Tokenization has become one of crypto’s favorite buzzwords, but Grayscale research head Zach Pandl said investors should think of it less as a single transaction and more as a long road map with different winners at different stages.
Speaking at the EthCC conference in Cannes, France, Pandl said the trend is still in its infancy. Tokenized assets – the process of using blockchain rails to settle, transfer and record ownership of all kinds of financial assets such as bonds, funds and stocks – are growing rapidly. However, currently, at $27 billion, this amount still represents around 0.01%, a tiny fraction of global capital markets. This amount is expected to reach almost $19 trillion by 2033, according to BCG and Ripple.
Large banks and asset managers already understand this opportunity. “The two things that institutions are aware of are stablecoins and tokenization,” Pandl said. But they are still trying to determine where to allocate capital to truly benefit from these innovations.
From there, Pandl expects tokenization to happen in phases, with different types of networks and models capturing value at each stage.
The early winners, he said, could be projects that look more like traditional finance, not less.
“In the early stages of the tokenization process, you will see things that are successful and more similar to how the financial system works today,” he said.
This means permissioned, institution-centric systems that solve practical problems like privacy, identity, and control.
Pandl pointed to the Canton Network (CC), backed by Wall Street giants like DRW, TradeWeb, Goldman Sachs and Nasdaq, as a potential winner in this first phase of tokenization.
He said it was a “perfectly reasonable investment” for investors who want shorter-term traction, even though Canton’s approach represents only “a slightly different and slightly improved version” of the current financial system.
The second phase
The second phase of tokenization could be a hybrid model where we have both institutionally owned blockchains and a shared global state, with these networks interconnected and talking to each other. An example of this is Avalanche (AVAX), with hundreds of corporate-owned sovereign chains (called subnets) active but connected to a main Layer 1 network.
Ethereum Ether (ETH), in his opinion, is the biggest but slowest bet. Pandl said he believes the market will eventually move toward “global decentralized finance,” but added that “the technology is not fully ready” and the institutions are not ready either.
This makes ETH the most ambitious investment for those willing to wait for the longer-term move away from financial intermediaries.
There are also pickaxe and shovel games. Pandl pointed to chain-agnostic service providers like Chainlink as another way to get exposure, saying they could be “even more compelling” than some blockchains.
Read more: How tokenized assets could become a $400 billion market in 2026
