Tokenization in Theory and in Practice: Lessons Learned from Tokenization Experiments All Around the World

Tokenization is an emerging and rapidly growing trend in the field of digital finance, carrying significant implications across academic, industrial and policy sectors. By combining lessons learned from tokenization experiments all around the world with a rigorous theoretical analysis, this paper seeks to bridge the knowledge gap between tokenization theory and practice. It first introduces three dimensions for evaluating the feasibility and necessity of tokenization: “Can it be tokenized?”, “How to tokenize?” and “Why tokenize?”. It also establishes five dimensions to assess the suitability of various asset types for tokenization: existence form, method of property rights verification, holding method, trading and settlement methods and regulatory requirements. Following this tokenization evaluation framework, the paper analyzes the tokenization prospects of major asset types, including the tokenization of currency, securities, funds, investment products and real-world assets. It finds that tokenization, while conceptually promising, may not yield practical benefits across all asset classes and in all application scenarios. This paper concludes by suggesting a pecking order of tokenization and a to-do list for tokenization infrastructure.