Tokenized Securities On Polygon, Ethereum, and Gnosis Hit New Highs Surpassing $225 Million Market Valuation

May 31, 2023

Tokenization continues to garner steam as recent data reveal that the top six networks host over $200 million worth of tokenized assets.
Ethereum leads the pack among networks with firms like Ondo and MatrixDock holding 64% and 32% of the market share.
Experts praise innovation in the sector but lament the lack of regulatory clarity as the only obstacle in sight.

Decentralized finance (DeFi) springs up new possibilities with tokenization as a way of issuing financial assets and securities including stocks and government-backed bonds on the blockchain.

A Dune report shows that tokenization on the blockchain now has tapped a $225 million market cap across the top six platforms. Leading DeFi blockchain, Ethereum boasts more activity as expected and is closely followed by Polygon and Gnosis Chain.

Firms like Ondo, Matrixport, Franklin Templeton, and Backed Finance have created ERC 20 tokens to represent stocks and government-backed bonds. Ondo and Matrixport dominate the scene with a market share of 64% and 32%, respectively focusing on short-term US bonds which are expected to yield about 5% due to interest hikes by the Federal Reserve.

As innovation grows, firms are seen to become more versatile in the industry. Last month, Franklin Templeton hosted a tokenized version of FOBXX, its own Nasdaq-listed US Fund on Polygon. Backed Finance tokenized bonds are currently being accepted as collateral across DeFi products, including Ribbon Finance and Angle.

Backed Finance has also rolled out a tokenized version of Coinbase stock on Ethereum alongside its ERC 20 version of over 400 companies in the S&P 500. Ondo, on its part, adds value to its users through Flux, a lending service that lets users put up their ERC 20 tokens as collateral.

The future of tokenization is here

Tokenization which leverages blockchain technology, is billed to grow massively in the coming months. Across the top six platforms, the sector has surged 17% in the last 30 days, with many saying it is “the next generation of markets.”

BlackRock’s CEO Larry Fink noted that tokenization leads to instant settlements, cheaper fees, and integration into its business model. Similarly, Kit Popplestone, Backed Finance Head of Marketing, noted that interoperability would unlock new opportunities and products, making lending more efficient.

With increased adoption comes sceptics who believe the lack of regulatory clarity may hinder the growth of tokenized securities.

“To continue this rapid growth, we need regulatory clarity and consistency, and just as importantly, tokens must be interoperable and composable with DeFi,” Popplestone added.

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