Dragonfly: Tokenized Equities May Not Boost Crypto

Rob Hadick’s central concern revolves around what he terms “leakage” – a phenomenon where institutions building private blockchains for tokenized assets create walled gardens that limit broader crypto ecosystem benefits. While speaking with Cointelegraph at the Singapore conference, the Dragonfly general partner explained that when traditional financial institutions develop their own proprietary blockchain infrastructure for tokenizing equities, the value generated tends to remain within their closed systems rather than flowing to public blockchain networks like Ethereum.

This leakage represents a fundamental challenge to the crypto industry’s expectations for real-world asset tokenization. Hadick’s analysis suggests that institutions are primarily motivated by operational efficiencies and economic advantages rather than contributing to the growth of decentralized networks. The development of private, permissioned blockchains by traditional finance players creates parallel systems that may ultimately compete with rather than complement public crypto infrastructure.

Hadick was unequivocal about the advantages tokenization brings to traditional finance. “There’s no doubt it has a big effect on TradFi,” he told Cointelegraph, pointing specifically to 24/7 trading capabilities and improved economics as transformative benefits. The ability to trade tokenized equities around the clock represents a significant operational improvement over traditional market hours, while the efficiency gains from blockchain settlement could substantially reduce costs for financial institutions.

However, the Dragonfly partner expressed skepticism about whether major crypto players would see comparable benefits. His comments specifically mentioned Ethereum as facing unclear advantages from the real-world asset tokenization trend. This perspective challenges the common narrative that tokenization represents a rising tide that will lift all boats in the crypto space, suggesting instead that the benefits may be asymmetrically distributed in favor of traditional finance.

The distinction Hadick draws highlights a crucial tension in the tokenization narrative: while the technology itself may be derived from crypto innovations, its implementation by traditional institutions may not necessarily translate into growth or value for the crypto ecosystems that pioneered it.

Hadick’s analysis at the Singapore conference raises important questions about the future relationship between traditional finance and crypto. If institutions continue developing private blockchain solutions for tokenized assets, the crypto industry might find itself competing with the very technology it helped create. This could potentially limit the anticipated network effects and user adoption that many in the crypto space had hoped tokenization would bring.

The Dragonfly partner’s perspective suggests that the crypto industry may need to develop more sophisticated strategies for capturing value from the tokenization trend. Rather than assuming that all blockchain-based innovation will naturally benefit crypto networks, industry participants might need to focus on creating specific bridges, interoperability solutions, or value propositions that ensure public blockchains remain relevant in the tokenized asset landscape.

As tokenized equities and other real-world assets gain traction, the relationship between private institutional blockchains and public crypto networks will become increasingly important. Hadick’s warning about “leakage” serves as a timely reminder that technological adoption doesn’t automatically translate to ecosystem growth, and that the crypto industry may need to be more intentional about how it positions itself within the evolving tokenization landscape.