Citrini sees a tokenization boom. The harder question is who profits

The Infrastructure Trap

For years, we have been sold the dream of putting everything on-chain. Real Estate, art, carbon credits, and even private equity. The pitch was always about efficiency and transparency. But if you look at the recent analysis coming out of firms like Citrini, the conversation is shifting from if this will happen to who gets paid when it does.

As a founder, you have to be careful here. In crypto, we often confuse activity with value capture. Just because a protocol handles billions in volume doesn't mean the token holders or the developers are building a sustainable business. The tokenization boom is real, but the profit margins might not land where you expect them to.

The Shift to Real World Assets

We are moving past the experimental phase where tokenization was just a buzzword for pitch decks. We are seeing actual treasury bills, money market funds, and credit products moving onto rails like Ethereum and various Layer 2s. This is the Real World Asset (RWA) narrative coming to life.

The reason this matters now is simple: the legacy financial system is slow and expensive. Blockchains, for all their faults, are excellent at settling transactions 24/7 without a room full of middlemen taking a cut. Citrini’s research highlights that this transition could give blockchains their first truly clear role in global finance beyond just speculation. It turns the network into a utility.

Where the Revenue Flows

If you are building in this space, you need to look at the three distinct layers where money can be made: the settlement layer, the protocol layer, and the application layer. Historically, we thought the settlement layer (the chains themselves) would capture all the value via gas fees. But as L2s get cheaper and competition increases, that fee revenue is trending toward zero.

The protocol layer—the smart contracts that actually manage the tokenization—is where things get interesting. These are the engines. However, they face a massive commoditization risk. If one protocol charges 50 basis points to tokenize a T-bill and another does it for 5, the market will move. It is a race to the bottom that looks a lot like the early days of discount brokerages.

• Asset Originators: The entities that actually own the underlying assets. They hold the power because they control the supply.
• Distribution Platforms: The interfaces where users actually buy these tokens. They own the customer relationship.
• Infrastructure Providers: The plumbing. Necessary, but often a low-margin business unless they achieve massive scale.

The Skeptical Founder View

I have seen this movie before. We build incredible tech, and then the big banks walk in and replicate it on a private version of the software. To avoid this, builders need to focus on interoperability. If your tokenized asset only lives in your walled garden, you aren't building a decentralized future; you are just building a slightly faster database for a bank.

Citrini points out a hard truth: the next challenge for investors is identifying which networks can actually retain revenue. A lot of the current RWA volume is driven by a few large players. If those players decide to move their liquidity, the underlying network can become a ghost town overnight. Loyalty in finance is non-existent; it is all about yield and cost.

Why Most Tokens Will Fail

Most RWA projects launch a token because that is how you raise money in this industry. But ask yourself: does a T-bill tokenization platform actually need a native utility token? In most cases, the answer is no. Using a token to govern a stable, regulated financial product is a legal nightmare and an unnecessary friction point for institutional users.

The winners won't be the ones with the best 'tokenomics.' The winners will be the ones who solve the boring stuff: KYC/AML integration, tax reporting, and legal recourse. If a user loses their private key to a tokenized house, there has to be a way to reset that ownership in the physical world. The bridge between code and law is where the real value is created.

Real-world assets don't care about your decentralization maximalism. They care about liquidity, compliance, and exit costs.

Navigating the Hype

We are going to see a lot of noise about 'Total Value Locked' (TVL) in RWA protocols. Take those numbers with a grain of salt. TVL is a vanity metric if the revenue generated from that capital doesn't stay within the ecosystem. We need to look at 'Revenue Per Million of TVL' to see who is actually running a business and who is just subsidizing growth with venture capital.

For those of us on the front lines, the takeaway is clear. Stop building features that only crypto people care about. The institutions moving into tokenization don't care about your DAO. They care about whether their auditors can understand the smart contract and whether the transaction is final. The 'boom' is coming from the top down, not the bottom up.

The Takeaway for Builders

The profit in tokenization will likely settle in the hands of the distributors and the creators of the underlying assets, not the generic infrastructure providers. If you are building today, focus on owning the customer relationship or owning the unique asset. Don't get stuck in the middle building a commodity bridge that someone else will eventually provide for free.

It is an exciting time, but stay skeptical. The tech is finally ready, but the business models are still being written. Don't let the shiny new narrative distract you from the basic math of running a profitable company.

Read the original at CoinDesk →