Why real-world assets on public blockchains are worthless without fees

Mike Cagney, CEO of financial services company Figure, said the growing interest in real world assets (RWA) on public blockchains is meaningless without yield for token holders.

He argued that public blockchains are built to replace, not host, traditional financial intermediaries. Cagney shared these comments during a public discussion on X this week.

RWA growth and TVL discussion

Cagney said in a tweet that the market often confuses activity with actual value. Indicators like Total Value Locked (TVL) only matter if they generate fees that benefit token holders.

He points out that RWA is gaining traction as major financial companies such as Visa, Nasdaq, JPMorgan, and DTCC are considering blockchain. People see this as mainstream adoption of cryptocurrencies, but Cagney says this ignores how value is actually created on public blockchains.

According to him, the value of a token comes from three things: yield, utility, and governance.

• Revenue comes from network fees and other cash flows.
• Practicality refers to practical benefits such as reduced fees and increased access to financial products.
• Governance is how much token holders can influence the rules and outcomes.

Metrics such as ecosystem size and TVL only become important if the fees paid to token holders increase.

Related: China issues joint warning to seven organizations, classifying RWA tokenization as illegal finance

TradFi on Blockchain: Adoption or Distraction?

Cagney said just because traditional financial companies are considering blockchain doesn’t mean public networks will benefit.

Citing Visa as an example, he pointed out that it doesn’t matter whether a company processes transactions on the blockchain because it pays very little network fees. Visa owns much of its own infrastructure, keeping costs low and unlikely to pay more than it already pays. Without meaningful fee payments, token holders receive little value.

He emphasized that while traditional financial companies exist to mediate transactions, public blockchains aim to eliminate intermediaries. The real value of blockchain lies in eliminating the need for these intermediaries, rather than supporting them.

The disintermediation paradox

Mr. Cagney pointed out structural contradictions in the RWA narrative. If public blockchains eliminate the need for companies like Visa and DTCC, there is little reason for them to fully support the network. It will hurt them to pay high prices for a system that hurts their business.

He said the same applies to clearing, payments and exchange infrastructure. Simply moving parts of a traditional system on-chain will not produce the same economic impact as replacing it completely with decentralized finance.

stablecoins, fraud, and payments

Discussion also extended to stablecoins and consumer payments. Cagney noted that stablecoins, combined with biometric wallets and multi-party computation, could reduce fraud by eliminating card numbers and centralized identity data. Without these attack points, payment fraud in general would decrease, he said.

Critics challenged this view, citing irrevocable transactions, wallet compromise, and smart contract abuse. They also expressed concerns about consumer protection, regulatory compliance and insurance coverage.

Cagney responded that stablecoin payments function like digital cash and can be settled instantly without chargebacks. Due to the lower risk of fraud, blockchain systems do not require the same fraud resolution as card networks. He also pointed out that thanks to faster payments and lower fees, merchants can directly reward users.

Governance and long-term token value

Governance also emerged as an important theme. Cagney pointed out that transparency and decentralization are essential for blockchain systems. Some argued that governance must be enforceable at the protocol level to prevent concentration of power and drifting incentives.

Related: Solana RWA ecosystem records 325% growth through 2025, reaching record high of $873 million

He used the Provenance blockchain and its HASH token as an example. In addition to increasing Total Value Locked (TVL), the network focuses on generating fees, restricting the creation of new tokens, and giving holders both utility and voting rights.

Ultimately, this discussion highlights a broader issue for RWAs. In other words, advances in blockchain will not depend on traditional finance simply participating in the system, but on building a network that completely replaces traditional intermediaries.