Sergey Diakov
In traditional capital markets, the size of the market for tokenized equities is small, although interest in the movement of financial assets to blockchain networks is increasing. As new research shows, this sector is in a very initial stage of development.
According to data from Token Terminal, tokenized equities are responsible for approximately $1.2 billion in value on chain. By comparison the global public equities market is estimated at $144 trillion. If tokenization reaches all traditional markets, there is room for a value increase of over 124 000 times.
Even when the focus is only on U.S. equities, the difference is large. For this $73 trillion market, tokenized exposure is only a small part. Due to current levels of use, there is a possibility for the market to become more than 62 000 times larger.
With specific regard to equities in the financial sector, the use of tokenization is slightly higher but remains very low. In a market of $20 trillion, roughly 0.0058% is tokenized. To reach the full size of that market, the sector would need to grow more than 17 000 times.
And tokenized equities are one part of a larger process where people represent real world assets (RWA) on blockchain networks - this process makes it possible for people to own fractions of assets. On those networks, trading is available 24 hours every day. For users the systems are easier to enter than traditional financial systems.
The data is an indication that the sector is in an early period of existence. Stablecoins and commodities are other tokenized assets that are growing quickly - but tokenized equities are not but used by many large financial institutions. For the current market of tokenized stocks, some estimates are around $1 billion - those figures are the same as the numbers in the chart.
To investors the important question is how quickly infrastructure, regulation and demand will change. If more individuals start to use tokenization, the sector will grow significantly. It is possible that even a small transfer of traditional equities to blockchain networks will cause this growth.
Sergey Diakov
