The institutional-grade RWA tokenization market size has approached $20 billion. RaylsLabs, Ondo Finance, Centrifuge, Canton Network, and Polymesh are each competing in infrastructure tailored to banking privacy, asset management efficiency, and Wall Street compliance needs. This article is based on a piece by Mesh, compiled, translated, and written by Deep潮TechFlow.
(Background: The explosive growth of RWA—Opportunity or Scam?)
(Additional context: Lawyers warn that China’s RWA industry has only two paths: go global or give up entirely)

Table of Contents

• The overlooked market is nearing the $20 billion mark
• Three main drivers accelerating RWA adoption:
• RaylsLabs: Privacy infrastructure truly needed by banks
  • Latest developments
  • Target markets and challenges
• OndoFinance: The rapid cross-chain expansion race
  • Recent updates
• Centrifuge: How asset managers are deploying billions
  • Major institutional deployment cases
  • Centrifuge’s unique operational model:
• Canton Network: Wall Street’s blockchain infrastructure
  • DTCC partnership (December 2025)
• Polymesh: The security blockchain network born for compliance
• How these protocols divide the market
• Unresolved issues
• Path to hundreds of billions: Key catalysts in 2026
• Why are these five protocols crucial?
• The next 18 months are critical
  • Key milestones in 2026

Honestly, the development of institutional-level RWA tokenization over the past six months warrants close attention. The market size is approaching $20 billion. This is not hype; genuine institutional capital is being deployed on-chain.

I’ve been following this space for a while, and recent developments are astonishing. From government bonds, private credit, to tokenized stocks, these assets are moving onto blockchain infrastructure faster than market expectations.

Currently, five protocols form the foundation of this field: RaylsLabs, OndoFinance, Centrifuge, Canton Network, and Polymesh. They are not competing for the same clients but are addressing different institutional needs: banks require privacy, asset managers seek efficiency, and Wall Street firms demand compliance infrastructure.

This isn’t about who “wins,” but about which infrastructure institutions choose and how traditional assets can migrate trillions through these tools.

The overlooked market is nearing the $20 billion mark

Three years ago, tokenized RWA was almost not a category. Today, on-chain assets like government bonds, private credit, and public stocks are approaching $20 billion. Compared to the $6-8 billion range at the start of 2024, this growth is significant.

To be honest, the performance of submarkets is more interesting than the total size.

According to the market snapshot from rwa.xyz in early January 2026:

• Government bonds and money market funds: approximately $8-9 billion, accounting for 45%-50% of the market
• Private credit: $2-6 billion (smaller base but fastest-growing, 20%-30%)
• Public stocks: over $400 million (rapid growth, mainly driven by OndoFinance)

Three main drivers accelerating RWA adoption:

• The appeal of yield arbitrage: tokenized government bond products offer 4%-6% returns with 24/7 access, whereas traditional markets have T+2 settlement cycles. Private credit tools provide 8%-12% returns. For CFOs managing billions in idle capital, this is straightforward.
• Gradual regulatory framework improvements: The EU’s Markets in Crypto-Assets Regulation (MiCA) has been enforced in 27 countries. SEC’s “ProjectCrypto” is advancing on-chain securities frameworks. Meanwhile, No-Action Letters enable infrastructure providers like DTCC to tokenize assets.
• Maturity of custody and oracle infrastructure: Chronicle Labs has handled over $20 billion in total locked value; Halborn has completed security audits for major RWA protocols. These infrastructures are mature enough to meet fiduciary standards.

Nevertheless, the industry still faces major challenges. Cross-chain transaction costs are estimated at up to $1.3 billion annually. Due to high capital flow costs exceeding arbitrage gains, price differences of 1%-3% exist for the same assets across different blockchains. If unresolved by 2030, annual costs could surpass $75 billion. This is one of my biggest concerns. Even with advanced tokenization infrastructure, if liquidity is fragmented across incompatible chains, efficiency gains are lost.

RaylsLabs: The privacy infrastructure banks truly need

@RaylsLabs positions itself as a compliance-first bridge connecting banks and DeFi. Developed by Brazilian fintech Parfin, and supported by FrameworkVentures, ParaFiCapital, ValorCapital, and AlexiaVentures, its architecture is a permissioned, EVM-compatible L1 blockchain designed for regulators.

I’ve been following its Enygma privacy tech stack development for some time. The key isn’t just technical specs but its methodology. Rayls is solving real banking needs, not just catering to DeFi’s imagination of what banks want.

Core functions of the Enygma privacy stack:

1. Zero-knowledge proofs: ensure transaction confidentiality
2. Homomorphic encryption: support computations on encrypted data
3. Native operations across public chains and private enterprise networks
4. Confidential payments: support atomic swaps and embedded “payment delivery”
5. Programmable compliance: selectively disclose data to designated auditors

Use cases:

1. Central Bank of Brazil: for CBDC cross-border settlement pilot
2. Núclea: regulated receivables tokenization
3. Multiple undisclosed node clients: private payment delivery workflows

Latest developments

On January 8, 2026, Rayls announced completion of a security audit by Halborn. This provides institutional-grade security certification for its RWA infrastructure, crucial for banks evaluating production deployment.

Additionally, the AmFi alliance plans to reach $1 billion in tokenized assets on Rayls by June 2027, with a reward of 5 million RLS tokens. AmFi is Brazil’s largest private credit tokenization platform, bringing immediate transaction volume to Rayls and setting an 18-month milestone. This is one of the largest institutional RWA commitments in any blockchain ecosystem so far.

Target markets and challenges

Rayls’ target clients are banks, central banks, and asset managers needing institutional privacy. Its permissioned model restricts verifiers to licensed financial institutions, ensuring transaction confidentiality.

However, the challenge is proving market traction. Without public TVL data or announced client deployments beyond pilots, the $1 billion AmFi target by mid-2027 is a critical test.

OndoFinance: The fastest cross-chain expansion race

Ondo has achieved the fastest growth from institutional to retail in RWA tokenization. Starting as a government bond-focused protocol, it has now become the largest platform for tokenized public stocks.

Latest data as of January 2026:

• TVL: $1.93 billion
• Tokenized stocks: over $400 million, 53% market share
• USDY holdings on Solana: about $176 million

I personally tested the USDY product on Solana—smooth user experience: combining institutional-grade government bonds with DeFi’s convenience, that’s the key.

Recent updates

On January 8, 2026, Ondo launched 98 new tokenized assets covering AI, EV, and thematic investments like stocks and ETFs. This isn’t small-scale testing but rapid expansion.

Ondo plans to launch tokenized US stocks and ETFs on Solana in Q1 2026, its most aggressive move into retail-friendly infrastructure. According to its roadmap, as expansion continues, it aims to list over 1,000 tokenized assets.

Industry focus:

• AI: Nvidia, data center REITs
• Electric vehicles: Tesla, lithium battery manufacturers
• Thematic investments: traditionally limited by minimum investment thresholds

Multi-chain deployment strategy:

• Ethereum: DeFi liquidity and institutional legitimacy
• BNB Chain: native exchange users
• Solana: support large-scale consumer use with sub-second finality

Honestly, while token prices declined, TVL reached $1.93 billion—this is the most important signal: protocol growth takes precedence over speculation. This growth mainly stems from institutional government bonds and DeFi protocols’ demand for idle stablecoin yields. The TVL increase during Q4 2025 market consolidation shows real demand, not just chasing hype.

By establishing custody relationships with brokers-dealers, completing Halborn security audits, and launching products on three major blockchains within six months, Ondo has gained a lead that competitors find hard to catch. For example, Backed Finance’s tokenized assets are only about $162 million.

However, Ondo still faces challenges:

• Off-hours price volatility: tokens can be transferred anytime, but pricing still depends on exchange hours, potentially causing arbitrage gaps during US night trading.
• Regulatory restrictions: securities laws require strict KYC and accreditation checks, limiting the “permissionless” narrative.

Centrifuge: How asset managers are deploying billions

Centrifuge has become the standard infrastructure for institutional private credit tokenization. By December 2025, its TVL soared to $1.3–$1.45 billion, driven by actual deployment of institutional capital.

Major institutional deployment cases

• Janus Henderson partnership (a global asset manager with $373 billion AUM)
• Anemoy AAACLO Fund: fully on-chain AAA-rated collateralized loan securities (CLO)
• Using the same investment team as its $21.4 billion AAACLO ETF
• Announced expansion plans in July 2025 to add $250 million on Avalanche
• Grove capital allocation (an institutional credit protocol in Sky ecosystem)
• Committed capital reaching $1 billion
• Initial capital of $50 million
• Founders from Deloitte, Citigroup, BlockTower Capital, and Hildene Capital Management
• ChronicleLabs oracle partnership (announced January 8, 2026)
• Asset proof framework: provides cryptographically verified holdings data
• Supports transparent NAV calculations, custody verification, and compliance reporting
• Dashboard access for LPs and auditors

I’ve been following oracle issues in blockchain; Chronicle’s approach is the first to meet institutional needs: providing verifiable data without sacrificing on-chain efficiency. The January 8 announcement included a demo video showing this solution is already in use, not just future promise.

Centrifuge’s unique operational model:

Unlike competitors that simply wrap off-chain products, Centrifuge tokenizes credit strategies directly during issuance. Its process:

• Issuers design and manage funds via a transparent workflow;
• Institutions allocate stablecoins for investment;
• Funds flow to borrowers after credit approval;
• Repayments are proportionally distributed to token holders via smart contracts;
• AAA assets yield 3.3%-4.6% APY, fully transparent.

Supported multi-chain networks: Ethereum; Base, Arbitrum, Celo, Avalanche.

The key is that asset managers need to prove on-chain credit can support deployment of billions, and Centrifuge has already achieved this. Its partnership with Janus Henderson alone provides capacity for billions.

Furthermore, Centrifuge’s leadership in setting industry standards (e.g., co-founding the Tokenized Asset Coalition and Real-World Asset Summit) further cements its role as infrastructure, not just a single product.

While $1.45 billion TVL demonstrates institutional demand, its target 3.8% annual yield appears modest compared to the higher risk/higher return opportunities historically seen in DeFi. How to attract DeFi-native liquidity providers beyond Sky ecosystem allocations remains a challenge for Centrifuge.

Canton Network: Wall Street’s blockchain infrastructure

Canton is a response to Wall Street’s vision of permissioned, privacy-preserving public networks for DeFi. Supported by top Wall Street firms, it aims to be a secure, privacy-focused public network.

Participants: DTCC (Depository Trust & Clearing Corporation), BlackRock, Goldman Sachs, Citadel Securities.

Canton targets the $3.7 quadrillion annual settlement flow processed by DTCC in 2024. Yes, that’s quadrillions—no typo.

DTCC partnership (December 2025)

Collaboration with DTCC is crucial. It’s not just a pilot but a core commitment to building US securities settlement infrastructure. With SEC No-Action Letter approval, this partnership allows some DTCC-custodied US Treasuries to be native-tokenized on Canton, with plans to launch a controlled MVP in early 2026.

Key details:

• DTCC and Euroclear co-chair the Canton Foundation;
• Not just participants but governance leaders;
• Initial focus on government bonds (lowest credit risk, high liquidity, clear regulation);
• Post-MVP, potential expansion to corporate bonds, equities, structured products.

Initially skeptical of permissioned blockchains, I changed my view after DTCC’s involvement. Not because of technical superiority, but because this is the infrastructure traditional finance will adopt.

Temple Digital platform launch (January 8, 2026): Canton’s institutional value proposition is further clarified in Temple Digital Group’s private trading platform launched on the same date.

Canton offers sub-second matching with a non-custodial architecture. Currently supports crypto and stablecoin trading, with plans to support tokenized stocks and commodities in 2026.

Ecosystem partners:

1. Franklin D. Dunst: manages an $828 million money market fund;
2. J.P. Morgan: settlement via JPM Coin.

Canton’s privacy architecture: Based on smart contract-level privacy using Daml (Digital Asset Modeling Language):

• Contracts specify which parties see which data;
• Regulators have full audit access;
• Counterparties can view transaction details;
• Competitors and the public cannot see transaction info;
• State updates propagate atomically across the network.

For institutions used to confidential trading via Bloomberg terminals and dark pools, Canton’s design offers blockchain efficiency without revealing trading strategies—highly rational. After all, Wall Street will never expose proprietary trading activities on a transparent public ledger. The 300+ participating institutions demonstrate its appeal. However, much of the reported volume may be pilot activity rather than actual production traffic. Development speed is a current bottleneck: the MVP planned for early 2026 reflects multi-quarter planning, whereas DeFi protocols often launch new products within weeks.

Polymesh: The security blockchain network born for compliance

Polymesh stands out through protocol-level compliance rather than complex smart contracts. Designed specifically for regulated securities, it performs compliance verification at the consensus layer, avoiding custom code.

Core features:

• Protocol-level identity verification: via licensed KYC providers;
• Embedded transfer rules: non-compliant transactions fail at consensus;
• Atomic settlement: transactions final within 6 seconds.

Production integrations:

• Republic (August 2025): supports private securities issuance;
• AlphaPoint: over 150 trading venues across 35 countries;
• Target sectors: regulated funds, real estate, corporate equity, etc.

Advantages: No need for custom smart contract audits; protocol automatically adapts to regulatory changes; cannot execute non-compliant transfers.

Challenges and future: Polymesh currently operates as an independent chain, isolating it from DeFi liquidity. To address this, a bridge to Ethereum is planned for Q2 2026. Whether it will be delivered on time remains to be seen. Frankly, I underestimated the potential of this “compliance-native” architecture. For security token issuers frustrated by ERC-1400 complexity, Polymesh’s approach—integrating compliance directly into the protocol rather than relying on complex smart contracts—is more attractive.

How do these protocols divide the market?

These five protocols do not directly compete because they address different problems:

Privacy solutions:

• Canton: Daml-based, Wall Street’s counterparty privacy;
• Rayls: zk-proofs, bank-grade mathematical privacy;
• Polymesh: protocol-level identity verification, one-stop compliance.

Expansion strategies:

• Ondo: manages $1.93 billion across three chains, prioritizing liquidity speed over depth;
• Centrifuge: focuses on $1.3–$1.45 billion institutional credit market, prioritizing depth over speed.

Target markets:

• Banks / CBDCs → Rayls
• Retail / DeFi → Ondo
• Asset managers → Centrifuge
• Wall Street → Canton
• Securities tokens → Polymesh

In my view, this market segmentation is more important than many realize. Institutions won’t choose the “best blockchain” but will select infrastructure that solves their specific compliance, operational, and competitive needs.

Unresolved issues

Inter-chain liquidity fragmentation: The cost of cross-chain fragmentation is estimated at $1.3–$1.5 billion annually. High bridging costs cause 1%-3% price gaps for the same assets across chains. If unresolved by 2030, annual costs could exceed $75 billion. This is one of my biggest worries. Even with advanced tokenization infrastructure, if liquidity is dispersed across incompatible chains, efficiency gains are lost.

Privacy vs. transparency dilemma: Institutions need confidentiality, regulators require auditability. In multi-party scenarios (issuers, investors, rating agencies, regulators, auditors), each party needs different visibility levels. No perfect solution exists yet.

Regulatory divergence: EU’s MiCA regulation applies in 27 countries; the US requires case-by-case SEC No-Action Letters, taking months; cross-border capital flows face jurisdictional conflicts.

Oracle risks: Tokenized assets depend on off-chain data. If data providers are attacked, on-chain assets may reflect false realities. Chronicle’s asset proof framework offers some solutions, but risks remain.

Path to hundreds of billions: Key catalysts in 2026

Catalysts to watch in 2026:

• Ondo’s Solana launch (Q1): test retail distribution’s ability to create sustainable liquidity; success indicator: over 100,000 holders, proving real demand.
• Canton’s DTCC MVP (H1): validate blockchain’s feasibility in US government bond settlement; success could transfer trillions of dollars on-chain.
• US Clarity Act passage: provides clear regulation; enables hesitant institutional investors to deploy capital.
• Centrifuge’s Grove deployment: $1 billion distribution completed in 2026; tests institutional credit tokenization with real capital; smooth execution without credit events will boost asset managers’ confidence.

Market forecast:

• 2030 target: tokenized assets reach $2–4 trillion;
• Growth from current $19.7 billion by 50–100x;
• Assumptions: stable regulation, cross-chain interoperability ready, no major institutional failures.

Industry-specific growth projections:

• Private credit: from $2–6 billion to $150–2000 billion (small base, highest growth rate);
• Tokenized government bonds: if money market funds migrate on-chain, potential exceeds $5 trillion;
• Real estate: estimated $3–4 trillion (depending on whether property registries adopt blockchain-compatible titles).

Milestone for hundreds of billions:

• Expected around 2027–2028;
• Distribution: institutional credit $30–40 billion; government bonds $30–40 billion; tokenized stocks $20–30 billion; real estate / commodities $10–20 billion.

This requires a 5x increase from current levels. Although ambitious, considering institutional momentum in Q4 2025 and upcoming regulatory clarity, this goal is not out of reach.

Why are these five protocols crucial?

The institutional RWA landscape in early 2026 reveals an unexpected trend: no single winner, because there is no single market.

Frankly, this is exactly how infrastructure should evolve.

Each protocol addresses different problems:

• Rayls → Banking privacy;
• Ondo → Tokenized stock issuance;
• Centrifuge → Asset manager on-chain deployment;
• Canton → Wall Street infrastructure migration;
• Polymesh → Simplified securities compliance.

From $8.5 billion in early 2024 to $19.7 billion now, the market shows demand surpassing mere speculation.

Core needs of institutional players:

• CFOs: yield and operational efficiency;
• Asset managers: lower distribution costs, expand investor base;
• Banks: compliant infrastructure.

The next 18 months are critical

• Ondo’s Solana launch → test retail scalability;
• Canton’s DTCC MVP → test institutional settlement;
• Centrifuge’s Grove deployment → test real capital credit tokenization;
• Rayls’ $1 billion AmFi goal → test privacy infrastructure adoption.

Execution takes precedence over architecture; results matter more than blueprints. This is the key at present.

Traditional finance is heading toward a long-term on-chain migration. These five protocols provide the necessary infrastructure: privacy layers, compliance frameworks, and settlement infrastructure. Their success will determine the future path of tokenization—whether as efficiency improvements to existing structures or as a new system replacing traditional financial intermediaries.

The infrastructure choices made by institutions in 2026 will shape the industry landscape for the next decade.

Key milestones in 2026

• Q1: Ondo’s Solana launch (98+ stocks listed)
• H1: Canton’s DTCC MVP (US government bond tokenization based on Wall Street infrastructure)
• Ongoing: Centrifuge’s $1 billion Grove deployment; Rayls’ AmFi ecosystem development. Trillion-dollar assets are on the horizon. NFA.