Tokenization Use Cases [P2.2]: Deepening Liquidity and Expanding Market Reach
This second half of Part 2 explores how tokenized RWAs become capital-efficient tools: Secondary Markets, DeFi Collateral, and Cross-Protocol Flow.
Having explored in Part 2.1 how tokenization opens up liquidity through fractional ownership, access to private markets, and 24/7 tradability, we now move into the second half of liquidity enhancement: how tokenized assets move beyond simple ownership and enter an advanced phase of capital utility—while unlocking even broader access and global financial participation.
In this section, we examine how tokenized assets evolve into versatile financial instruments—used for borrowing, collateralizing, bundling, and even circulating across protocols simultaneously. Just as liquidity improves, market reach also expands—into DeFi, into emerging jurisdictions, and into use cases far beyond what traditional financial infrastructure allows.
We’ll dive into four powerful sub-use cases: secondary market trading, DeFi collateralization, rebundling/repacking of existing assets, and rehypothecation across platforms.
4. Tokenized Assets Trading on Secondary Markets
After tokens are issued to fundraise or represent ownership, the next step toward liquidity is enabling them to be traded freely. Secondary markets—both centralized and decentralized—offer venues for peer-to-peer trading of these tokens, enhancing access, price discovery, and geographical reach.
Take Arca’s ArCoin: the first SEC-registered 40-Act fund token. Arca Labs launched ArCoin to represent shares of its U.S. Treasury Fund. These tokens trade via Securitize Markets, a registered Alternative Trading System (ATS), and allow investors to buy or sell in near real time. This offers a third leg of liquidity: redemption, transfer, and now, active market trading.
RealT’s property tokens offer another example. After initial sales, these ERC-20 tokens trade on RealT’s secondary marketplace. According to RWA Intelligence, daily trading volumes for some properties reach 0.5–2% of total value—impressive for real estate, which is traditionally locked up for years. With investors from more than 140 countries, this marketplace exemplifies how market reach and liquidity grow together.
The same model extends to bonds. Platforms like InvestaX host tokenized fixed-income assets that trade among accredited investors with much shorter settlement times and higher liquidity than traditional over-the-counter (OTC) bond markets. The ability to list and transact globally—without regional brokers or business hour constraints—marks a substantial upgrade in both liquidity mechanics and market accessibility.
5. Collateralizing Tokenized Assets in DeFi
Beyond just trading, tokenized assets can unlock liquidity by being used as collateral in decentralized finance protocols. This allows users to borrow stablecoins, gain leverage, or enhance yield—without needing to sell the asset itself. More importantly, DeFi as a venue extends the market’s reach to a new class of investors and liquidity providers native to crypto.
New Silver, a fintech lender, issues tokens representing pools of real estate-backed loans on Centrifuge’s Tinlake protocol. MakerDAO approved these tokens as eligible collateral, allowing New Silver to mint DAI stablecoins—thus using the value of its real estate loan portfolio to access cash-like liquidity.
Similarly, Ondo’s OUSG token—backed by U.S. Treasuries—can be deposited into Flux Finance, where users mint fUSDC or fDAI. These stablecoins maintain exposure to the underlying yield, while being usable in broader DeFi. It’s a way to turn low-volatility assets into spendable, composable liquidity that flows across a growing network of protocols.
Aave is also experimenting with integrating tokenized money market fund tokens as collateral in future versions of its lending protocol. This pilot, dubbed Project Horizon, showcases the growing interest in bridging traditional yield products with on-chain liquidity—and with it, expanding the investor base from traditional institutions to DeFi-native users.
6. Tokenized Rebundling or Structuring of Existing Assets
Structured finance is a hallmark of TradFi—and tokenization is giving it a Web3 twist. By bundling tokenized assets into new instruments, platforms can create yield tranches, structured notes, or securitized pools with tailored risk-return profiles. These products not only enhance liquidity but also broaden appeal to varied investor types across jurisdictions and risk profiles.
A standout case: Figure Technologies has successfully tokenized and securitized $149 million in 2020 and $355 million in 2025 of HELOCs on Provenance blockchain—underwritten by major banks and rated by S&P/DBRS. The entire lifecycle (origination, pooling, securitization, servicing) was on-chain. As of December 31, 2023, Figure originated, funded, and serviced more than 112,000 HELOCs totaling approximately $7.9 billion in cumulative loan origination. This brought the speed and transparency of blockchain to a complex financial instrument, while reducing friction for institutions.
Another notable example of tokenized structuring comes from Robinhood, which has begun offering tokenized versions of stocks onchain through a custody-backed model for EU users. Unlike a fundraising use case—where a project issues new tokens to raise capital—Robinhood isn’t creating new financial products or sourcing investor funds. Instead, it is repackaging existing stocks (like SpaceX and OpenAI) into programmable token wrappers, making them tradable on decentralized networks. This mirrors the approach taken by projects like Backed Finance or Swarm, which tokenize public market securities without altering the underlying instrument. According to their roadmap, these tokenized asset tokens will be traded 24/7, fractionally owned, or even used as collateral in Web3 environments—demonstrating how tokenized structuring enhances liquidity and composability without requiring new asset issuance.
7. Rehypothecation & Cross-Protocol Collateral Mobility
Perhaps the most transformative use case is the ability for tokenized assets to move between protocols and use cases—fueling liquidity in multiple systems at once and bridging capital across previously disconnected markets.
In Flux Finance, for example, users deposit OUSG and mint fTokens (fUSDC/fDAI), which are then used to back Reserve Protocol’s RTokens. The original Treasury exposure thus flows across multiple layers of DeFi. In effect, the same asset becomes collateral in several systems simultaneously, broadening both liquidity and the reach of capital utilization.
Asset loop: tokenized Treasuries → fTokens → RTokens
Step 1 – Initial collateral: Flux accepts only OUSG, Ondo’s ERC-20 that represents shares in a short-term U.S.-Treasury fund.
Step 2 – First rehypothecation: Users deposit OUSG and borrow fUSDC/fDAI—Flux’s interest-bearing stablecoins, effectively wrapping the Treasury yield into new tokens.
Step 3 – Second rehypothecation: Reserve Protocol now lets projects use fUSDC/fDAI as backing for their own RTokens, so the same T-bill collateral supports a third-layer stable asset.
Figure’s senior DROP token from Centrifuge vaults can be used in MakerDAO for minting DAI, and that DAI can be used elsewhere in DeFi, compounding liquidity and composability. These dynamics help assets circulate beyond their origin platforms into a wider ecosystem of users and protocols.
In institutional finance, Depository Trust & Clearing Corporation (DTCC)’s Tokenized Collateral Network launched in April 2025 demonstrates real-time movement of tokenized collateral (like Treasuries or MMFs) between exchanges, clearinghouses, and repo markets. This “collateral in motion” reduces delays and unlocks intraday liquidity, while connecting institutions globally through a unified, programmable layer of collateral mobility.
Even flash loans are part of the picture. Aave’s V3 flash loan feature allows users to borrow tokens for one block to buy discounted tokenized Treasuries and sell for a profit—without deploying long-term capital. These innovations allow liquidity and market access to spike when needed most—during price dislocations, volatility, or arbitrage windows.
Tokenization doesn’t stop at fundraising or simple trading. As these case studies show, it’s enabling a new class of programmable, composable financial infrastructure. Tokenized assets can now move freely, serve multiple purposes, and reach liquidity levels once unthinkable in traditional finance. But the story is also one of expanding reach—into more markets, more protocols, and more investor profiles. As the Web3 rails continue to evolve, liquidity won’t just be about buying or selling—it’ll be about where, how, and how many ways a tokenized asset can be activated across global financial ecosystems.
In Part 3 of this series, we’ll explore how these new rails are spawning entirely new financial products and utilities that couldn't exist before—native to the Web3 environment. From composable token baskets and dual-purpose stablecoins to on-chain structured notes, we’ll dive into the innovations that stretch beyond liquidity enhancement into the next frontier of tokenized finance.
Disclaimer: This content is for informational and research purposes only. DYOR!
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