Research September 2024 9 min GDA Research

01 Capital and attention have concentrated on issuance and custody — the supply side — where the problems are legal and technical and therefore tractable.

02 Distribution has received comparatively little, because it is a commercial problem rather than an engineering one.

03 The result is a market with credible supply infrastructure and almost no retail-facing demand infrastructure.

04 Rewards networks are the most plausible distribution rail available, because they already hold consumer attention and a redemption relationship.

05 The firms that own distribution will capture more of this market than the firms that own issuance.

It is now possible to structure, issue, custody, and settle a tokenized real-world asset within recognised regulatory regimes in several jurisdictions. The legal wrappers exist, institutional custodians have entered, and transfer agency and settlement have credible providers.

This is genuine progress and it absorbed most of the capital deployed into the sector. It is also, increasingly, commoditised. Where several providers can perform the same function under the same regime, margin compresses toward cost.

The implicit assumption was that once issuance worked, demand would find it. It has not, for a straightforward reason: no consumer-facing surface exists where a person encounters a tokenized asset in the ordinary course of their day.

Institutional demand is intermediated by allocators who already have access. Retail demand has no comparable route. The exchanges that could serve it are optimised for trading rather than holding, and the products they list are selected for volume, not suitability.

The gap is not regulatory. It is that nobody has built the place where an ordinary person acquires a fractional interest in a real asset without deciding to become an investor first.

A rewards network solves the two problems distribution actually faces: attention and a redemption relationship.

It holds attention because users are already there for reasons unrelated to investing — games, predictions, communities, campaigns. Acquisition cost is already paid.

It holds a redemption relationship because the user already expects to convert an earned balance into something real. Extending that catalogue from goods and experiences to fractional interests in real assets is an inventory decision, not a behavioural one. The user is not asked to change what they do; they are offered a new thing to redeem for.

This is a materially lower barrier than any route that requires a person to open a brokerage relationship and form an investment intention.

Three components are missing and none are exotic.

A redemption layer that can hold both conventional inventory and fractional asset interests in the same catalogue, with the disclosure obligations that the second category carries.

A suitability and compliance layer appropriate to a consumer audience — lighter than a brokerage onboarding, sufficient for the jurisdiction and the instrument.

Inventory relationships on the asset side, which is the part that resembles conventional capital markets work and where an institution with issuance relationships has an obvious advantage over a consumer application.

In most maturing markets, the participant closest to end demand captures a disproportionate share of the economics, because supply competes for access to it.

There is no strong reason to expect this market to behave differently. Issuance is becoming a service. Distribution is becoming the scarce asset.

The strategic implication for anyone positioned across both is to treat issuance capability as the qualification for participation, and distribution as the business.

Issuance and structuring Mature · multiple credible providers

Custody and settlement Mature · institutional entrants

Secondary liquidity Developing · venue-dependent

Consumer distribution Largely unbuilt