The primary objectives of tokenization involve the establishment of comprehensive secondary trading markets for alternative private assets, enhancing integration and portability within the DeFi ecosystem, and improving accessibility for investments. Numerous platforms and service providers currently offer tokenization as a service, albeit with some inherent restrictions on the dynamic onboarding of existing legacy assets.

For instance, the tokenization of a loan portfolio by a middle-market direct lender could allow the use of portfolio collateral as non-crypto collateral in DeFi applications such as Moonwell, Aave, or Morpho. The optimal asset lending workflow, as outlined in Blue Water’s Opportunities in Tokenization 2025 report, is illustrated below.

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It is imperative that the concept advances beyond traditional quarterly, semi-annual, or annual portfolio valuations by direct lenders, as this delays the immediate execution typically anticipated in digital asset markets. To unlock the potential of trillions of dollars’ worth of existing, performing alternative assets, an ecosystem that supports these applications must be developed. These applications include decentralized exchanges, lending platforms, and peer-to-peer collateral transfers that continuously draw on financial asset data.

Several factors must be addressed when transitioning to blockchain-based environments:

1. Transparency and proof-of-metrics – where “matric” refers to any measurable entity, such as reserves and holdings, will be vital in the crypto markets. Onboarding legacy assets in a meaningful way calls for significant transparency levels, especially for direct investors.
2. Operational speedbumps – impeding a 24/7 operational capability may undermine trust and escalate execution risk for crypto investors. This means that manual updates and working hours will detract from the appeal of real-world assets in crypto markets.
3. Holistic solutions – seasoned crypto participants will expect real-time monitoring of off-chain assets and near real-time execution velocity, whether for trading, subscriptions, redemptions, or loan processing.

For example, Inveniam’s blockchain-based operating system allows private assets to integrate into previously inaccessible crypto-native ecosystems.

Platforms such as Inveniam and Accountable alongside blockchain layers like Chainlink and Pyth offer significant opportunities for asset managers and capital market players to prepare for tokenization by adopting blockchain frameworks.