Opinion by: Olivier Dang, head of ventures at Laser Digital, and COO at KAIO
The first generation of tokenization got it half right. It proved that regulated funds can live onchain — but it stopped there. Billions of dollars in so-called real-world assets have been wrapped in tokens, but underneath, little has changed.
Most of “onchain finance” today is little more than a digital reflection of the old system: PDFs with price feeds, spreadsheets behind tokens and settlement still managed by intermediaries. In essence, it’s legacy finance repackaged in blockchain gloss.
That model, unfortunately, won’t scale.
Real transformation requires financial assets to communicate and interact with each other and become composable. This will be the defining feature of the second wave of tokenization.
Composability’s place among fund managers
The market has become more sophisticated, whether fund managers agree or not. Without composability, digital assets are unable to integrate with the new plumbing of digital money, decentralized liquidity or automated treasury systems.. With it, finance becomes modular, interoperable and programmable.
Stablecoins show what that looks like in practice.
They’ve become the default settlement layer for global crypto markets, moving more than $700 billion each month, according to a16z’s “State of Crypto 2025” report. Digital money now moves at internet speed.
Related: AI will forever change smart contract audits
Yet the investment side of the balance sheet still runs on batch settlements and reconciliations. The result is an asymmetry. The money leg of finance has gone digital, but the asset leg has not. Capital can settle in seconds but still waits days for its corresponding investment record to catch up.
To close that gap, tokenization must evolve from being a wrapper to becoming an infrastructure. The next phase isn’t about putting more products onchain; it’s about rebuilding the financial stack for programmability, with issuance, transfer and reporting all operating within the same digital environment.
This means designing trust into the system itself. When investor rights, liquidity rules and asset data are encoded directly into smart contracts, transparency and enforcement become continuous rather than occasional. Institutions no longer rely on layers of reconciliation; the network itself confirms ownership and settlement in real time.
That infrastructure unlocks composability, shifting tokenization from a fintech experiment to a market architecture.
Converging digital assets with DeFi
The push for composability should be viewed as a necessary, trust-driven automation that enables institutions to join this new system. In a composable system, a tokenized credit fund could serve as collateral in a lending facility or a fund share could settle instantly against a digital currency, closing the loop between investment and money. None of this is futuristic. It’s simply the next logical step, once both capital and cash operate on programmable rails.
History shows that these transitions happen slowly, then all at once. Electronic trading has displaced phone brokers over the past decade. Digital payments replaced bank checks almost overnight once users saw the efficiency. Tokenization will follow the same curve: The technology works, but business models need to catch up.
Transitioning legacy assets onchain
The proponents of this next tokenization era are aware of the potential at stake. Banks, sovereign wealth funds and asset managers are adopting open, composable protocols, not because they are crypto-friendly but because they are more efficient, auditable and scalable by design.
Investments in infrastructure should be viewed as a sign of institutional appetite for long-term stability, rather than speculation. As more assets move onchain, we’ll see liquidity centralized and intermediaries reliant on settlement friction losing relevance. Institutions developing this infrastructure will naturally lead the newly emerging hybrid capital markets, even as technology continues to lower costs and commoditize formerly high-margin processes.
Once asset managers and investors experience the boon of transparent compliance and automated operations, the economic logic will be impossible to ignore. At that point the distinction between onchain and offchain will disappear. There will only be infrastructure that works and infrastructure that doesn’t. The market will stop becoming a tokenized duplicate.
It will simply become the market.
Opinion by: Olivier Dang, head of ventures at Laser Digital, and COO at KAIO.
This opinion article presents the contributor’s expert view and it may not reflect the views of Cointelegraph.com. This content has undergone editorial review to ensure clarity and relevance, Cointelegraph remains committed to transparent reporting and upholding the highest standards of journalism. Readers are encouraged to conduct their own research before taking any actions related to the company.
This opinion article presents the contributor’s expert view and it may not reflect the views of Cointelegraph.com. This content has undergone editorial review to ensure clarity and relevance, Cointelegraph remains committed to transparent reporting and upholding the highest standards of journalism. Readers are encouraged to conduct their own research before taking any actions related to the company.
