Tokenization becomes the test of whether AMMs capture on-chain liquidity or get bypassed

The number Adams is pointing at is real, but its composition is the problem for his own product. Most of the $18 billion, a figure 18 times its 2022 level ^[3], is tokenized U.S. Treasuries ^[13], and one fund, BlackRock's BUIDL, accounts for more than $2 billion of that, close to a quarter of all tokenized Treasuries ^[14]. Work the ratio backward and the entire tokenized-Treasury market is roughly $8 billion ^[15], a slice of the wider total concentrated in instruments that behave nothing like the assets an AMM was built to swap.

That matters because an automated market maker prices and settles from pooled deposits, with no order book pairing buyers and sellers ^[11]. It needs assets that can be pooled and traded freely. Many tokenized funds and bonds are open only to accredited investors and see thin secondary trading ^[6], and tokenizing an asset makes it transferable without making it easy to trade ^[5]. Pooled, permissionless liquidity is exactly what a gated, thinly traded security cannot supply.

Then there is who actually provides the liquidity today. The Bank for International Settlements found a small group of skilled participants supplied 65% to 85% of the liquidity on Uniswap V3, and earned better returns than retail providers ^[10]. The venue that processes over $10 billion in digital assets a day ^[4] already runs on professional market-makers, not the crowd, and tokenized securities would deepen that dependence, since someone has to hold inventory and quote both sides ^[5].

The regulatory read is the sharper test. In its March 30, 2026 letter to the SEC's Crypto Task Force, SIFMA argued that regulators should look at what a protocol does rather than whether it is decentralized, and that order routing, execution, price discovery and settlement may fall under securities law ^[9]. It also flagged slippage, liquidity-provider incentives, pseudonymous trading and weak market-manipulation surveillance ^[12]. If execution and settlement inside an AMM count as regulated functions, the permissionless pool is the liability, not the feature.

Meanwhile the incumbents are building the alternative. DTCC said on July 15 that it had tokenized assets in its depository for live production trades with more than 30 firms, and plans a tokenization service in October 2026 ^[7]. That is settlement staying inside a regulated venue. The friendlier U.S. posture under the 2025 GENIUS Act and Paul Atkins's SEC ^[8] cuts both ways: it clears the path for tokenized Treasuries and for the traditional plumbing to host them without an AMM in the middle.