The First Trillion: Which Asset Class Will Lead Tokenization’s Breakthrough?
Randle’s Ramblings
Setting the Stage: The First Trillion as a Psychological Milestone
Every financial innovation has its “threshold moment,” the point where it stops being a curiosity and becomes undeniable. For the internet, it was crossing one billion users. For ETFs, it was passing one trillion in assets under management. For Bitcoin, it was reaching a one trillion dollar market cap in 2021.
Tokenization of real-world assets (RWAs) is approaching its own threshold. The question is not if but which asset class will be the first to pass one trillion dollars onchain. That milestone will mark the shift from experiments and pilots to mainstream adoption, and it will alter how global markets view blockchain as financial infrastructure.
History as a Guide: Thresholds That Changed Finance
Financial history is filled with moments where an asset class or product hit scale and changed everything.
Dutch Government Bonds in the 1600s: The first deep and liquid sovereign debt market gave birth to modern finance, pulling capital into Amsterdam and cementing Dutch dominance.
London’s Equity Boom in the 1800s: The Industrial Revolution met public markets, and suddenly railroads, mines, and banks could raise massive amounts of capital from ordinary investors.
Chicago Futures in the 1900s: Grain and livestock contracts evolved into derivatives that underpinned global commodity markets, creating liquidity that transformed both agriculture and finance.
ETFs in the 2000s: Initially small and niche, ETFs became mainstream when they proved they could carry trillions in passive investment flows.
Each of these moments shares a pattern: scale creates legitimacy. Once an asset class crossed a certain size, it stopped being a novelty and became embedded into the fabric of the financial system. Tokenization will follow the same pattern.
For readers who want to explore how financial systems evolve at tipping points, I recommend Lords of Finance by Liaquat Ahamed for early 20th-century finance, The Ascent of Money by Niall Ferguson for the sweep of financial history, and The Man Who Solved the Market by Gregory Zuckerman for how quantitative innovations reshaped markets.
The Current State: Tokenization’s Early Billions
Today, tokenized assets sit around the low tens of billions in value, depending on how you measure it (stablecoins excluded). The largest categories are:
Tokenized Treasuries and Money Market Funds (MakerDAO, Ondo, Franklin Templeton)
Tokenized Private Credit (Maple, Centrifuge, Goldfinch)
Tokenized Real Estate (Lofty, RealT, small-scale pilots from institutions)
Tokenized Funds and Equities (Securitize, Arca, Hashnote)
This is a tiny fraction of global capital markets. For context:
Global bond markets exceed $130 trillion.
Public equities are over $100 trillion.
Real estate is worth north of $300 trillion.
Derivatives markets (CDS, IRS, options) run into the quadrillions notionally.
The room for growth is obvious. The challenge is figuring out where the first trillion will land.
The Contenders: Which Asset Class Crosses $1T First?
1. Tokenized Treasuries and Money Market Funds
Why they are strong candidates:
Massive underlying market (U.S. Treasuries alone exceed $25 trillion).
Demand for yield-bearing stable alternatives is already proven (stablecoins).
Clear institutional appetite for short-duration, low-risk assets.
Catalyst: If just 3 to 4 percent of U.S. Treasuries went onchain, we would pass the $1T mark quickly.
Risk: Regulatory bottlenecks, especially in the U.S., where custody and investor protections remain unclear.
2. Private Credit and Alternative Debt
Why they are compelling:
Higher yields attract investors in both TradFi and crypto.
Naturally illiquid and fragmented markets benefit most from blockchain rails.
Platforms like Maple and Centrifuge are already growing.
Catalyst: A global liquidity crunch could push investors toward tokenized credit structures that offer real yield with transparency.
Risk: Credit defaults or fraud in early issuances could scare off institutions before scale is reached.
Readers interested in the darker side of credit markets may find Michael Lewis’ The Big Short (movie is good too) illuminating for how misaligned incentives can unravel markets, a lesson tokenization must heed.
3. Real Estate
Why it has appeal:
Largest global asset class (approximately $300T).
Fits the narrative of democratizing access to hard assets.
Clear use case for fractionalization.
Catalyst: If a major sovereign wealth fund or REIT migrated holdings onchain, scale would come quickly.
Risk: Complex regulatory and title systems across jurisdictions make this the hardest to harmonize.
4. Equities and Funds
Why they are possible:
Equity markets are already digitized, and ETFs show the appetite for pooled exposure.
Tokenized funds could serve global investors more efficiently than legacy rails.
Catalyst: A major asset manager such as BlackRock or Fidelity issuing tokenized ETFs with onchain settlement.
Risk: High regulatory hurdles, particularly in the U.S., where the SEC resists securities innovation.
5. Derivatives (CDS, IRS, Options)
Why they are the dark horse (I may be biased here given my work with Derive and SettledHere!):
Notional size is enormous, in the hundreds of trillions.
Blockchain’s ability to improve margining, collateralization, and settlement is unmatched.
Smart contracts make payoff structures programmable.
Catalyst: Institutional adoption of tokenized swaps for efficiency and risk management.
Risk: Complexity, lack of regulatory clarity, and limited retail appetite mean derivatives may lag behind simpler products.
For those who want to see how derivatives reshaped markets in the past, Against the Gods by Peter Bernstein is essential reading. It shows how managing risk through financial innovation changed the world.
Why It Matters: Liquidity as a Domino Effect
The first trillion matters not just as a headline, but as a confidence signal. Once institutions see scale, liquidity attracts liquidity:
Market makers deploy capital.
Custodians and administrators build infrastructure.
Regulators grow more comfortable with precedent.
CFOs and treasurers see tokenized assets as a safe allocation.
This is not linear growth, it is domino growth. The first trillion triggers the next five.
The Psychological Shift
Crossing the trillion-dollar threshold will reframe tokenization in the eyes of skeptics. It will no longer be a playground for crypto-native experiments, but a global market category with legitimacy. At that point, dismissing tokenization will sound as shortsighted as dismissing ETFs in the early 2000s or the internet in the 1990s.
Conclusion: Betting on the Bridge Asset Class
If I had to place a bet, my view is that short-term government debt and money market funds will cross $1T first. They offer the perfect balance of safety, demand, and scalability. They are also the easiest for institutions to explain internally: “It is the same treasuries, just with better rails.”
But the bigger point is this: whichever asset class gets there first, the milestone will change how global markets view blockchain. The first trillion is the tipping point where tokenization moves from possibility to inevitability.
And once it happens, the question will shift from “why tokenization?” to “why not everything?”
Cheers,
Ian
Ian Randle is a Core Contributor at Derive.xyz and Founder of SettledHere.com
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