santander Bank, and Societe Generale, issued a 100 million euro digital bond on Ethereum. The bond is settled using the CBDC issued by the French central bank, highlighting Ethereum's potential in 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 track record continues to attract attention, forming a reinforced adoption loop.

For example, in 2018, Securitize announced that it would build tools on Ethereum to manage the entire lifecycle of digital securities. This laid the foundation for the eventual launch of BlackRock's BUIDL fund, which is currently the largest tokenized fund on Ethereum.

![Ethereum's Dominance in the RWA Market: Who Will Take the Next Baton?])https://img-cdn.gateio.im/webp-social/moments-8d8fc7a1bc3f5588bb84b3215f4888f8.webp(

) 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 possesses deep and deployable on-chain liquidity.

This is evident on platforms like Ondo, Spark, and Ethena, all of which hold a large amount of tokenized BUIDL funds on Ethereum. These platforms have attracted hundreds of millions in funding by offering products based on tokenized U.S. Treasuries, stablecoin lending, and synthetic yield USD tools.

• Ondo Finance has accumulated over $600 million in total locked value through government bond-backed products USDY and OUSG, ( TVL ).

• Spark Protocol utilizes DAI liquidity from MakerDAO to purchase over $2.4 billion in real-world government bonds.

• Ethena uses synthetic stablecoins USDe and sUSDe on Ethereum to establish a non-bank yield infrastructure, attracting institutional demand and DeFi liquidity.

These examples indicate that Ethereum is not just an asset tokenization platform. It provides a strong 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 very 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 ownership and transaction records of high-value assets into a digital system. In this process, institutions focus on system reliability and transparency. This is precisely where Ethereum's decentralized architecture offers 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 participant consensus rather than centralized control. This avoids single points of failure, ensures resilience against hacking attacks 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.

3. Emerging Challengers Reshaping the Landscape

The Ethereum mainnet has demonstrated the feasibility of tokenized finance. However, alongside its 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.

To address these challenges, Layer 2 Rollup solutions such as Arbitrum, Optimism, and Polygon zkEVM have emerged. Significant upgrades, including the Merge ###, Dencun ( in 2024, and the upcoming Pectra ) in 2025, bring scalability improvements. Nevertheless, the network still fails to match traditional financial infrastructure. For example, Visa processes over 65,000 transactions per second, a level that Ethereum has yet to reach. These performance gaps remain critical limiting factors for institutions that require high-frequency trading or real-time settlement.

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, this delay may increase further—causing difficulties for time-sensitive financial operations.

Moreover, 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 fee uncertainty complicates business planning and may undermine the competitiveness of services based on Ethereum.

Some companies illustrate this dynamic well. After encountering limitations with Ethereum, they expanded to other platforms such as Solana and Polygon, while also developing their own chains. Although Ethereum played a crucial role in facilitating early institutional experimentation, it is now under increasing pressure to meet the demands of a more mature and performance-sensitive market.

( The rise of a fast, efficient, and cost-effective universal blockchain.

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 a multi-chain deployment strategy dominated by Ethereum.

Even so, there are still signs of substantial progress. In the private credit sector, new tokenization initiatives are emerging. For example, on zkSync, the Tradable platform has gained attention, accounting for over 18% of the activity in this sector—second only to Ethereum.

At this stage, general-purpose blockchains are just beginning to establish their foothold. Platforms like Solana, which have experienced rapid growth in the DeFi ecosystem, are now facing strategic issues: how to translate this momentum into a sustainable position in the RWA space. Merely relying on superior technical performance is not enough. To compete with Ethereum, it is necessary to provide infrastructure and services that meet institutional investors' trust and compliance expectations.

Ultimately, the success of these blockchains in the RWA market will depend less on the 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.

) The emergence of RWA-specific blockchain

More and more blockchain platforms are abandoning general designs in favor of specialized solutions for specific fields. This trend is also evident in the RWA sector, where a wave of new dedicated chains optimized for the tokenization of real-world assets is emerging.

The reasons for a dedicated blockchain for RWA are clear. The tokenization of real-world assets requires direct integration with existing financial regulations, which makes using generic 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 tokenized 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 blockchain. The demand for blockchain networks is growing, as these networks can not only record ownership but also enforce regulatory requirements natively at the protocol level.

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

Apart from compliance, many such platforms also leverage deep domain expertise to target specific asset classes. Some platforms focus on institutional lending and asset management, while others specialize in trade finance or regulated securities. These chains are not widely tokenized assets like sovereign bonds or stablecoins that are broadly held, but rather adopt vertical specialization as a competitive strategy.

That said, many of these platforms are still in the early stages. Some have yet to launch their mainnet, and most are still limited in scale and adoption. If general-purpose chains are just beginning to gain attention in the RWA space, then dedicated chains are still at the starting line.

![Ethereum's dominance in the RWA market