While tokenization has become one of the prominent concepts in the cryptocurrency world recently, Grayscale’s research director Zach Pandl pointed out that investors should evaluate this field not as a single move, but as a long-term and gradual process. Speaking at the EthCC conference held in Cannes, France, Pandl emphasized that tokenization is still at a very early stage.
The current state and future potential of tokenization
Pandl stated that tokenization basically enables the recording, transfer and management of ownership of financial assets such as bonds, funds and shares on the blockchain. Although this area is growing rapidly, for now it still has a very small proportion compared to global capital markets. While the total value of tokenized assets has reached $27 billion, this figure may rise to approximately $19 trillion by 2033, according to projections made by BCG and Ripple.
While it is stated that major banks and asset management institutions are aware of this opportunity, it is stated that institutions are still trying to clarify how they can best benefit from both stablecoins and tokenization processes. A cautious approach still stands out when determining areas to invest.
According to Pandl, the spread of tokenization will occur gradually and different structures will come to the fore at each stage. In the first period, projects that resemble more traditional financial structures seem more likely to succeed.
Prominent approaches and projects in tokenization
Among the projects that will stand out in the first phase are initiatives with structures reminiscent of the traditional system. Pandl cited Canton Network, which is supported by well-established institutions such as DRW, TradeWeb, Goldman Sachs and Nasdaq, as an example. In addition to offering a more advanced and digitalized version of the current financial structure, such networks are considered reasonable options for investors in the short term.
Pandl predicts that in the second phase of tokenization, a hybrid structure may emerge in which institutionally owned blockchains and a global, shared financial infrastructure can coexist. Networks like Avalanche exemplify this model, thanks to the interconnection of many independent and corporate blockchains.
In the long term, it is stated that Ethereum’s native asset, ether, can lead to a more comprehensive and decentralized finance approach. Although Pandl states that technology and institutions are not fully ready yet, he thinks that markets may evolve in this direction over time.
Not only the network or assets but also chain-independent service providers may play an important role in the future of tokenization. Projects focusing on inter-blockchain data transmission, such as Chainlink, are shown as attractive opportunities for investment.
