Total value locked (TVL) has become the scoreboard through which projects signal relevance, traction and supposed credibility. But chasing TVL, especially in the context of tokenised traditional assets, is one of the biggest misconceptions holding the sector back. When it comes to stocks, gold and other deeply liquid real-world assets, you don’t need billions in on-chain liquidity to prove that tokenisation works. In fact, making TVL the goal pushes tokenisation into the hands of only the most well-capitalised players. We know that some tokenisation platforms require as much as $30–$70 million to bootstrap the liquidity to spin up a single automated market maker (AMM) pool for just one tokenised asset. That alone excludes smaller decentralised finance (DeFi) teams who want to dip their toe in this space and shuts out traditional financial institutions who want to test tokenised equities but are not about to move eight figures on-chain just to “try something”. This approach fundamentally misunderstands what tokenisation is for. Tokenisation’s promise is not to recreate the liquidity of Nasdaq or the NYSE on day one; the promise is to connect those worlds, securely, compliantly and automatically, so the depth of traditional markets can be leveraged on-chain, without needing massive pools of idle capital. And that’s where automation becomes the breakthrough.
Source: X
Traditional market depth is the missing ingredient
The overwhelming majority of liquidity for assets such as Apple stock, gold, or U.S. Treasuries already sits within traditional markets. That liquidity is regulated, deep, and globally accessible. Tokenization doesn’t need to recreate these markets from scratch; it simply needs to connect them to DeFi. A hybrid model is now emerging that allows smart contracts to draw on traditional market liquidity during normal trading hours while still gaining the benefits of 24/7 programmability on-chain. According to US broker Robinhood, 25% of its trading volume falls outside of market hours, indicating there is a demand for off-hours trading. When the connection between TradFi and DeFi is built correctly, a smart contract can trigger a genuine buy or sell order in traditional markets, settle that transaction in real time and immediately reflect the outcome on the blockchain. Crucially, this removes the need for enormous amounts of on-chain TVL to sit idle in a DeFi pool just to create the illusion of liquidity. The result is a system that blends the strengths of both worlds. Users benefit from the real liquidity and price discovery that traditional exchanges provide, while also gaining the instant settlement, programmability and transparency that blockchain enables. They retain the self-custody and composability that define DeFi and simultaneously access the asset integrity that exists in regulated markets. However, achieving this at scale is only possible with full automation. Without automated processes linking traditional financial infrastructure to on-chain environments, the hybrid liquidity model cannot function efficiently or reliably.
Hidden complexity behind tokenisation
Bridging traditional markets and blockchain sounds straightforward in theory, but the reality is far more complex. Legacy Web2 systems were never designed to interact easily with Web3, which means every part of the process, from identity verification to order routing, settlement and custody, has to be stitched together with precision. At Swarm, it required more than 30 onboardings to find the right infrastructure that would enable a smart contract to initiate a fully compliant buy or sell order in traditional markets. When a user purchases $100 of tokenised Apple stock on Swarm, the process that unfolds behind the scenes is highly orchestrated. The user sends USDC to SwarmX, which then converts it into fiat currency and executes a real-world Apple stock purchase through a network of regulated brokerage partners. The shares are placed into institutional custody and only once the underlying asset is securely held is a token minted on a one-to-one basis to represent the position. That tokenised Apple stock is then delivered directly to the user’s wallet, where it behaves as a fully programmable, self-custodied digital asset. When the user chooses to redeem, the entire flow runs in reverse, ensuring that the token maps precisely back to the real-world asset it represents. This is not synthetic exposure, and it is not a marketing abstraction. It is fully backed, compliant infrastructure that turns traditional assets into automated, machine-readable instruments. And it represents the foundational step toward truly programmable financial markets, markets that AI agents can understand, interact with and execute within autonomously.
Why this matters for future financial markets
AI agents are about to become active participants in financial markets, handling everything from portfolio rebalancing to collateralisation, risk assessment, treasury management and automated trading. But for them to function properly, markets must be machine-readable, instantly actionable and free from the frictions of today’s legacy systems. An AI agent cannot “wait until Monday” for markets to open, open a bank account in order to onboard with an online broker, or interpret fragmented, non-standardised data. It needs assets and liquidity that are available 24/7 and can be interacted with programmatically. Tokenisation creates this bridge. By bringing major traditional assets like equities and gold onto the blockchain in fully backed, compliant, redeemable formats, tokenisation turns them into digital objects that AI agents can understand and act on. But this only works if the underlying infrastructure is deeply connected to traditional liquidity and allows fast, automated movement between the two worlds.
Automation is the critical enabler. Without it, tokenised assets remain static representations rather than live, executable financial instruments. Automated tokenisation allows smart contracts, and eventually AI agents, to trigger real buy and sell orders, settle instantly, access market liquidity and treat traditional assets as if they were digitally native. This is why automated tokenisation is the foundational step toward AI-ready financial markets. It transforms traditional instruments into building blocks, enabling a future where assets can be traded, settled and utilised autonomously, around the clock, in globally liquid financial systems.
This article first appeared in Digital Bytes (2nd of December , 2025), a weekly newsletter by Jonny Fry of Team Blockchain.