Traditional equity markets operate on localised exchange hours, whereas onchain venues run non-stop. When market operators deploy 24/7 trading for tokenised equities, where does overnight or weekend liquidity realistically come from without creating wide bid-ask spreads and severe price slippage?
The very first item we need to clarify here is that 24/7 trading doesn’t mean 24/7 liquidity. Those are two very different things.
Blockchain gives us the technical ability to trade around the clock, but that does not automatically create buyers, sellers, or price discovery.
If the underlying stock exchange is closed, the main source of price formation disappears with it.
That naturally means fewer market participants, less available capital, wider spreads, and greater execution risk.
This is one of the biggest misconceptions around tokenisation today. Simply moving an asset onchain doesn’t suddenly make it behave the same way as BTC or ETH.
A tokenised equity is still fundamentally tied to the economics of its underlying market.
That’s why it’s important to design real-world asset (RWA) market infrastructure that can continue to provide liquidity and sensible pricing when the traditional reference market is unavailable because it closed down for the day.
Without that, 24/7 availability still won’t create a functional market.
Crypto-native protocols often rely on token emissions or yield farming to attract liquidity providers. What economic models or capital-efficiency mechanisms can incentivise institutional market makers to commit balance sheet capital to secondary tokenised asset venues?
Yield farming was effective in early DeFi, but for institutional markets, it is not the best liquidity model.
Professional market makers don’t allocate capital because there’s a temporary token incentive. They look at whether the underlying economics make sense and promise benefits in the long run.
And that, in turn, means they look at things like trading volume, fee generation, and capital efficiency to assess how much risk they’re taking on and in exchange for what expected returns.
For tokenised RWAs, risk management becomes even more important because these assets typically have an external reference price. The more efficiently a trading venue can deploy liquidity and keep prices aligned with external markets, the less idle capital market makers need to commit to achieve the same execution quality.
There’s also the fact that the existence of secondary markets builds confidence in the asset itself. If investors know they can exit their position quickly, they’re much more willing to enter it in the first place. That’s why issuers often provide liquidity themselves in the early stages to make the buying and selling of their tokens possible through familiar DeFi mechanisms.
That’s why, in the future, I think secondary RWA markets will compete by becoming the most economically efficient place for professional liquidity providers to operate in.
With institutions issuing RWAs across diverse permissioned ledgers and public Layer 1 and Layer 2 networks, how can the market prevent severe liquidity fragmentation and pricing arbitrage gaps between isolated venues?
The crypto industry often talks about interoperability like it’s a technical challenge, but I think the deeper issue here is economic in nature. Connecting blockchains is relatively straightforward compared to connecting liquidity.
If every venue has its own isolated liquidity pool or order book, we’re effectively taking one liquid market and splitting it into many smaller ones, which creates shallower liquidity, inconsistent pricing, and overall poor execution.
But at the same time, forcing everyone onto a single blockchain or exchange isn’t an option either. Different asset classes have different trading rules, compliance requirements, and pricing mechanisms, so venues need to be adaptable. And the same is true for frameworks within which institutions trading those assets have to operate — they will always vary.
We also have to account for the fact that the market is still in its early stages, so all chains are naturally trying to carve out a niche for themselves. I don’t expect that everything will end up converging around a single network. More likely, we’ll see multiple major public ecosystems alongside many permissioned networks operated by banks and financial institutions.
We’ve already seen something similar happen in crypto, back when Ethereum and Tron competed over being the dominant ecosystem for DeFi. Ethereum ultimately came out ahead in that race, but Tron established itself as one of the leading networks for stablecoins. They serve different purposes now, and that’s perfectly okay.
I think RWAs might evolve in a similar way, and that’s going to make interoperability even more important, because liquidity will need to move efficiently across all of those chains.
Traditional finance overwhelmingly favours CLOBs, while DeFi relies heavily on AMMs. Is standard AMM architecture capable of managing the risk and quote precision required for regulated RWAs, or will institutional secondary venues require new hybrid models?
I don’t think this is really a central limit order books (CLOBs) versus Automated Market Maker (AMM) debate. The real question is whether the market structure reflects the characteristics of the asset being traded. Traditional AMMs were designed for crypto-native assets, where price discovery happens largely within the market itself.
RWAs, like we already covered, are different because they almost always have an external reference price. If an AMM ignores that external reality and prices an asset as if it only exists onchain, arbitrage becomes inevitable. Liquidity providers effectively end up paying for the market to correct itself every time prices drift away from fair value.
That being said, there is evidence that AMMs play a big role in RWAs.
When tokenised RWAs first started gaining traction, a lot of participants gravitated towards request for quote-based execution that was already familiar to institutional players. But that has changed over time.
By mid-2026, Uniswap alone has processed over US$9 billion across RWA pools — that’s millions of transactions and almost 150,000 wallets involved. So clearly, AMMs do have a place in tokenised markets; the issue is just how they need to evolve to better meet institutional requirements.
Institutional RWA markets need infrastructure that can adapt liquidity around external market conditions and apply asset-specific risk controls. Different assets have different trading and settlement models, as well as different regulatory requirements, so trying to fit all of them into one AMM architecture doesn’t make much sense. Which is why I think we’re going to see a combination of models existing side-by-side, with different approaches being applied for different assets.
Primary issuance onchain is easily managed via investor whitelists. How can secondary trading infrastructure dynamically enforce transfer restrictions, identity checks like KYC and anti-money laundering, and jurisdictional suitability during high-frequency or peer-to-peer execution?
You can whitelist investors when an asset is created, but that’s only the beginning of its lifecycle. Once that asset starts changing hands, that’s where the complexity begins.
Secondary markets can’t rely on static whitelists alone because eligibility isn’t universal. The rules can differ depending on the asset, the investor, the jurisdiction, or even the time of execution. Those checks have to happen continuously, not just once at issuance.
The good news is that modern market infrastructure is already capable of enforcing many of these requirements.
Today’s AMMs can support configurable trading rules, asset access restrictions, trading hours, Know Your Customer (KYC), and more. Different assets have different regulatory obligations and market structures, so there isn’t a single rulebook that works for everything. Market operators need the ability to configure those rules around the asset they’re listing, rather than forcing every asset into the same framework.
That’s one of the reasons we’ve taken a programmable infrastructure approach with Theorem. Instead of brute-forcing every tokenised asset to follow the same rules, the venue itself can be configured around the requirements of a particular asset class. Different markets can enforce different compliance frameworks without sacrificing the efficiency of onchain trading.
I think that’s a much more scalable model than trying to squeeze every regulated asset into one fixed market structure.
If a major macroeconomic event occurs on a Sunday while underlying traditional exchanges are closed, how can an onchain venue maintain accurate price discovery for a tokenised stock without exposing liquidity providers to toxic order flow?
This is probably one of the hardest market-design problems that tokenisation faces today.
If an event takes place on Sunday, everyone knows Monday’s opening price for a particular stock won’t match Friday’s close, so leaving that price unchanged clearly isn’t right. But at the same time, the reference exchange hasn’t opened yet, and pretending the onchain venue can somehow determine the new fair value with perfect accuracy isn’t realistic either. At that point, liquidity providers face greater risk because some traders will inevitably have better information (or just stronger expectations) about where the prices are headed by Monday’s opening.
And if they trade while the onchain price hasn’t caught up yet, liquidity providers themselves end up bearing the cost. To avoid such situations, the industry needs infrastructure that recognises periods of elevated uncertainty and responds appropriately. That could be accomplished by incorporating external reference signals where available, applying additional risk controls, or even introducing market-specific safeguards until reliable price discovery resumes. In fact, this whole example is a perfect practical example of what we talked about in the beginning — why 24/7 availability requires rethinking how markets operate when the traditional mechanisms of price discovery temporarily disappear.
Sometimes the appropriate response is to stop instead of continuing to trade, no matter the costs. If reliable price discovery isn’t possible, the infrastructure should be able to pause trading until market conditions normalise. That’s something we’ve built into Theorem because there are situations where protecting market integrity is more important.
Institutional trading in traditional markets relies on prime brokerage, bilateral credit, and end-of-day net settlement rather than full pre-funding. How must clearing and credit infrastructure adapt to support liquid secondary trading for tokenised assets?
If tokenised markets want to attract institutional-scale liquidity, they can’t assume every large-scale participant is willing to lock up capital before every trade. One of the biggest differences between TradFi and DeFi is that institutional markets aren’t built around fully pre-funding every transaction. That simply isn’t how most of these organisations operate.
I think the future will be a combination of both worlds. Blockchain can be used to streamline settlements and make them faster, while traditional concepts like credit provision and clearing continue to exist, albeit in forms that are compatible with programmable markets.
I’ve said as much many times before, but this is where I feel the conversation around tokenisation sometimes becomes too narrow. It’s not enough to tokenise securities. For secondary markets to work, the supporting infrastructure — trading, clearing, settlement, credit, etc. — has to evolve and work together.
Do you expect meaningful secondary liquidity to accumulate on closed, bank-led networks, or will institutional traders eventually be forced onto public, interoperable blockchains to access sufficient market depth?
I do believe in the power of open markets. Ideally, the long-term goal should be to make investment opportunities as broadly accessible as possible, while also respecting the regulatory requirements that apply to different asset classes.
Tokenisation is, in many ways, not just about improving secondary markets, but also about making crowdfunding and investment more efficient and inclusive. A company raising capital shouldn’t be limited to investors in only one jurisdiction. If the infrastructure is interoperable, you can open opportunities to a much wider investor base.
The problem arises when every institution decides to build its own isolated ecosystem. If each issuer, bank, or blockchain creates a separate liquidity pool that can’t interact with the rest of the market, we’re simply recreating fragmentation. Capital becomes trapped inside individual venues, execution quality drops, and users ultimately suffer for it. So, again, I think interoperability is the way to go. Infrastructure that allows liquidity, assets, and market participants to connect across various environments is how we build market depth.
The digital asset sector currently measures tokenisation success by total asset value issued or TVL. What specific secondary market metrics should the industry track to measure true market health?
Total value locked (TVL) is important, but it’s only part of the picture. It can tell us how many assets have been tokenised; it doesn’t tell us whether those assets are actually traded. The more practical thing to do, in my opinion, is to look at whether secondary transfer volume is growing faster than assets under management.
That way, you can see if assets are circulating or simply sitting in wallets. Holder distribution is also a useful signal: if an asset is mostly held by issuers, partners, and market makers, we don’t have broad market participation.
Then we should also look at independent utility. When a tokenised asset starts being accepted as collateral or integrated into applications outside the issuer’s own ecosystem, that’s a sign the market is assigning it genuine value. And investor behaviour can also be quite telling; if Treasury yields fall but investors continue holding the assets, it means they’re staying for the utility and accessibility, not just for the yield.
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