RWA cross-chain issuance impacts Ethereum's institutional favorite positioning: Is ETH really indispensable?

Frax Finance founder Sam Kazemian recently questioned Ethereum's dominance in the issuance of stablecoins and the tokenization of real-world assets (RWA) on the X platform. He pointed out that when assets are natively issued cross-chain, Ethereum's "Settlement guarantee" will lose its meaning, and he called on the community to recognize the challenges at the practical level under institutional adoption.

Stablecoins and the Loss of RWA Dominance: Is the Settlement Guarantee of Ethereum Necessary?

Kazemian stated that with the rapid rise of RWA and regulated stablecoins, the importance of whether assets need to be issued or settled on the Ethereum mainnet (ETH L1) is diminishing.

1/ With RWAs & regulated stablecoins one of the fastest growing sectors in crypto, does it actually matter if a stablecoin/RWA is issued or settled on Ethereum? I don’t think it does once the asset is issued natively anywhere else but on ETH L1. Let me explain why

— sam.frax (@samkazemian) March 29, 2025

He cited the example of BUIDL, a US bond tokenization fund launched by BlackRock and Securitize, which has been issued simultaneously in Ethereum, Arbitrum, and Solana, showing that RWA multi-chain deployment has become the new normal:

This is certainly good news for BlackRock, but for the vision of "Ethereum as the 'institutional issuance main chain'", it may be a zero-sum game.

He further pointed out that for assets without an issuer, such as BTC(, the settlement guarantee of Ethereum still holds value; however, for RWA with responsible entities, the key to fulfilling obligations lies with the issuer, not the verification mechanism of the blockchain. At this point, the necessity of choosing Ethereum varies from person to person.

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Is institutional trust in Ethereum just a myth? Kazemian points to systemic vulnerabilities.

Kazemian pointed out that if tokenized assets and liabilities are directly issued natively on L2, rather than being extended from the Ethereum mainnet, then these assets will lose the security and trust backing of Ethereum, and the necessity of that network will become less important.

He uses the institutional stablecoin $frxUSD launched by Frax as an example, which exists natively on chains such as Fraxtal and Solana, without relying on the Ethereum mainnet for security.

He also criticized that the current community's attitude towards trust in Ethereum is too dispersed:

Supporters of Ethereum should have a strong sense of "territorial awareness" regarding the issuance of RWA, just like Bitcoin extremists do for BTC. Otherwise, the "settlement guarantee" feature of ETH will ultimately become empty talk in the realm of RWA. If RWA is natively issued across multiple chains, then it doesn't matter where the settlement occurs.

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Possible way out? Asset prioritization attempts to rebuild the mainnet value with absolute uniqueness.

Regarding the solution, Kazemian proposed the concept of "issuance alignment )issuance alignment(". He suggested establishing "senior class liabilities )senior class liabilities(" on the Ethereum mainnet with legal priority, allowing issuance only on the mainnet and prioritizing redemption, while daily trading assets could retain cross-chain flexibility, hoping to restore Ethereum's dominant position in legal and trust levels:

If we want to strengthen Ethereum's position in institutional asset issuance, we should ensure that the most important assets, which are prioritized for legal repayment, can only be issued on the Ethereum mainnet.

) Is the decline in fee revenue a sign of decay? Ignas: The intrinsic value of Ethereum has already been reshaped in the evolution.

Can Ethereum firmly establish itself as the main chain for institutions? It still requires community consensus and technological innovation.

Sam Kazemian's questioning reveals the potential structural risks of Ethereum in the new financial era. When the issuer becomes the main body for the settlement of cross-chain assets, Ethereum may lose its long-term competitive advantage if it does not clearly define its role.

Today, "high-level liability assets" may be the starting point for rebuilding its uniqueness, but whether it can balance cross-chain flexibility with mainnet authenticity still depends on the collective efforts and experiments of the overall community.

This article discusses the impact of RWA cross-chain issuance on Ethereum's institutional positioning: Is ETH really indispensable? Originally appeared on Chain News ABMedia.