The storm is coming—market convergence will drive ETH toward value discovery
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The storm is coming—market convergence will drive ETH toward value discovery
"The rise of ETH is not driven by purchases or promotion from one or two institutions, but rather a collective choice among mainstream institutions amid transformative shifts, and the tipping point for this trend change is approaching."
Navigating Web3 tides with focused insightsAuthor: Alfred@Gametorich
Recently, with strong performance from crypto-related stocks such as CRCL and HOOD, several investors have raised valuable questions: "If the stablecoin bill passes, where will the market growth come from?" "Why do tokens like SBET and BMNR surge simply by associating with Ethereum?" "Is there a connection between RWA opportunities and Ethereum?" "Why do you remain bullish on ETH regardless of short-term price movements?" We've provided fragmented answers to these individual questions before. This article aims to systematically consolidate those responses—offering a comprehensive summary from foundational logic and a long-term perspective—while also serving as supplementary content to our previous reports.
"ETH’s rise isn’t driven by purchases or promotions from one or two institutions—it reflects a collective choice among mainstream institutions positioning themselves for transformation, and we’re approaching a critical inflection point in this trend."
1. Starting with the Data
Stablecoins have grown at a pace exceeding market expectations, reaching a record-high total market cap of $258.3 billion. The U.S. Genius Act has passed the Senate and is now moving into the Republican-majority House stage. Trump has urged Congress to finalize the U.S. stablecoin legislation before its August recess. Hong Kong's Stablecoin Ordinance has already been passed and will take effect on August 1. U.S. Treasury Secretary Bessent forecasts that if the U.S. stablecoin bill passes, the stablecoin market could grow more than tenfold in the coming years—to over $2 trillion. Beyond stablecoins, asset tokenization is one of the fastest-growing markets: RWA (Real-World Assets) has surged from $5.2 billion in 2023 to $24.3 billion today—an increase of 460%.
Currently, traditional finance has a total market cap exceeding $400 trillion, while the crypto market stands at $3.3 trillion. Stablecoins account for $0.25 trillion and RWA $0.024 trillion. According to industry projections from Standard Chartered, Redstone, and RWA.xyz, 10–30% of global assets could be tokenized by 2030–2034—amounting to $40–120 trillion—with RWA market capitalization potentially expanding over 1,000 times from current levels.
What other businesses are the most aggressive proponents of stablecoins and crypto ETFs—like “BlackRock”—building?
BlackRock BUIDL Fund: BUIDL (BlackRock USD Institutional Digital Liquidity Fund) is a blockchain-based, dollar-pegged tokenized fund launched by BlackRock. It uses tokens to represent underlying assets (primarily U.S. Treasuries). The fund currently manages $2.86 billion in assets (11.7% of the RWA market), with 95% deployed on Ethereum.
Securitize: An asset tokenization company co-led by BlackRock and Jump Capital, with participation from Coinbase and others. In addition to launching BUIDL with BlackRock, Securitize has partnered with multiple traditional financial institutions to issue various tokenized products: collaborating with Hamilton Lane to tokenize its private equity funds; working with VanEck to explore tokenized investment offerings; partnering with Apollo to tokenize parts of its private credit and alternative investments; and assisting KKR with fund tokenization. Tokenized products issued via Securitize have reached a market value of $3.7 billion (15% of the RWA market), with 80% deployed on Ethereum.
Franklin Templeton BENJI Fund: BENJI (BENJI Tokenized Fund) is a tokenized fund launched by Franklin Templeton that converts traditional assets (money market or bond funds) into digital tokens, enabling fractional ownership and access for smaller investors. It supports smart contract functionality for yield distribution or reinvestment. Currently managing $743 million in assets (3% of the RWA market), 59% is deployed on Stellar and 10% on Ethereum.
More traditional financial players are advancing blockchain asset integration and tokenization initiatives. This wave of institutional adoption signals that years of infrastructure development are finally transitioning into production-scale deployment.
2. Re-examining RWA
RWA (Real-World Assets) refers to tangible or intangible real-world assets—such as real estate, art, bonds, equities, or commodities—that are digitized and mapped onto blockchains through blockchain technology or tokenization. Broadly speaking, I believe RWA within the industry primarily refers to any off-chain asset being brought on-chain and tokenized, allowing rights, transfers, and settlements of the underlying assets to be fully executed on the blockchain.
Tokenization offers the following structural advantages:
1. Programmability – Revolutionizing Asset Management via Smart Contracts: Programmability means encoding rules, conditions, and execution logic of assets into automated, verifiable code through blockchain smart contracts. Tokenized assets can embed features such as dividend payouts, redemption, and staking, eliminating manual intervention. This transforms asset management from static holding to dynamic automation, shifting from manual data transmission to on-chain automatic updates.
2. Settlement Revolution – Efficiency Gains and Risk Control: Tokenization enables peer-to-peer instant settlement via blockchain, replacing the long-standing T+2 settlement cycles that have plagued traditional finance. Ownership can be transferred directly between parties via tokens without centralized intermediaries, reducing counterparty risk and capital requirements.
3. Liquidity Revolution – Core Driver for Traditional Finance Embracing Crypto: By breaking down traditionally illiquid assets—such as real estate or private equity—into standardized, small-denomination tokens tradable on secondary markets and integrated with increasingly mature DeFi systems, tokenization significantly enhances liquidity. The blockchain’s inherent 7×24 trading environment further amplifies this effect.
Each time an asset goes on-chain, settlement efficiency improves and idle assets become usable within DeFi. “The faster value clears, the more frequently capital can be redeployed, thereby expanding the overall economic scale. Business models will no longer rely on charging fees during the [flow] process, but instead create new revenue streams through [momentum] effects” (-Sumanth Neppalli). This is the essence of traditional finance integrating with crypto.
4. Global Accessibility – Breaking Geographic Barriers of Fragmented Capital: Leveraging the distributed nature of blockchain, tokenization allows global investors to access tokenized assets via the internet without complex cross-border intermediaries or local accounts. This dramatically expands the investor base while lowering distribution costs. The global adoption of stablecoins serves as the best testament to this, and the trend is now extending to markets such as equities.
Which assets are being tokenized?
1. Private Credit – Largest Segment in RWA Tokenization: Contrary to common perception, private credit is currently the largest segment in asset tokenization, with a total size of $14.3 billion—accounting for 58.8% of the RWA market. Figure, Tradable, and Maple are actively providing $10.6 billion, $2 billion, and $800 million in loans respectively.
2. Government Bonds – Starting Point for Traditional Institutions: The tokenized government bond market has reached $7.4 billion (30% of RWA), with notable examples including BlackRock’s BUIDL, Franklin Templeton’s BENJI, Superstate’s USTB, and Ondo Finance’s USDY. Using tokenized treasury products as a foundation, traditional financial institutions are beginning to explore derivative financial product development and DeFi integration on-chain.
3. Tokenized Stock Markets Accelerating: On June 30, crypto exchanges Kraken and Bybit announced the launch of tokenized U.S. stocks and ETFs via xStocks, enabling 5×24 trading. Although not natively blockchain-based stocks, they allow participation in price spread trading, breaking geographical boundaries of U.S. equity markets. Meanwhile, Robinhood announced it is building the “Robinhood Chain” on Arbitrum, aiming to support decentralized ownership management in the future—a sign of its transition from a traditional broker to a blockchain-native platform. It divides stock tokenization into three stages to gain composability benefits via blockchain integration. Additionally, Coinbase has positioned tokenized stocks as a top priority. Its Chief Legal Officer, Paul Grewal, is actively lobbying the SEC to approve blockchain-based stock trading services, planning to use its Base Layer 2 network as potential settlement infrastructure. This year may witness the launch of major stocks natively on blockchain by these pioneers.
4. Commodities – Gold Dominates Tokenized Markets: Gold accounts for nearly 100% of tokenized commodities. Paxos Gold (PAXG) leads with a market cap of approximately $850 million.
5. Private Equity – Actively Being Explored: Private equity represents the ultimate goal of tokenization—this technology could solve decades-old structural inefficiencies and transform the historically poor liquidity of traditional private equity.
3. Stablecoins – RWA – DeFi
Stablecoins serve as the most fundamental layer for traditional finance integrating into on-chain ecosystems. They make money programmable and decentralized, forming the basis for all on-chain financial asset flows and settlements. Dr. Xiao Feng, Chairman of Hashkey Group, shared in an interview with Mr. Meng Yan: “The U.S. presidential team and Congress have been quite open and transparent about their motivations behind stablecoin legislation: first, to modernize the U.S. payment and financial system; second, to consolidate and strengthen the dominance of the U.S. dollar, creating trillions of dollars in demand for U.S. Treasuries within a few years.” He added, “Bitcoin reserves are secondary for the U.S.—dollar-backed stablecoins are primary; they represent America’s core interest.”
The recent rapid growth of RWA stems from institutional compliance efforts exploring new integration methods and pushing forward the Digital Asset Market Structure Act. Once stablecoin and market structure regulations pass, a large volume of assets will rapidly move on-chain, with transactions, yields, and settlements operating natively on blockchain, using stablecoins as the foundational monetary unit and value carrier.
Once significant volumes of assets go on-chain, DeFi begins to play its role—integrating newly tokenized assets with increasingly sophisticated DeFi protocols to achieve greater efficiency, automation, and compliance. This drives the creation of derivative products and high-liquidity yield generation and distribution. This cycle may mark the next major growth phase for the entire DeFi ecosystem since DeFi Summer.
Examples of RWA and DeFi Integration
1. Securitize Connecting to DeFi via sTokens:
Securitize, the world’s largest issuer of tokenized assets, does not allow direct use of its native tokenized securities in DeFi due to compliance considerations. Instead, tokens must first be deposited into an sVault to mint sTokens—DeFi-compatible versions—that can then interface with existing DeFi ecosystems.
BlackRock BUIDL & Euler Protocol: sBUIDL (a derivative of BUIDL) has been integrated into Avalanche’s Euler lending protocol. Users who deposit sBUIDL into the sToken Vault can borrow other assets while continuing to earn daily yields from BUIDL.
Apollo ACRED & Morpho Protocol: The sToken version of ACRED (sACRED) operates on Polygon PoS via Morpho. Holders can use sACRED as collateral to borrow USDC and automatically reinvest to amplify returns.
2. Ethena’s USDtb Integrates BUIDL to Secure Stable Yield Floor
Ethena’s Risk Committee approved using USDtb as a primary reserve asset when delta-neutral funding strategies reach local minima. 90% of USDtb’s reserves are held in BlackRock’s BUIDL fund, serving dual purposes: providing low-risk collateral for margin trading on centralized exchanges and offering compliant treasury exposure during adverse funding environments.
"The inclusion of USDe alongside USDtb indirectly catalyzed explosive growth in complex DeFi yield strategies, particularly driving robust money markets for principal (PT) and yield tokens (YT) on Pendle—tools viewed by traditional finance as interest rate instruments. During periods when crypto derivatives funding rates turn negative or compress sharply, USDtb backing provides crucial stability in yield floor (typically 4–5% annualized). This predictable minimum yield base is vital for PT token valuation and AAVE’s oracle system, enabling more accurate pricing models for zero-coupon bonds and safer liquidation mechanisms."
Currently, traditional financial institutions are starting from stablecoins and using tokenized treasury products as a base to explore development of on-chain derivatives and compliant integration with DeFi.
4. ETH Is the Current Mainstream Choice Among Institutions
Data shows that Ethereum remains the dominant public chain for institutional asset tokenization. The tokenized asset market cap on ETH stands at $7.5 billion, representing 58.41% of the total. On Ethereum L2 ZKsync Era, it’s $2.245 billion (17.47%). Among other chains, Aptos ranks first with $540 million (about 4.23%).
From a foundational logic standpoint, there are three key reasons why institutions favor Ethereum as their primary platform for on-chain asset deployment:
1. Highest Security Among All Public Chains: Ethereum boasts a decade-long security track record without major outages. When Ethereum upgraded from PoW to PoS, it accomplished a core architectural overhaul mid-operation—described as “changing the engine while the plane is flying.” This demonstrated exceptional technical foundation and organizational capability, aligning with the prudent principles required for institutional business expansion.
2. Most Mature DeFi Ecosystem and Best Liquidity: Ethereum hosts the most advanced DeFi protocols and innovative product mechanisms. Institutions deploying on ETH can quickly integrate into established DeFi systems and benefit from superior liquidity.
3. High Decentralization and Global Reach – A Balanced Interest Hub for Major Institutions and Global Investors: One reason stablecoins hold strategic importance for the U.S. is their ability to achieve decentralized global reach via blockchain, breaking down politically defined national currency barriers and distributing dollar equivalents globally via networks. Similarly, asset tokenization—such as recent U.S. stock tokenization—enables individuals previously excluded from investing in American equities to bypass national restrictions and participate on-chain. Thanks to its leading liquidity and influence, Ethereum is the preferred public chain for global operations. Moreover, its decentralized nature makes it a neutral ground—a balance point for large institutions and global investors. Sovereign-state institutions are unlikely to choose a public chain fully controlled by another country for issuing products or conducting major financial activities.
What Does Etherealize Say?
The Ethereum Foundation (EF) has undergone clear functional differentiation and professional restructuring, reorganizing internally into three business units while spinning off specific functions into external organizations—one of which is Etherealize. Positioned as the “institutional marketing and product pillar” of the Ethereum ecosystem, Etherealize focuses on bridging traditional finance and Wall Street to accelerate institutional adoption of Ethereum.
Etherealize argues that ETH should not be evaluated as a tech stock, but rather as a new category of asset: ETH is digital oil—the asset powering, securing, and serving as reserve for the internet’s new financial system.
"Traditional financial systems are just beginning a structural shift from analog infrastructure to digital-native architecture. Ethereum is poised to become the foundational software layer—akin to an operating system like Microsoft Windows—upon which the world’s new financial system will be built.
When this vision materializes, ETH will underpin a comprehensive global platform encompassing finance, tokenization, identity, computing, artificial intelligence, and beyond. This inherent complexity makes ETH harder to define—especially compared to simple store-of-value assets like Bitcoin—but also makes it strategically more valuable, indicating far greater long-term potential."
Moreover, ETH is more than just a cryptocurrency. It is a multi-functional asset serving as: computational fuel; yield-bearing store of value; primary settlement collateral; deflationary asset; embodiment of tokenized economic growth; reserve trading pair; and strategic reserve asset.
Therefore, ETH cannot be accurately valued using discounted cash flow models. Instead, ETH must be understood through the lens of strategic store of value and utility-driven scarcity. ETH powers the digital economy, secures it, captures value from its growth, and possesses intrinsic scarcity due to its supply dynamics and issuance cap. As the global economy transitions toward tokenized infrastructure, ETH will become indispensable—not merely as fuel, but as the native asset of the monetary and settlement layer for the future financial system.
Why Has ETH Lagged Behind BTC?
The answer is simple: Bitcoin’s narrative has already been accepted by institutions, whereas Ethereum’s has not. In contrast, Ethereum’s value proposition is harder to define—not because it’s weaker, but because it’s broader. Bitcoin is a single-purpose store-of-value asset, while Ethereum is a programmable foundation supporting the entire tokenized economy.
The acceleration of ETH’s repricing is already underway:
1. Surging Demand: Institutional-level adoption and large-scale deployment of tokenized assets and financial infrastructure on Ethereum have already begun—the data presented here proves it.
2. Growing Demand for Native Crypto Yields: As institutions increasingly build on Ethereum, ETH staking via ETFs is only a matter of time. The emergence of institutional physical share creation/redemption models will greatly boost interest in ETH staking yields.
3. Strategic Accumulation of ETH: A competition is emerging within the Ethereum ecosystem to accumulate ETH as a premium store of monetary value. Recently, Nasdaq-listed Bitmine Immersion Technologies raised $250 million for an ETH-focused financial strategy, causing its stock price to surge from $4 to a peak of $74 within two days—an increase of over 180%.
4. ETH as Institutional Treasury Asset: ETH’s unique characteristics—native collateral, neutrality, yield generation, and global utility—make it the preferred treasury reserve asset for institutions and across global markets.
In summary, ETH may not be the only long-term option for institutions entering blockchain, but it is currently the optimal solution for mass-scale asset tokenization. Combining data, real-world cases, foundational logic, and recent major developments, the trend of ETH regaining prominence is imminent.
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