Why Tokenise Real Assets

Tokenisation is not magic. It does not turn an illiquid asset into a liquid one by decree. What it does do is lower the cost and latency of four things: moving a claim, recombining it with other claims, dividing it into smaller units, and distributing cash flows programmatically. Those four operations are the structural case.

The structural case

Every benefit of tokenisation reduces to one of four mechanisms. If a pitch deck claims a fifth, be sceptical.

Capital velocity

T+2 settlement on a traditional private-placement LP interest is aspirational. Most private credit settles in days to weeks. Tokenising that interest collapses settlement to the underlying blockchain's finality window — seconds on Canton, minutes on Liquid, hours on Ethereum L1.

This matters less for long-term holders and more for secondary-market makers. Tight settlement means tighter bid-ask spreads, which means more liquidity at lower cost.

Composability

Composability — the ability for one asset to be used inside another protocol — is the feature most DeFi-natives overvalue and most TradFi professionals undervalue. The truth is in the middle.

A tokenised Treasury (OUSG, BUIDL, USTB) can be posted as collateral inside a lending protocol. That is real. A tokenised nickel-backed LP interest could theoretically be posted as collateral too — but only in protocols that have performed the KYC on the holder and that accept regulated securities. Composability within the regulated perimeter is the model that survives; composability that routes through a permissionless pool does not.

Fractionalisation

A USD 1M private placement unit minimum becomes a USD 1 token. This is the feature that most obviously expands the addressable market. It also creates new regulatory questions — which is why sophisticated RWA issuers fractionalise within an accredited-investor perimeter, not outside it.

Programmable distributions

The most underrated benefit. A smart contract can pay a 6% preferred return quarterly, then sweep excess to an 80/20 waterfall, then update each holder's accrual balance — all without a transfer agent calling 400 LP holders. This reduces operational cost and reconciliation error to near zero.

What tokenisation does not do

• It does not create yield where none exists.
• It does not make an illiquid underlying liquid.
• It does not turn a jurisdictional offering into a global one.
• It does not eliminate custody risk — it relocates it.