Tokenization Has a Paradox Problem

Eli5DeFi identifies a fundamental trade-off across three competing tokenization models: digitally native tokens offer strong investor protections but weak DeFi composability, synthetics enable seamless DeFi integration but concentrate counterparty risk (Backed and Ondo hold 95% of tokenized stocks), and digital twins serve TradFi institutions through permissioned ecosystems launching 2026-2027. The $29.35B in on-chain RWAs versus $354B locked on permissioned platforms suggests the market is still choosing between ownership certainty and composability rather than achieving both.