Woofun AI reports that Blockchain Capital partner Aleks Larsen identifies a fundamental 'packaging' inefficiency in global finance, where fragmented record-keeping systems for mortgages, private funds, and shares create massive hidden costs and prevent the free flow of capital across institutions.

The core issue lies in the separation of asset records into disparate systems: a mortgage is a complex bundle of contracts, PDF files, databases, and post-loan management relationships; an ownership stake in a private fund might be merely a line in an application form and a transfer agent sheet; and share ownership is scattered across records held by brokers, custodians, and securities depositories. When an asset moves from one institution to another, these original records must be broken down, verified, checked, and re-registered according to the recipient's specific rules, a process driven solely by the fact that different institutions use varying methods to record the same underlying asset or right.

This fragmentation results in huge hidden costs worldwide, as global balance sheets account for nearly $180 trillion in assets, much of which cannot flow freely between institutions unless specialized processes are designed for them. These frictions significantly slow down the speed at which capital can be redirected toward new businesses, infrastructure, housing, and other productive uses, creating a structural barrier to economic efficiency.

Tokenization addresses this problem at its core by providing a standardized, machine-readable interface for assets or financial rights. When assets can be identified and used within a shared network, trading platforms, lending institutions, custodians, asset service providers, and software applications can interact with them directly, without having to rebuild financial infrastructure each time. This allows capital markets to be built on a universal, programmable underlying network, enabling smoother flow, settlement, and utilization of assets. The best analogy for understanding how tokenization will change the world is containerization, which revolutionized global trade by standardizing the physical movement of goods.

Before the 1960s, goods were transported in various forms: coffee was packed in burlap sacks, machinery was placed in wooden crates, cotton was bundled, and oil was stored in barrels. Each commodity had different handling requirements, so every ship relied on manual labor for loading and unloading, with skilled dockworkers developing a whole set of techniques around this task—arranging goods as tightly as possible, balancing weights, and securing them to prevent movement or damage at sea. This skill was essential because there were no unified standards for shipping packaging at the time, resulting in ships spending more time in ports than at sea. Bulk goods required repeated loading, unloading, and counting when transferred between ships, trains, trucks, and warehouses, making them more prone to damage, loss, or theft, which created significant inefficiencies in global supply chains.

In 1956, freight entrepreneur Malcolm McLean converted an oil tanker into the Ideal-X, equipped with 58 detachable truck containers, and sailed it from Newark Port to Houston. Upon arrival, trucks could transport the goods straight away without opening the containers, and the loading and unloading cost for the Ideal-X was only $0.16 per ton, about 36 times cheaper than traditional bulk freight transport. Thus, modern maritime containers were born, and over the next 20 years, standards for container size, connection mechanisms, and load capacity were gradually established.

The entire supply chain began to reorganize around these standardized containers, allowing further specialization across various stages: ships adopted vertical compartments to enable safe stacking of containers; cranes were designed for fast, standardized lifting; truck chassis and railway cars used uniform sizes and fixing devices; and ports evolved into large hubs for efficient transfer of containers between different modes of transport.

The most direct impact of containerization was a significant reduction in transportation time and cost, with shipping time from Australia to Europe dropping from 70 days to 34 days, and shipping capacity increasing by four times. International trade increasingly focused on manufactured goods and intermediate products, and companies began to split production processes across different countries, while new logistics companies emerged to coordinate the increasingly complex global networks.

A deeper impact was the substantial growth in economic activity, with the World Bank estimating that within 15 years after both parties in trade adopted containers, bilateral trade between developed countries increased by 1,240%. Containerization and the resulting infrastructure restructuring enabled the large-scale expansion of global supply chains and significantly accelerated world economic development, demonstrating the power of standardized interfaces in reducing friction.

Tokens are standardized containers that carry financial rights, holding not goods but rather ownership of assets, rules for transfer, cash flows, permission requirements, and other status information. In other words, tokens record who owns an asset, how it can be transferred, what cash flows it generates, and what operations software can perform on it. Once an asset has a machine-readable interface, trading platforms can offer transactions for it, lending markets can accept it as collateral, custodians can store it, and wallets can receive and manage its cash flows. Software applications can directly identify assets and apply corresponding rules, without needing to negotiate and connect with each relevant institution separately, which is the fundamental difference between tokenization and simply 'electronicizing documents' or 'adding a database': all participants can identify and use the asset according to the same standard.

Stablecoins illustrate the potential of tokenization most clearly, as traditional international wire transfers usually require going through a network of correspondent banks, taking days to complete a dollar transfer, while stablecoins can reach anywhere in the world in seconds, with near-zero on-chain transfer costs. This is because a global network has already formed, consisting of trading platforms, custodians, fiat-to-stablecoin conversion services, payment processors, and wallets, all of which can recognize the token interface of stablecoins, functioning like ports, cranes, trucks, trains, and ships in the financial world.

Much of this infrastructure was initially built for Bitcoin and Ethereum, but once such facilities existed, stablecoins and other tokens could flow along the same network, with activity around stablecoins further attracting users, liquidity, applications, and infrastructure. The results are already evident, with the current supply of stablecoins around $300 billion, transaction volumes approaching those of Visa, and capital turnover rates about 10 times higher than those of traditional M1/M2 currencies, giving hundreds of millions of people around the world more reliable access to dollars and payment options.

Today, this highly active pool of dollar funds is attracting other assets onto the on-chain space to accommodate this stablecoin capital, with the scale of on-chain tokenized assets other than stablecoins close to $40 billion, about 10 times that of two years ago, with growth accelerating. These assets include Treasury bonds, money market funds, commodities, private credit, stocks, and fund shares, with hundreds of issuers involved, as shown by data from RWA.xyz.

The natural next step is to bring the business processes behind financial assets onto the chain as well, such as Tare, an investment made by Blockchain Capital, which is bringing loan issuance, duration management, and securitization onto the chain, using tokens to record complete duration information for each underlying loan. Through lightweight software and a transparent market, Tare can replace the costly and multi-step lending processes of traditional systems, allowing lenders and borrowers to record and verify tokenized loans in the same ledger, which not only reduces lending costs but also makes loans easier to use as collateral in various on-chain applications, thereby attracting more assets and capital into the tokenized network.

Woofun AI notes that similar opportunities exist for every asset class, as seen in Aave, which allows users to use eligible tokens as collateral to obtain funds from lending markets at floating interest rates, with relevant rules encoded in the protocol and whether an asset can be used as collateral determined by asset-specific standards.

This is vastly different from the structure of traditional lending markets, where individuals or businesses wanting to obtain a loan using an asset usually need to find an institution first, which controls access channels, evaluates borrowers according to its own processes, and provides products through its networks.

On Aave, the real criterion for access is the asset itself, with smart contracts identifying tokens, enforcing transparent rules, and connecting them to the capital market, changing the logic of accessing financial services so that they now revolve around the asset itself, rather than depending on the relationship between the asset holder and an institution.

In other words, tokens give assets executability similar to software, allowing different applications to provide services such as trading, financing, payment, and fund management around that asset, with issuers only needing to list the asset on the chain once to integrate it into various applications, without having to build a separate system for each use case.

This will also transform the organizational structure of financial institutions, as banks, securities firms, and asset management companies currently typically offer bundled services such as custody, underwriting, liquidity, asset management, compliance, and distribution within closed product systems. Cryptographic networks allow these functions to be separated and specialized, with one institution responsible for issuing and managing loans, while others provide funding, assess risks, execute transactions, offer insurance, or develop applications using that asset.

Assets can flow between different professional services through a unified interface, without needing to be re-registered and connected each time they enter a service provider's system, shifting scale advantages from individual institutions to the entire network. In traditional financial systems, large institutions can support more products because they have the capacity to bear the fixed costs of building infrastructure for different assets and customer groups, but in public cryptographic networks, much of the infrastructure is shared among all participants, allowing new service providers to access existing assets, funds, and user networks without having to rebuild ledgers, trading, custody, and settlement systems.

This not only reduces system construction costs but also lowers the barriers for new service providers to enter the market, with the network effect of stablecoins having crossed the tipping point and begun to self-reinforce, leading capital markets to increasingly reorganize into open service networks built around tokenized assets.

In this new paradigm, competition among institutions will focus on who can provide better capital, underwriting, risk management, asset services, and distribution, rather than who owns the database or controls the only entry point for customers into the market. The most important outcome of this transformation is the creation of a global capital market, as today's capital markets remain constrained by financial institutions, with most individuals and businesses unable to access capital markets directly and only able to choose from limited products offered by institutions willing and able to serve them.

Which customers to serve, which regions to cover, which asset classes to support, and what volume of transactions to handle are all decided by institutions, while investors face similar limitations, unable to access all global assets and only able to invest in those that have been underwritten, packaged, integrated, and distributed by institutions.

As a result, much of the global economic value remains outside the reach of existing capital markets, with small accounts receivable, local infrastructure, private enterprises, emerging market credit, and non-traditional cash flows having real economic value but being too small, too fragmented, lacking market recognition, or too far from major capital centers to afford the high costs required by traditional financial systems for financing.

Tokenization provides a standardized interface for assets, allowing them to be discovered and used within the global financial network, and as financial systems reorganize around this interface, the cost for all participants to enter the market will drop significantly. Financial functions will be able to be embedded directly into various software, just like payment and data interfaces, with developers building specialized services for specific asset classes and regions, enabling capital markets to reach areas that were previously difficult to access.

Business applications that previously struggled to obtain complex financial services can also integrate functions such as payment, working capital financing, collateral management, and fund management directly into their systems, allowing many idle or untapped assets to enter the on-chain capital market. Of course, tokenization does not magically make assets that lack financing conditions eligible for financing, but in the long run, it can enable many high-quality assets that are currently isolated from capital markets due to structural reasons to participate, with AI further amplifying this change by helping to handle complex aspects of asset evaluation and operation.

AI agents can evaluate assets, price risks, allocate capital, manage collateral, and settle transactions in this global, efficient, and machine-readable market, further reducing the cost of providing financial services. Driven by AI and cryptographic infrastructure, markets that are currently highly dependent on customization and discontinuous trading have the potential to become continuously operating, globally covered, and increasingly automated markets, creating more opportunities around the world and gradually freeing capital from institutional constraints.

Capital allocation is one of the core mechanisms determining the flow of social resources, deciding which companies can expand, which technologies can be scaled up, which homes and factories will be built, and which regions can develop. In today's financial system, some assets may be too small, too regional, too structurally unique, or have too high management costs to warrant dedicated resources for evaluation and financing, but once the costs of finding, financing, and managing these assets drop significantly, they may re-enter capital markets, representing another deeper impact of containerization.

Containers not only reduced transportation costs but also made entirely new trade and production models economically viable, with goods being produced where costs are lowest, assembled elsewhere, and sold globally, as the cost of coordinating this network has dropped significantly. Tokens can have a similar effect on capital, with global balance sheets expected to evolve from a set of isolated records into a market that software can directly identify and access over the next few decades. Capital will flow more based on asset quality and return potential, rather than solely to institutions that control market access, and if the development of stablecoins serves as a guide, this change could drive significant expansion of global capital markets and reach areas that have never been truly covered before, marking a fundamental shift in how value is created and distributed globally.