The discussion surrounding the tokenization of financial assets has increasingly shifted from questions of feasibility to questions of functionality and scale. With the value of tokenized real-world assets exceeding $30 billion on blockchain networks in 2026, including approximately $15 billion in tokenized US Treasury products, financial institutions have largely moved beyond pilot programs and proof-of-concept initiatives.
According to a joint report released by LayerZero and Centrifuge in June 2026, the next stage of market development will depend on whether tokenized funds can evolve into fully interoperable financial instruments capable of moving across blockchain ecosystems, serving as collateral, supporting intraday settlement, and contributing to yield-generating strategies while remaining compliant with the legal and operational requirements governing regulated investment products.
From Issuance to Utility: The Composability Frontier
The report argues that the challenge of issuing tokenized assets has largely been addressed and that industry attention is now focused on composability. Rather than functioning solely as digital representations of traditional assets, tokenized funds are increasingly being integrated into broader on-chain financial systems.
Several practical applications highlighted in the report are already in operation. Stablecoin platforms, including Sky and Ethena, are allocating reserve assets to tokenized Treasury and credit funds to generate returns that support savings and yield products. At the same time, decentralized lending platforms such as Aave Horizon, Morpho, and Euler have begun accepting tokenized fund shares as collateral, allowing institutions to access liquidity while continuing to earn returns from the underlying assets.
The report also highlights the emergence of more advanced financial structures. One example is the use of tokenized real-world assets in looping strategies, where investors borrow against tokenized holdings, acquire additional exposure, and pledge those assets again within a single blockchain-based transaction. Processes that traditionally required multiple counterparties and extended settlement periods can now be completed almost instantly through automated infrastructure. In parallel, developments in instant redemption mechanisms for tokenized Treasury products are improving the responsiveness required for on-chain repo markets and real-time settlement systems. These developments indicate a broader transformation in the role of fund shares within programmable financial networks and are already attracting institutional capital at meaningful scale.
One Hub, Every Chain: Solving the Infrastructure Problem
While adoption continues to expand, the report identifies operational challenges associated with deploying tokenized assets across multiple blockchain networks. Historically, each new blockchain required separate infrastructure, fragmented liquidity pools, duplicated compliance processes, and independent management systems. As the number of supported chains increased, operational complexity grew substantially.
The challenge is particularly important for regulated funds. Net asset value calculations are performed periodically rather than continuously, while subscription and redemption processes must remain coordinated across all networks. In addition, assets moving between blockchains can temporarily fall outside the visible balance sheet of a fund, creating accounting discrepancies that are difficult to reconcile within existing compliance frameworks.
To address these issues, LayerZero and Centrifuge have developed a hub-and-spoke architecture. Under this model, a central blockchain serves as the authoritative source for fund accounting, net asset value calculations, share-class management, and compliance controls. Additional blockchains function as distribution channels that accept deposits and interact with local decentralized finance applications. Information is transmitted across networks through LayerZero’s cross-chain messaging infrastructure, which supports communication between more than 165 blockchain ecosystems and enables the transfer of operational data such as net asset value updates and compliance instructions.
According to the report, this approach allows fund issuers to manage products from a single source while distributing them across multiple blockchain environments. Compliance updates, valuation changes, and investor permissions can be synchronized across all supported networks, reducing the operational burden that has historically limited multi-chain fund deployment. The report points to Janus Henderson’s JTRSY tokenized Treasury fund, which has exceeded $1 billion in total value locked, as an example of this model operating at institutional scale.
Two Models for a Constrained Market
Despite improvements in infrastructure, the report notes that significant differences remain between regulated investment products and decentralized finance protocols. Traditional funds operate within controlled investor frameworks and follow administrative settlement cycles, whereas decentralized finance systems are designed around immediate settlement and open participation.
The report identifies restricted transferability, delayed settlement processes, and liquidity constraints as the primary barriers preventing direct integration between regulated fund shares and open decentralized finance applications. To address these challenges, it outlines two models currently being adopted within the market.
The first model retains regulated tokens within existing compliance frameworks while building permissioned market infrastructure around them. Approved counterparties assume settlement-related risks on behalf of investors, allowing complex financing strategies to be completed more efficiently. The report cites the 3F protocol on Morpho as an example of this approach. In addition, dedicated liquidity facilities have emerged to provide near-instant access to stablecoins while underlying fund settlements continue in parallel.
The second model, developed by Centrifuge through its deRWA framework, separates compliance management from token distribution. Under this structure, a vault holds regulated fund shares and issues a transferable ERC-20 token that can be integrated into decentralized finance protocols without requiring custom compliance checks at every transaction. Regulatory controls remain embedded within the vault infrastructure rather than being applied individually to each transfer. The report notes that products including deJTRSY, deJAAA, and deSPXA are already operational, with deSPXA providing tokenized exposure to the S&P 500 index while remaining usable across decentralized trading and lending platforms.
According to the report, these approaches represent practical solutions for expanding composability within existing regulatory frameworks. Rather than waiting for legal standards to evolve, market participants are developing infrastructure that accommodates current requirements while enabling broader blockchain-based functionality. As tokenized funds continue to gain traction, the report concludes that the primary strategic consideration for asset managers is no longer whether assets should move on-chain, but whether the infrastructure selected today can support future growth, interoperability, and large-scale adoption without requiring significant redesign.
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Source: Mpost.io
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