a16z crypto has highlighted that a significant portion of tokenized assets remains underutilized on-chain, with bonds leading the category at a $15.2 billion market cap but only 5% integrated into DeFi. Similarly, tokenized precious metals are largely inactive in decentralized finance. In contrast, smaller asset categories like reinsurance tokens see 84% deployment in DeFi, and 33% of private credit tokens are actively used. a16z attributes higher DeFi adoption in these categories to their original design for decentralized finance, citing examples like Nexus Mutual and Maple Finance. The firm also points out that many tokenization efforts are essentially digitization, merely transferring records to the blockchain without enhancing functionality. a16z emphasizes that true on-chain financial systems should leverage composability, a core value proposition that remains underexploited in many current tokenization practices.