Asset tokenization opens the door to new forms of investment, fractional ownership and global access to traditionally closed markets.
However, Liquidity —the ability to buy or sell a token without significantly affecting its price—remains one of the main bottlenecks.
In this article, we address the real liquidity challenges faced by tokenized assets and we explore applicable solutions to improve operability and market share.
Why is liquidity so important?
Liquidity isn't a luxury: it's a requirement for a market to function efficiently. A tokenized asset without sufficient liquidity can result in:
- Hard to sell (low output)
- Volatile (unstable prices)
- Unattractive to institutional investors
Key fact: According to the World Economic Forum (2020), 90% of the world's assets are “illiquid” or difficult to exchange.
Tokenization can help solve it, but only if it is accompanied by appropriate mechanisms.
Main liquidity challenges in tokenized assets
1. Lack of regulated secondary markets
Many tokens represent real-world assets (real estate, private company shares, commodities) that they cannot be freely listed on public exchanges due to legal restrictions.
This prevents immediate access to liquid secondary markets.
Solution:
Create authorized private markets (ATS, MTFs) or use tokenized platforms with regulatory license, such as INX or tZero.
2. Excessive market segmentation
Each project creates its own token, its own standard and its own platform. This creates an ecosystem fragmented, where liquidity is distributed across multiple small pools.
Solution:
Adopt common standards (ERC-20/ERC-1400, etc.), interoperability between platforms and using widely supported blockchain networks (such as Ethereum, Polygon or BASE) to consolidate liquidity.
3. Passive or absent inverters
In many cases, the tokens are in the hands of investors who They are not actively participating in the market. This reduces rotation and the depth of the order book.
Solution:
Implement liquidity incentives, such as staking with rewards, volume rebates, or market-making programs.
4. Regulatory Limitations
Tokens that represent securities, economic rights, or fractional ownership can be considered financial securities, which limits their free movement without complying with legal requirements.
Solution:
Legally structure tokens from the start (as security tokens if necessary), and work with legal advisors to ensure legal transferability in each jurisdiction.
5. High transaction costs
In certain networks, high commissions (gas fees) dissuade users from making small transactions, directly affecting retail liquidity.
Solution:
To use scalable or L2 networks with reduced costs (such as Arbitrum, Polygon, Base) and enabling automated trading with efficient smart contracts.
6. Absence of adapted DeFi infrastructure
Unlike purely crypto tokens, many tokenized assets cannot be directly integrated into DeFi platforms, for reasons of custody, legality or interoperability.
Solution:
Develop specific DeFi infrastructure for real asset tokens, such as loan protocols or regulated MMAs, and promote alliances between issuers and DeFi platforms.
Practical Strategies for Improving Liquidity
Create secondary markets from the start of the project
Anticipating the need for liquidity allows us to design parallel trading channels at launch.
This can include agreements with exchange platforms, building your own marketplace, or collaborations with DeFi pools.
Establish incentive and reward programs
Use token rewards or reduced commissions for reward purchasing/selling activity helps to energize markets.
You can also use mechanisms such as:
- Liquidity mining
- Volume Bonuses
- Programs for first time participants
Integrate oracles and price data
Count on Reliable Price Oracles allows you to power DeFi applications and increase market confidence.
This is essential for low-volume tokenized assets, where prices could be easily manipulated.
Partnering with traditional financial players
Platforms that collaborate with brokers, funds or investment banks can attract more institutional liquidity, especially if they offer secure Fiat entry/exit ramps and full compliance.
Cases that solved the liquidity problem
TZero
Regulated token security platform with institutional support. It has been able to legally list and trade tokenized assets, including tokenized shares of private companies.
Keys to your success:
- Full compliance with the SEC
- Simple user experience
- Alliances with Large Issuers
Centrifuge
It allows you to tokenize real-world invoices and assets, connecting them to DeFi to receive liquidity. It uses pools like Tinlake so that tokens can be used as collateral in loans.
Results:
- +250 million tokenized dollars
- Integration with MakerDAO and Aave
Conclusion
Tokenization has the potential to unlock trillions in illiquid assets, but that potential only materializes if it is guaranteed The liquidity of the issued tokens.
It's not enough to represent an asset digitally: it's necessary Build the conditions so that asset can be traded in a smooth, secure and legal manner.
As the sector evolves, projects that think about liquidity from day one will survive and scale.
Are you tokenizing an asset and want to secure its liquidity?
In Unknown Gravity we help design tokenized ecosystems with trading infrastructure, legal strategy and DeFi compatibility right out of the box.
Request a free consultation and avoid costly mistakes.