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Research Report: Fragmentation Has Become the Biggest Obstacle to the Trillion-Dollar Potential of the RWA Market
BlockBeats News, December 19th - A research report by RWA.io highlighted that while blockchain technology has accelerated innovation, it has also created liquidity barriers, hindering capital's free flow across networks. As a result, tokenized real-world assets (RWA) are increasingly resembling fragmented markets rather than a unified financial system.
The research found that despite representing the same underlying asset, identical or economically equivalent assets on different blockchains continue to have price divergences. Additionally, transferring capital across networks remains costly and complex. These inefficiencies impede the market's ability to self-correct through arbitrage and achieve efficient price discovery.
The report stated that one of the most apparent consequences of this fragmentation is the continual price differentiation of the same asset issued on different chains. Economically identical tokenized assets often exhibit a trading price difference of 1% to 3% across different major networks. In traditional finance, arbitrage activities would swiftly eliminate such market discrepancies. However, due to technical barriers, costs, delays, and operational risks, cross-chain arbitrage remains challenging to execute, with the cost of asset transfer often exceeding the price difference itself, leading to persistent inefficiencies.
In addition to price discovery, RWA.io estimates that transferring capital between non-interoperable chains results in a loss of 2% to 5% per transaction due to exchange fees, slippage, transfer costs, Gas fees, and timing risks. The report's model indicates an average loss of approximately 3.5% per capital reallocation. If this fragmentation pattern continues, the friction cost could siphon off around $600 million to $1.3 billion from the market annually.
Marko Vidrih, Co-Founder and COO of RWA.io, stated: "This fragmentation is the most substantial obstacle for the market to realize its trillion-dollar potential." He added, "In traditional finance, the SEPA Instant Payment directive within the EU has shown how value can move across accounts in seconds. Tokenized assets should also flow frictionlessly in a similar manner."
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