DeFi has achieved product-market fit with cryptonative assets but not yet with traditional assets beyond U.S. dollars. Simultaneously, cryptonative growth has slowed after the memecoin fiascos on Solana in early 2025. To find new growth, the crypto industry should focus on the application of its innovation to traditional assets and markets. Here are a few observations about asset tokenization.

These are my independent thoughts and do not necessarily represent the views of my employer.

PYUSD is a tokenized dollar liability. The special part of the liability is the token part, which is its new form factor. The underlying dollar corporate obligation doesn’t change whether PayPal issues it as a token or as a Venmo or PayPal balance. Generalized, if you tokenize something of you value you’ll have something of value, but tokenize junk and you’ll still have junk.

Tokenized Money Market Funds (”TMMFs”) have added ~$6.4b in supply in the past 18 months while stablecoins have added 17x that amount. This seems like poor performance for an asset class that’s supposed to be a drop-in replacement. Additionally, a lot of TMMF issuance is subsidized by chain foundations, which means the organic growth of the class is even smaller. Why might that be? Hint: it has to do with my first observation. What’s the difference between BUIDL and USDC on the asset side? Now how about on the token side?

Equity is an entitlement to partial ownership of a company. Debt is a a legal obligation for future repayment. Legal contracts are secured by the state, the rule of law, and a legal system. Are you unclear about what you own? Ask yourself if you own a legal obligation to some future asset or performance.

Because I learned about blockchain from Bitcoin, I didn’t realize that an EVM ERC-20 token is not a literal bearer asset in the way I thought of a Bitcoin UTXO. In the Ethereum account model, tokens are smart contracts that record each wallet’s ownership. Understanding this is key to imagining the programmability that can make tokens special form factors for value.

Thanks to Brendan Malone for teaching me this. A startling number of people want to tokenize stocks. Why? The U.S. equities market is one of the best-regulated, most-liquid markets in the world (perhaps surpassed only by the market for U.S. Treasuries, lol). The barriers are higher and the improvements smaller for U.S. equities vs. other asset classes. Perhaps it’s wiser to start with a market that is inefficient, fragmented, and antiquated.

Understanding truths about the nature of assets and tokens can identify promising areas of investment, research, and innovation. Hopefully this post has helped.

These are my independent thoughts and do not necessarily represent the views of my employer.