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Tokenization’s inflection point will arrive when institutions start making their onchain capital productive
Tokenization is taking off right now, but some people are spending too much time just putting assets on blockchains instead of making them useful, according to Jillian Friedman, COO of Symbiotic.
"If you really want to unlock what's possible, tokenizing something is not the final destination," Friedman said, pointing out that the majority of tokenized assets are just representations of something that exists off-chain.
"The more you can bring the value chain of an asset onchain, the more that asset can work in other markets," she said.
Friedman thinks it makes sense to start with lower-hanging fruit such as tokenizing liquid assets like money market funds and public equities, as they give institutions something to test, risk committees something to approve, and the market gets time to develop trust in the infrastructure.
The more interesting conversations Friedman is having involve private credit, alternative assets, and structured products. These are things that currently trade on what she describes as "an email chain,” with liquidity windows that open once every six months if you're lucky.
The core issue, she argues, is that you can tokenize a private credit fund and deploy it in DeFi, but if the redemption cycle is still dictated by the underlying fund's terms, the token is just a digital wrapper around an analog process.
Symbiotic sees an opportunity to address that gap with its recently launched secondary market product, LiquidLane. Financed by pooled capital that earns yield from multiple sources simultaneously, the product provides an exit path that lets holders sell their position without waiting for the redemption window.
"You need to be able to know that you can exit the position," Friedman said. "It needs to be clear, it needs to be programmatic."
One question she keeps coming back to is the one risk committees are asking: is the juice worth the squeeze? Tokenizing something can introduce new risks, such as smart contract exposure, regulatory uncertainty, or even reputational risk for trying something new. For an institution to absorb those risks, the benefits need to be concrete.
Not "we upgraded our tech stack," but "this asset can now be used as collateral in lending markets," or "we now have secondary market pricing that doesn't exist anywhere else," she said. "It has to be worth it. That's a big part that people miss."
The inflection point she's watching for is when institutions start deploying their parked onchain capital in ways that compound its value.
Pure DeFi protocols already show what this looks like in miniature, with lending protocols like Aave and Morpho, or vaults like those built on Maple Finance, providing assets that are being put to work continuously.
The version of that for traditional institutional capital hasn't arrived yet, but Friedman thinks it's closer than the market realizes.
Check out the next section for more details and the full episode.
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The latest Talking Tokens podcast 🎙️
For today’s episode, I interviewed Jill Friedman, Chief Operating Officer at Symbiotic, to talk about what it actually takes to make tokenization work at scale, ranging from why 94% of tokenized real-world assets are still bought directly from the issuer, to how Symbiotic's LiquidLane gives investors an instant exit from illiquid RWAs, to why she doesn't see CeFi and DeFi as opposing camps.
Jill Friedman breaks down why she thinks institutions are tokenizing the easiest assets first instead of the most useful ones, what actually makes an asset "digitally native," and her honest answer for what it really takes to get a risk committee to say yes.
TIMESTAMPS:
00:00 Introduction to Jill Friedman and her background
02:50 Why Jill transitioned from law to crypto and her early interest in Bitcoin
03:32 The appeal of DeFi and Symbiotic's focus on both C-Fi and DeFi
05:30 The future integration of centralized and decentralized finance
06:56 How digital native assets differ from off-chain assets
08:35 The spectrum of digital nativeness and tokenization challenges
11:25 Market readiness and infrastructure needs for tokenized assets
14:33 Long-term outlook: the inflection point for tokenization and DeFi
17:42 Regulatory and risk considerations for institutional adoption
21:24 LiquidLane: solving liquidity and exit challenges for RWAs
29:34 Future of tokenized assets and market evolution
31:48 Jill's advice for navigating the crypto space
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Please note this content is for informational and educational purposes only. Any views shared should not be considered financial advice, nor should it be used to make investment decisions. Cryptocurrencies are high risk and you should consult a financial professional before making any financial decisions. Make sure you do your own research. We may have a direct or indirect financial interest in content mentioned in this newsletter.