Layer One: Hivemind & AVAX One on the state of play in tokenized assets

Welcome to Layer One: the newsletter and podcast on the intersection of crypto and the real world. Hosted by The Block's Kelvin Sparks, Layer One brings you inside the institutional conversations driving blockchain forward.

In this week's newsletter, we speak with Matt Zhang, founder and managing partner of Hivemind, and Pete Wylie, interim CEO of AVAX One, about the future of tokenization and why the next phase of growth will depend on putting tokenized assets to work.

Hivemind's Zhang and AVAX One's Wylie say institutional tokenization is moving from experimentation to production

Through the Layer One podcast and newsletter, we've been tracking the shape of Wall Street's tokenization drive for almost a year now. Across that time, the value of the tokenized asset space has almost doubled and dozens more institutions have begun experimenting with blockchain integrations.

This week we spoke with Pete Wylie, interim CEO of digital asset company AVAX One, and Matt Zhang, founder and managing partner of Hivemind Capital, for insights into which sectors, issuers and chains could drive the next major growth spurt. 

Ethereum still leads the market by some distance, with over $17 billion in distributed tokenized value and growing — almost three times that of the closest competitor, BNB Chain. However, as the market has continued its rapid expansion through 2026, Ethereum's overall market share has in fact declined, down from over 60% at the start of the year to under 45% now.

Meanwhile, BNB Chain, Solana, Stellar and Avalanche have all logged triple-digit percentage gains, carving out a growing share of the market.

Zhang said, however, that this is not a "winner-takes-all" scenario. "Ethereum has an enormous installed base and will remain important," he added, "but institutions are increasingly evaluating infrastructure based on the specific requirements of the application they are building. That creates room for multiple networks to succeed."

In other words, sophisticated institutions seek bespoke solutions, rather than simply congregating around the largest established pools of liquidity.

Wylie additionally highlighted the need for infrastructure that allows institutions to remain compliant with existing regulations. "Depending on the use case, they may need different permissioning models, compliance controls, and the ability to hold certain sensitive information in a private network," he explained.

Franklin Templeton currently leads traditional financial institutions in tokenized asset value, at $2.56 billion in total deployments. BlackRock comes in second place, thanks largely to its $2.2 billion BUIDL money-market fund, the majority of which resides on Solana, Avalanche and Ethereum.

Distribution remains top-heavy, with only six of the leading institutions surpassing $500 million in tokenized assets and only 11 surpassing $100 million. However, a stronger indication of progress is the number of institutions launching pilots and deploying assets. Most major financial players in the United States now have a tokenization strategy.

A few years ago, a lot of the discussion was still about explaining what blockchain or tokenization actually was. Today, most sophisticated financial institutions understand the technology and the potential benefits. [...] The bottleneck now is about moving from experimentation into production. — Matt Zhang

Asked where the next major unlock lies, Zhang and Wylie both noted that the immediate challenge is making existing tokenized assets productive rather than simply bringing more value onchain.

Avalanche itself is one illustrative example: the chain ranks fifth by 'distributed' RWA value but third by 'represented' value (meaning assets confined to the issuer's own platform and not interoperable with the wider ecosystem). Wylie — whose digital asset treasury firm holds 14.1 million AVAX — characterized this as a "sensible first step" for regulated institutions, which are conservative by nature.

"The next phase," he added, "requires distribution, liquidity, collateral utility, settlement infrastructure and applications that give those assets something productive to do."

Looking further ahead, Citigroup has estimated that tokenized assets could reach as high as $8.2 trillion by 2030. Asked where the majority of this projected growth could come from, Zhang pointed to treasuries, money-market products, public-market securities, private credit, private funds, payments and settlement as the most promising areas.

"Even modest migration of existing activity could therefore be meaningful," he added, given the enormous size of these sectors compared to their still-nascent tokenized equivalents.

Disclosure: Matt Zhang serves on the Board of Directors of AVAX One. Hivemind Capital Partners may hold AVAX.

Podcast Catch-up: OpenTrade CEO cites bank lobby's $3 trillion deposit-flight warning

Last time on the podcast, we were joined by David Sutter, co-founder and CEO of OpenTrade, to discuss the evolving regulatory environment, institutional demand for DeFi and the rapid growth of stablecoins in emerging markets.

Subscribe to Layer One on YouTube, Apple, Spotify, or wherever you get your podcasts.

In the Headlines: The stories driving the conversation this week

• BNY and Citadel Securities have completed the first tokenized Treasury repo transaction on a major triparty platform. The transaction involved a two-year U.S. Treasury note, tokenized on BNY's private digital ledger and used as collateral in an overnight repurchase agreement. BNY said the transaction demonstrates how tokenized securities could improve collateral mobility and settlement efficiency across institutional financial markets.
• Morgan Stanley has pushed back its timeline for supporting tokenized equities to the first quarter of 2027. In an interview with The Block, head of digital asset strategy Amy Oldenburg said the bank is currently developing the infrastructure to facilitate trading in tokenized securities, which it previously planned to launch in H2 2026. Oldenburg also projected that the tokenized RWA market could reach between $3 trillion and $10 trillion by 2030.
• Dubai's International Financial Centre (DIFC) Courts have launched an Avalanche-based system for authenticating judicial documents internationally. Court orders and hearing records now carry unique NFT-based credentials recorded on Avalanche's C-Chain, allowing recipients to verify their authenticity within seconds. The initiative aims to simplify cross-border document authentication for banks, businesses and legal authorities without requiring access to the courts' internal systems.

AVAX One holds approximately 14.1 million AVAX tokens, 95% of which are staked

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Layer One is brought to you in collaboration with Avalanche.