Tokenization
The process of converting real-world assets into digital tokens on blockchain, enabling fractional ownership and enhanced liquidity.
What is Tokenization?
Tokenization refers to the process of converting real-world assets (RWAs) into tokens on a blockchain, enabling fractional ownership, enhanced liquidity, and global accessibility. For example, ETF tokenization converts exchange-traded fund shares into tokens, offering real-time trading and integration with decentralized finance (DeFi) protocols for yield generation or lending.
A prominent example is BlackRock’s BUIDL (BlackRock USD Institutional Digital Liquidity Fund), the first tokenized fund issued on the Ethereum network in 2024, providing qualified investors with U.S. dollar yields through tokenized shares managed by Securitize, with a TVL exceeding $2.2 billion across multiple chains in 2025.
The tokenized RWA market exceeds $230 billion, driven by platforms like Centrifuge and Ondo Finance, with oracles ensuring off-chain data integration.
Related Terms
Constant Product Market Maker (CPMM)
An automated pricing model in DeFi that maintains a constant product of asset reserves in a liquidity pool to determine prices.
Capital Inefficiency
The underutilization of provided liquidity in DeFi protocols, where most capital remains idle across unused price ranges.
Financial Disintermediation
The shift of funds from banks to alternative channels, potentially reducing bank lending.
MEV Vulnerability
The susceptibility of DeFi protocols to value extraction by miners or validators through transaction reordering or insertion.
Genesis Block
The initial block in a blockchain that establishes the foundation of the network and its digital asset.
Lamport
The smallest fractional unit of Solana’s native digital asset, SOL, equivalent to 0.000000001 SOL (one-billionth of a SOL).