TradFi is building Ethereum L2s to tokenize trillions in RWAs

TradFi’s Push for Ethereum L2s to Tokenize Trillions in Real-World Assets

Traditional finance (TradFi) institutions are increasingly turning to Ethereum Layer 2 (L2) solutions to tokenize real-world assets (RWAs), aiming to unlock trillions in value. This shift, driven by firms like Securitize, Ethena, and Ant Digital, leverages Ethereum’s ecosystem to bridge the gap between regulated finance and decentralized systems, despite criticisms of L2s’ centralization.

Why Ethereum L2s?

Ethereum dominates RWA tokenization, holding 58% of the $22.6 billion tokenized market as of May 2025, with L2s like ZKsync Era securing $2.19 billion. TradFi giants like Goldman Sachs and JPMorgan are unlikely to build on competing Layer 1s like Solana, favoring Ethereum’s established trust and infrastructure. L2s offer scalability, with potential speeds of 100,000 transactions per second, and can be tailored for regulatory compliance—key for institutions. Securitize and Ethena’s Converge L2, for instance, integrates permissioned DeFi apps like Aave Horizon, ensuring compliance while maintaining Ethereum’s security.

Major Players and Projects

Securitize, the largest tokenization firm, collaborates with Ethena on Converge, expecting $1.2 billion in stablecoin inflows on launch day. Ant Digital’s Jovay L2 focuses on renewable energy assets, while Robinhood’s acquisition of WonderFi introduced Wonder L2 on ZKsync’s network. Deutsche Bank is also building an L2 with Matter Labs’ ZKsync technology, aiming for a public yet permissioned system to address compliance concerns, as noted in posts on X reflecting institutional momentum.

Benefits and Challenges

L2s reduce costs and enhance liquidity for RWAs like U.S. Treasuries and commodities, which TradFi has already tokenized to the tune of billions. However, L2s sacrifice some decentralization, a trade-off critics argue contradicts crypto’s ethos but suits TradFi’s need for control. Scalability and interoperability issues persist, and while Ethereum’s base layer leads, the complexity of L2 ecosystems could fragment liquidity if not addressed.

The Bigger Picture

TradFi’s move signals a broader convergence with DeFi, potentially transforming finance by making illiquid assets like real estate tradable 24/7. Standard Chartered predicts a $30 trillion tokenized market by 2034. Yet, the reliance on Ethereum L2s raises questions about long-term decentralization and whether these solutions can truly scale without compromising security or user autonomy. For now, TradFi’s bet on Ethereum L2s is reshaping how trillions in RWAs are managed, blending the best of both financial worlds.