Blockchain Technology Concept, Defi, RWA, Ai agent, Web3
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The market for tokenized real-world assets is expanding quickly, but institutional adoption still hinges on whether blockchain infrastructure can meet the standards of traditional finance.
“For the past decade, blockchain infrastructure has focused on proving possibility rather than usability,” says Wish Wu of Pharos Network. “Institutions require two things above all: deterministic finality and predictable costs.”
That gap has created what Wu describes as an “uncertainty tax” for large allocators.
“When a network suffers from latency or gas spikes during market volatility, it creates an uncertainty tax that institutional risk committees cannot accept,” he says.
The constraint is notable given how quickly the sector itself is growing. On-chain RWAs have reached roughly $29.9 billion as of April 2026, up from $8.8 billion a year earlier, according to RWA.xyz. The data suggests demand is already present, even if infrastructure has not fully caught up.
Institutional Demand Is Already Showing Up
The clearest signal of that demand is in tokenized Treasuries, which now account for a significant share of the RWA market.
“Lasting value is created when a protocol moves toward real yield,” Wu says.
Tokenized U.S. government debt has grown to nearly $14 billion on-chain, led by products from firms including BlackRock and Franklin Templeton. These instruments offer yields broadly in line with traditional markets, while adding continuous settlement and programmability.
At the same time, most of that liquidity remains relatively siloed. Only a small portion is actively used across decentralized finance protocols, reinforcing Wu’s argument that composability and infrastructure remain limiting factors.
From Serial Systems to Parallel Execution
Wu argues that the next phase of blockchain development will address these constraints directly.
“We are moving from the serial era to the parallel era,” he says. “High-performance networks will eliminate the throughput bottlenecks that previously caused liquidity fragmentation.”
On legacy systems, settlement times can stretch into minutes, and transaction costs have historically spiked during periods of congestion. Those conditions make it difficult to support institutional-scale activity.
Newer execution environments, including Layer 2 networks, are pushing toward near-instant finality and lower, more predictable costs. The goal is to remove the operational friction that has kept large pools of capital on the sidelines.
Privacy Without Sacrificing Compliance
Alongside performance, Wu points to advances in cryptography as another key unlock.
“Zero-Knowledge technology is moving from theory to production,” he says. “This allows for controlled privacy, where institutions can prove compliance to regulators without exposing sensitive underlying data.”
This model reframes privacy as selective disclosure rather than anonymity.
“A user can prove they are a qualified investor or resident of a specific jurisdiction without revealing their identity or net worth,” Wu says.
That balance could help resolve a longstanding tradeoff between public blockchain transparency and regulatory requirements.
From Static Assets to Continuous Finance
As infrastructure improves, new use cases are beginning to emerge.
“Two years ago, the gas costs and latency of legacy chains made micro-distributions impossible,” Wu says.
That is starting to change.
“We are seeing real-time yield streaming,” he says. “Rental income from a tokenized commercial property can be distributed to thousands of global holders every second rather than monthly.”
The shift is subtle but significant. Financial flows that once moved in periodic batches can now operate continuously, opening the door to new types of products and investor experiences.
Measuring Real Economic Activity On-Chain
Wu argues that the long-term value of blockchain networks will ultimately depend on the volume of real economic activity they support.
“Infrastructure value is ultimately a function of the economic activity it facilitates,” he says.
That activity is already visible in adjacent sectors. Stablecoins now account for more than $250 billion in circulating supply, led by issuers such as Tether and Circle. Annual settlement volumes have reached into the trillions, offering a proxy for what an “on-chain economy” could look like at scale.
For RWAs, the implication is that growth in issuance alone is not enough. The next phase will depend on whether these assets are actively used, traded, and integrated into broader financial systems.
The Next Test Will Be Execution
Skepticism around RWAs persists, particularly given the sector’s history of overpromising.
“To the skeptics, I say the technology has finally caught up to the vision,” Wu says.
He points to a clear near-term milestone.
“The real test is not a theoretical TPS number,” Wu says. “It is the successful, stable settlement of regulated assets in a live environment.”
That shift from experimentation to execution may define the next phase of the market. Infrastructure is improving, demand is already visible, and institutional products are gaining traction.
Whether those trends converge into a functioning, large-scale on-chain financial system will depend on what happens next.