Tokenization: A Slow and Steady Race

Tokenization is a hot topic in finance. It involves using blockchain to represent real-world assets like stocks and bonds. This allows for fractional ownership and easier trading. Many people think this change will happen quickly. But not everyone agrees. Sidney Powell, co-founder of Maple Finance, thinks tokenization will take time. He compares it to an S-curve. At first, progress is slow. Then, it speeds up. Finally, it levels off. Powell believes tokenization will follow this pattern. He thinks it will take longer than expected at first. But eventually, it will grow faster than people think. Powell disagrees with those who say everything will be on-chain in just two years. He thinks this is unrealistic. He points out that major changes in technology usually take decades. The internet, for example, took years to become mainstream. Powell believes tokenization will be the same.Recent developments have put tokenization in the spotlight. The Depository Trust & Clearing Corporation (DTCC) plans to tokenize U. S. Treasury securities. They will use the Canton Network, a privacy-focused blockchain. This network is designed for regulated financial institutions. It has attracted investment from major players like Citadel Securities. Powell notes that Canton is gaining attention. But he doesn't think it will disrupt established chains like Ethereum and Solana. He believes liquidity is the key factor in adoption. Canton is tailored for specific market participants. Meanwhile, larger chains still attract new business. Powell is skeptical about tokenization driving value to layer-1 (L-1) blockchains. He thinks the value will go to the applications themselves. He also questions the ability of L-1 blockchains to generate meaningful revenue growth.