What are the benefits of tokenized assets?
Put most directly, a tokenized asset is something one can own whose ownership has been made trackable through a digital representation on a blockchain network. A full explanation for what tokenized assets are can be found here. Asset tokenization is a new technology with the potential to change how we buy, sell, hold and otherwise interact with many of the assets in our lives. The biggest benefits for investors and issuers tend to cluster around four themes: 24/7 trading and transfer, expansiveness of the financial ecosystem, fractional ownership, and unprecedented transparency. Together, these make it possible to create new markets, open existing markets to a global set of participants, and give people finer-grained control over how they put their assets to work.
Capital efficiency: Capital efficiency is about how much “work” your capital can do. An asset is capital efficient when you can easily trade it, borrow against it, or use it in multiple strategies at once, instead of letting it sit idle. Onchain, this often looks like the same token being used simultaneously as collateral, in liquidity pools, and in structured products.
Direct market access: Traditional markets route most participation through intermediaries, brokers, custodians, transfer agents, and clearing houses. Direct market access means individuals and institutions can interact with markets more directly, often just by controlling a wallet and interacting with smart contracts, without needing every traditional middle layer.
Liquidity: Liquidity describes how easy it is to buy or sell an asset without moving the price too much. Highly liquid tokenized assets can be traded quickly, in small or large sizes, with relatively tight spreads. Illiquid ones are hard to exit or require steep discounts.
Fractional ownership: Fractionalization is the process of splitting an asset into many smaller pieces so that multiple people can own parts of it. Instead of one entity owning a whole building, painting, or song catalog, many people can each own a small fraction, represented by tokens.
Composability: Composability is the ability for different protocols and applications to plug into each other like Lego bricks. Once an asset is tokenized, any onchain protocol that understands the token standard can often integrate it without bespoke legal or technical work.
Cryptographic security: Cryptographic security means that ownership, balances, and transfers are secured by cryptography rather than by a private database entry. If you control the private key to an address, you control the tokens at that address, and anyone can verify that fact by inspecting the blockchain.
24/7 Trading and Transfer
One reason to tokenize assets is 24/7 trading and transfer. Unlike banks or brokerage accounts that close on weekends and holidays, blockchains are always running. Generally, blockchains natively allow transfer from one address to another. This means that if you have someone's address you can send them money at any time from anywhere with an internet connection. For modern blockchains, these transactions settle in seconds and cost cents.
Blockchains are always running and so are all the protocols built on them. Many of these protocols allow you to trade one asset for another. You can swap your USDC for BTC or SOL whenever you decide. This is true for any other assets that live onchain as well. In typical finance you can’t make trades on the weekend or holidays and you have to go through a broker of some kind. In contrast, blockchains allow you to trade whatever, whenever you would like.
This means that any assets on a blockchain can always be traded or transferred. The permissionless nature of blockchains and the guarantee of liveness means that at any moment you can do anything you want onchain. You are only bound by the rules of the chain.
Fractional Ownership
Another major benefit of tokenization is the ability to fractionalize assets. Instead of requiring someone to buy an entire building, an entire painting, or a full song catalog, tokenization allows those assets to be divided into many small pieces, each represented by a token.
For example, imagine a luxury apartment on Billionaires’ Row in New York City. In the traditional model, the ownership is binary: either you can afford the whole apartment or you can’t participate at all. In a tokenized model, the ownership interest in that apartment could be wrapped in a legal entity and split into a large number of tokens. Those tokens might entitle holders to a share of rental income, a portion of future sale proceeds, or even limited time-based access if the structure is designed that way.
Fractional ownership is not just about “democratizing access,” although that is a large benefit. It also creates more liquid, tradable claims on things that are normally extremely illiquid. A small fraction of a building or a song catalog, if properly tokenized and backed by a solid legal framework, can be traded much more easily than a traditional stake written into a bespoke contract.
Composability
Another benefit is composability. Composability is the ability for developers to connect different existing blockchain protocols to work together. For the typical user this allows them to make their assets “work” for them more than once. Developers create protocols to be open so users can freely move between them.
In typical finance you get some amount of yield from your bank account. Typically this is around 0.39% to 0.64% APY. Typically this is a payment for the bank using your money for external investments. In the blockchain world you can also get yield for allowing your assets to be used. However, with composability you can get yield opportunities across multiple protocols. This means that you can get a much higher yield on your money.
Composability allows for developers to connect different blockchain protocols. This means that users can freely move assets between these different platforms. Users can benefit from multiple protocols at once, not being captive to one platform like is typically the case in traditional finance. With all investments one should be aware of all the associated risks and invest accordingly
Verifiability
Tokenized assets also inherit the cryptographic guarantees of the blockchains they live on. On public networks like Ethereum and Solana, the state of the ledger is transparent and verifiable.
Anyone can see which address holds which token, how many tokens exist, and how those tokens move over time. Once a transfer is confirmed onchain, it becomes a permanent part of the ledger’s history, providing a clear, auditable trail of ownership changes. If you control the private key to an address, you control the tokens in that address. In contrast, in the typical financial world moving money or assets requires permission from a bank or broker.
These properties are especially powerful when combined with good provenance. For purely crypto-native tokens, the onchain record may be the whole story. For tokenized assets, however, there is still an offchain legal layer that has to say, “Owning this token equals owning this underlying asset or legal claim.”
Tokenization doesn’t magically fix the offchain world. Contracts still need to be enforceable. Courts and regulators still need to recognize that certain tokens correspond to legal rights. Issuers can still mismanage reserves or take on excessive risk. But once that legal link is in place, the blockchain provides a tamper-resistant record of who owns what and when that changed.
In other words, cryptographic guarantees don’t replace law and institutions, but they do give everyone a shared, transparent source of truth about balances and transfers. They reduce the need to trust opaque databases and increase the ability to verify.
Summary
The primary benefits of asset tokenization are 24/7 Trading and Transfer, Composability, Fractional Ownership and Verifiability. By moving ownership into a token format that lives on programmable, composable, public ledgers, tokenization lets anyone with a wallet tap into global markets and use their assets in a wide range of protocols. Fractional ownership lowers barriers to entry for expensive, illiquid assets, and verifiability makes it easier to know who owns what without relying on a single centralized record-keeper. Together, these forces create new markets, open existing markets to participants around the world, and allow both individuals and institutions to make more effective use of the assets they already have.