Each issuer operates in its own ecosystem. Could 1,000 RWAs turn into 1,000 silos?
1/ Last time, we talked about liquidity fragmentation across chains. This time, let’s take it a step further: even if all chains are connected, what would make different issuers trust one another’s compliance systems?
The answer may be more pessimistic than you think—even if everyone uses the same token standard, the silo problem still remains
2/ The state of the industry: every platform is building its own end-to-end system
Mainstream views clearly acknowledge this: the RWA market is still in its early stages and highly fragmented—almost every platform uses its own tech stack, making interoperability and scaling difficult. Even the creators of the ERC-3643 standard admit that the next challenge to tackle is fragmentation “across chains and virtual machines.”
3/ The more counterintuitive truth: a unified token standard doesn’t mean unified trust
The industry’s most widely recognized compliant token standard is currently ERC-3643 (T-REX), which embeds identity verification and compliance rules directly into token contracts. But here’s the key issue: its compliance logic is “issuer-specific,” rather than based on a shared, open standard—identity credentials aren’t portable between different issuers.
In other words, completing KYC on Ondo’s platform doesn’t mean your identity will be recognized on Securitize’s or Franklin Templeton’s platform—you have to go through the process again. The standards unify the outer framework, but each issuer still manages its own identity and compliance logic.
4/ Why this happens: the cost of customization is isolation
Industry analysis has highlighted this trade-off directly: control and customization come at a cost—the cost is deeper fragmentation. If every issuer builds its own access layer, its own standards, and its own redemption paths, cross-platform interoperability becomes more difficult, and branded islands begin to form.
Every issuer has an incentive to keep users, compliance processes, and redemption channels within its own ecosystem—that’s commercial logic, not a technical failure.
5/ The industry is fighting two different battles, not just one
Beyond incompatibility between issuers, the market is also splitting in two directions: on one side are open ecosystems with “compliance built into the blockchain,” such as ERC-3643 and Token-2022; on the other are “private ledgers”—capital-intensive but completely closed systems favored by banks, which may not even plan to adopt public blockchain standards. Fragmentation isn’t happening only among crypto-native players; it’s also emerging between the two major camps of “open blockchains” and “closed bank ledgers.”
6/ Mapping this back to the four tokens
• $ONDO: A textbook example of a “brand island”—the KYC identities and redemption channels for USDY and OUSG are currently confined to its own system. That’s the problem being discussed here, not the solution.
• $LINK: CCIP, discussed in the previous installment, addresses cross-chain messaging and asset transfers. But the lack of mutual recognition of identity and compliance between issuers is a higher-level problem, currently outside its core scope—an important distinction to make honestly.
• $UNI: In theory, it could become a “neutral meeting point” for assets from different issuers. But that depends on liquidity pools being willing to accept multiple, disconnected issuer-specific compliance identity systems at the same time—a possibility that has yet to be validated at scale.
• $HYPE: Because it trades exposure to derivatives rather than the underlying securities themselves, it largely sidesteps this entire problem of compliance silos across multiple issuers. That’s what structurally sets it apart from the other three.
7/
The industry consensus is that “the long-term trend is toward coordination rather than fragmentation, but full convergence may still take years.” Organizations such as the ERC-3643 Association are already trying to reduce fragmentation through unified claim standards and compliance modules. But this looks more like a prolonged effort requiring years of negotiation than a technical upgrade that can solve everything at once.
8/
Risk warning: The timeline for standards convergence is highly uncertain. Issuers may lack the commercial incentive to proactively open up compliance identities, and whether private bank-ledger networks will eventually adopt public-chain standards remains unknown.
Purely an analysis of industry structure; not investment advice. DYOR.