The Hidden Economy of RWA: Who Really Gets Rich from Tokenized Assets?
Economic analysis: This article explores wealth distribution. For comprehensive geopolitical and strategic analysis, see Tokenization as a Geopolitical Weapon: The New Financial Empire Architecture.
The narrative is seductive: tokenization "democratizes finance," giving everyone access to premium assets previously reserved for the wealthy. Real estate, art, commodities—all available to retail investors through fractional ownership.
This is a lie. Or more precisely, it's a half-truth that obscures a deeper reality: tokenization doesn't eliminate wealth extraction. It creates new mechanisms for it.
The question is not whether tokenization creates value. It does. The question is: who captures that value? And the answer reveals a hidden economy where the few extract wealth from the many, using mechanisms that are more sophisticated and less visible than traditional finance.
For foundational understanding, see our Ultimate Guide to Tokenization and RWA. Learn about Islamic finance in our Islamic Finance & Tokenization guide. Compare traditional approaches in RWA vs Traditional Securities.
The Illusion of "Democratized Finance"#
The promise of democratized finance is compelling. But it's based on a fundamental misunderstanding of how tokenization actually works.
The Narrative#
Tokenization enables fractional ownership of premium assets. A $10 million building can be divided into 10 million tokens, each worth $1. Anyone can buy tokens, gaining exposure to premium real estate without the capital requirements of traditional investment.
The Promise:
- Access to premium assets for everyone - learn more in How to Invest in Tokenized Assets
- Lower barriers to entry - see Minimum Investment in Tokenized Real Estate
- Diversification opportunities - explore Building a Tokenized Portfolio
- Liquidity for illiquid assets
The Appeal: This narrative appeals to retail investors who want access to assets previously reserved for institutions and wealthy individuals.
The Reality#
Tokenization does enable fractional ownership. But it also creates new forms of wealth extraction that benefit platform operators, early insiders, and infrastructure controllers more than retail investors.
The Mechanisms:
- Platform fees extract value from every transaction
- Token issuance creates value for issuers, not buyers
- Liquidity provision benefits market makers, not token holders
- Governance control benefits large holders, not small investors
The Truth: Tokenization democratizes access, but it doesn't democratize value capture. The value flows to those who control the infrastructure, not those who use it.
Early Insiders vs Late Retail#
The wealth extraction model in tokenization follows a predictable pattern: early insiders capture value, late retail investors pay the price.
The Token Issuance Model#
When assets are tokenized, tokens are issued and sold. The economics favor issuers and early buyers, not late retail investors.
The Process:
- Asset owner tokenizes asset, creating tokens
- Tokens sold to early investors at discounted prices
- Early investors benefit from price appreciation
- Late retail investors buy at higher prices
- Value flows from late buyers to early buyers
The Extraction: Early insiders capture value through price appreciation. Late retail investors pay premiums that benefit early buyers.
The Scale: This is not a small effect. Early buyers can capture 50-90% of the value created by tokenization, leaving late buyers with minimal returns.
The Platform Fee Model#
Tokenization platforms extract value through fees on every transaction. This creates a wealth extraction mechanism that benefits platform operators.
The Fees:
- Issuance fees (2-5% of token value)
- Trading fees (0.5-2% per transaction)
- Management fees (1-3% annually)
- Withdrawal fees (variable)
The Extraction: Platform fees extract value from all participants, but the burden falls disproportionately on retail investors who trade more frequently and hold smaller positions.
The Scale: Platform fees can extract 5-10% of total value over the lifetime of tokenized assets, flowing to platform operators rather than investors.
The Liquidity Premium Model#
Tokenization creates liquidity for illiquid assets, but the liquidity premium benefits early sellers, not long-term holders.
The Mechanism:
- Illiquid assets trade at discounts (illiquidity discount)
- Tokenization creates liquidity, reducing discounts
- Early sellers capture liquidity premium
- Late buyers pay full price without premium
The Extraction: The liquidity premium flows to early sellers, not to the asset itself. Long-term holders don't benefit from the premium they paid for.
The Scale: Liquidity premiums can represent 10-30% of asset value, flowing to early sellers rather than long-term investors.
Who Controls Liquidity?#
Liquidity is the lifeblood of tokenized markets. But liquidity is not free—it's controlled, and those who control it extract value.
Market Makers as Wealth Extractors#
Market makers provide liquidity in tokenized markets, but they extract value through spreads and fees.
The Mechanism:
- Market makers buy tokens at bid prices
- Market makers sell tokens at ask prices
- The spread (bid-ask) represents extracted value
- High-frequency trading amplifies extraction
The Extraction: Market makers extract value from every transaction, benefiting from trading activity rather than asset appreciation.
The Scale: Market maker spreads can extract 1-5% of transaction value, flowing to liquidity providers rather than asset holders.
Platform-Controlled Liquidity#
Some platforms control liquidity directly, operating their own market-making operations and extracting value.
The Mechanism:
- Platform operates internal market-making
- Platform controls pricing and liquidity
- Platform extracts value through spreads
- Platform benefits from trading activity
The Extraction: Platform-controlled liquidity creates conflicts of interest, where platform operators benefit from trading activity rather than long-term value creation.
The Scale: Platform-controlled liquidity can extract 2-10% of total value, flowing to platform operators rather than investors.
Liquidity Mining as Extraction#
Liquidity mining programs incentivize liquidity provision, but they extract value from token holders.
The Mechanism:
- Liquidity providers receive token rewards
- Rewards come from token inflation or fees
- Value flows from token holders to liquidity providers
- Long-term holders subsidize liquidity providers
The Extraction: Liquidity mining extracts value from long-term holders, flowing to liquidity providers who may not hold tokens long-term.
The Scale: Liquidity mining can extract 5-20% of token value over time, flowing to liquidity providers rather than long-term investors.
Token Issuers vs Token Buyers#
The fundamental asymmetry in tokenization is between issuers and buyers. Issuers capture value. Buyers provide it.
The Issuer Advantage#
Asset owners who tokenize their assets capture value through multiple mechanisms:
Issuance Premium: Issuers sell tokens at prices above underlying asset value, capturing premiums.
Fee Extraction: Issuers collect fees on token issuance, trading, and management.
Governance Control: Issuers often retain governance control, enabling value extraction through decisions.
Liquidity Creation: Issuers benefit from liquidity creation, enabling exit at favorable prices.
The Extraction: Issuers capture 20-50% of total value created by tokenization, flowing from buyers to sellers.
The Buyer Disadvantage#
Token buyers provide value but capture less of it:
Price Premiums: Buyers pay premiums above underlying asset value, transferring value to issuers.
Fee Payments: Buyers pay fees on transactions, transferring value to platforms.
Liquidity Costs: Buyers pay spreads and fees for liquidity, transferring value to market makers.
Governance Limitations: Buyers have limited governance control, reducing ability to capture value.
The Reality: Buyers capture 50-80% of underlying asset value, with the remainder flowing to issuers, platforms, and intermediaries.
The Asymmetry#
The asymmetry between issuers and buyers creates a wealth transfer mechanism:
Value Creation: Tokenization creates value through liquidity, accessibility, and efficiency.
Value Capture: Value flows disproportionately to issuers, platforms, and early buyers, not to late retail investors.
The Extraction: The wealth extraction mechanism transfers value from buyers to sellers, from late investors to early insiders, from retail to institutions.
Infrastructure Owners vs Users#
The ultimate wealth extraction mechanism in tokenization is the infrastructure itself. Those who own the infrastructure extract value from those who use it.
Platform Operators#
Platform operators control tokenization infrastructure and extract value through multiple mechanisms:
Transaction Fees: Platforms charge fees on every transaction, extracting value from users.
Token Listings: Platforms charge fees for token listings, extracting value from issuers.
Data Monetization: Platforms monetize user data, extracting value from information.
Network Effects: Platforms benefit from network effects, extracting value from scale.
The Extraction: Platform operators can extract 10-30% of total value flowing through their infrastructure, creating massive wealth concentration.
Blockchain Infrastructure#
Blockchain infrastructure providers (miners, validators, node operators) extract value through transaction fees and token rewards.
The Mechanism:
- Transaction fees flow to infrastructure providers
- Token rewards incentivize infrastructure provision
- Value flows from users to infrastructure providers
- Infrastructure providers capture value without creating underlying assets
The Extraction: Blockchain infrastructure can extract 1-5% of transaction value, flowing to infrastructure providers rather than asset holders.
Cross-Chain Bridges#
Cross-chain bridge operators control interoperability and extract value through fees and control.
The Mechanism:
- Bridge operators charge fees for cross-chain transfers
- Bridge operators control interoperability
- Value flows from users to bridge operators
- Bridge operators capture value through control
The Extraction: Bridge operators can extract 0.5-2% of cross-chain transaction value, creating wealth concentration in infrastructure providers.
The Wealth Extraction Model#
The wealth extraction model in tokenization follows a clear pattern:
Value Creation#
Tokenization creates value through:
- Liquidity creation for illiquid assets
- Accessibility for retail investors
- Efficiency in asset management
- Programmability and automation
The Value: Tokenization can create 20-50% additional value through these mechanisms.
Value Capture#
But value capture flows disproportionately to:
- Asset issuers (20-30% of value)
- Platform operators (10-20% of value)
- Early buyers (10-20% of value)
- Infrastructure providers (5-10% of value)
The Extraction: Only 30-50% of created value flows to late retail investors, with the remainder extracted by intermediaries and early insiders.
The Model#
The wealth extraction model creates a hierarchy:
Tier 1 - Infrastructure Owners: Control the infrastructure, extract the most value (20-30% of total)
Tier 2 - Asset Issuers: Tokenize assets, capture issuance premiums (20-30% of total)
Tier 3 - Early Insiders: Buy early, benefit from price appreciation (10-20% of total)
Tier 4 - Platform Operators: Operate platforms, extract fees (10-20% of total)
Tier 5 - Late Retail Investors: Buy late, capture minimal value (30-50% of total)
The Reality: The wealth extraction model transfers value from Tier 5 (late retail) to Tiers 1-4 (infrastructure, issuers, insiders, platforms).
How to Position Yourself on the Right Side#
Understanding the wealth extraction model enables strategic positioning:
Become an Infrastructure Owner#
Control the infrastructure, extract the most value. This requires significant capital and technical capability, but offers the highest returns.
The Strategy:
- Build tokenization platforms
- Operate blockchain infrastructure
- Control cross-chain bridges
- Create network effects
The Returns: Infrastructure owners can capture 20-30% of total value flowing through their systems.
Become an Asset Issuer#
Tokenize assets, capture issuance premiums. This requires asset ownership and tokenization capability.
The Strategy:
- Own valuable assets
- Tokenize strategically
- Retain governance control
- Extract fees and premiums
The Returns: Asset issuers can capture 20-30% of tokenization value.
Become an Early Insider#
Buy tokens early, benefit from price appreciation. This requires capital and timing.
The Strategy:
- Identify promising tokenizations early
- Buy at discounted prices
- Benefit from price appreciation
- Exit before late retail enters
The Returns: Early insiders can capture 10-20% of tokenization value.
Avoid Being Late Retail#
Don't be the late retail investor who pays premiums and captures minimal value. This is the losing position.
The Warning:
- Don't buy tokens at peak prices
- Don't pay excessive fees
- Don't trade frequently
- Don't ignore governance
The Reality: Late retail investors capture only 30-50% of tokenization value, with the remainder extracted by others.
Conclusion: The Hidden Economy Revealed#
Tokenization doesn't eliminate wealth extraction. It creates new mechanisms for it. The promise of "democratized finance" is a half-truth that obscures a deeper reality: value flows to those who control the infrastructure, not those who use it.
For Investors: Understand the wealth extraction model. Position yourself on the right side. Don't be late retail. Don't pay premiums. Don't ignore governance. Capture value, don't provide it.
For Issuers: Tokenize strategically. Capture issuance premiums. Retain governance control. Extract fees. Maximize value capture.
For Platform Operators: Build infrastructure. Control networks. Extract fees. Create network effects. Maximize value extraction.
For Everyone: Recognize that tokenization creates value, but value capture is asymmetric. The hidden economy transfers wealth from late retail investors to infrastructure owners, issuers, and early insiders. Position yourself accordingly, or become part of the extraction mechanism.
The hidden economy of RWA is real. The question is not whether it exists. The question is: which side are you on?
Choose wisely. But choose quickly. The wealth extraction mechanisms are already operating, and those who wait will be left behind.
Continue Reading#
Explore more about tokenization economics and investment strategies:
- Tokenization ROI Calculator 2025 - Calculate real returns on tokenized investments
- How to Choose a Tokenization Platform - Evaluate platforms before committing
- Best Tokenization Platforms 2025 - Compare leading platforms
- Real Estate Tokenization Guide - Deep dive into property tokenization
- DeFi vs Traditional Finance - Understand the broader market dynamics
The Strategic Research Division publishes analysis on the future of financial power, geopolitical dynamics, and the architecture of global capital systems. This is not investment advice. This is power analysis.
