Who Will Drive On-Chain Private Equity Trading? The Case for Retail-Led Demand

Originally published 28 May 2025. Republished in the Tessera archive; figures, company details and market state are as of that date.

An earlier piece traced the evolution of tokenized private equity and the structures that might make it liquid. That leaves a question behind it. If private equity exposure can be structured as a non-security bearer instrument, who actually trades it? The answer shapes what kind of market this becomes, and it is the question Tessera works on.

The thesis here is that retail investors rather than institutions will dominate trading demand in on-chain private equity, while institutional participants serve mainly as suppliers of the underlying assets through off-chain arrangements. If that holds, the resulting market looks structurally different from traditional private equity, with tokenization acting as both a price discovery mechanism and a source of exit liquidity.

Momentum behind that idea has built through 2025. The Blockworks Research analyst Carlos Gonzalez Campo has predicted that shares of private companies including SpaceX and OpenAI will be tokenized over the following four years, and the tokenized asset market is projected to grow from $40 billion to $317 billion by 2028.

Where the Infrastructure Stood in May 2025

The regulatory environment has turned more accommodating this year, and several major platforms are preparing tokenized private equity offerings. Robinhood is working on tokenization technology to give retail investors fractionalized ownership of US private assets, though it remains constrained by current accredited investor definitions.

As of May 2025 the Security Token Market reports 826 tokenized projects totaling $63 billion in value, with large institutions actively tokenizing traditional financial assets. McKinsey projects the underlying value of tokenized assets reaching $2 trillion by 2030, with private equity among the more promising categories. Projections of that kind are estimates, and the gap between $317 billion and $2 trillion in overlapping forecasts is a reminder of how wide the uncertainty is.

Why Retail Demand Is Likely to Lead

Four structural factors point the same way.

The first is exclusion. Private equity has been systematically unavailable to retail investors because of accredited investor requirements, high minimums and complex structures. That has produced a constituency of investors who have watched the asset class deliver strong long-run returns from outside it. Tokenization would be their first practical access.

The second is demographics. Crypto trading is retail-dominated in a way public equity markets are not, and volumes are disproportionately driven by individuals rather than institutions. That existing infrastructure positions individual investors as the natural early participants in anything built on the same rails.

The third is trading behavior. Retail investors typically trade more frequently than institutions, which hold longer horizons and rebalance less often. The liquidity tokenization promises is therefore worth more to retail holders, who value the option to trade even when they do not exercise it.

The fourth is friction. Bearer instrument structures remove compliance friction that institutional investors are already equipped to handle through existing private equity allocations. For retail investors the same removal is the difference between access and no access.

Why Institutions Are Likely to Supply Rather Than Trade

The mirror image explains the institutional side.

Institutions already have established relationships and processes for private equity through traditional channels, and they invest on horizons that match fund lifecycles, so the liquidity tokenization provides is worth less to them. They are also comfortable inside existing regulatory frameworks and may be cautious about structures designed to sit outside securities classification.

Large investors can already access private equity directly through general partners, co-investments and secondary markets, so the central value proposition of tokenization, which is access, is least compelling to the people who already have it. What tokenization offers them instead is distribution: allowing existing holdings to be tokenized and offered to a retail market, using the structure as a liquidity channel rather than an investment vehicle.

What That Market Would Do to Prices

An on-chain private equity market with continuous trading could produce price discovery that traditional private markets cannot. Tokenized assets could trade continuously rather than being marked infrequently, generating real-time signals about sentiment and valuation. A broader participant base would incorporate a wider range of information. Blockchain trading venues could show order book depth that private markets do not reveal. And active trading could create arbitrage between on-chain prices and traditional private equity valuations, pulling the two toward each other.

The same structure changes exits. Rather than waiting for fund distributions or negotiated secondary transactions, holders could exit continuously. Fractional tokenization allows partial exits, which traditional structures make difficult. And exit timing shifts from the general partner to the investor.

Each of those is a property the structure permits rather than an outcome it guarantees. Continuous trading requires continuous counterparties, and thin markets do not produce reliable price discovery regardless of what the venue allows.

Which Assets Would Attract That Demand

If retail demand leads, the assets that matter are the ones retail investors recognize. That is a statement about attention rather than about merit, and the characteristics that draw attention are not the ones that determine returns.

Companies associated with Elon Musk illustrate the pattern most clearly. As of May 2025, xAI is valued at $80 billion following its acquisition of X in March 2025 and is reported to be in talks to raise $20 billion at a valuation above $120 billion, while competing directly with OpenAI and holding a data advantage from the X acquisition. SpaceX, valued at $350 billion as of December 2024, is the world's most valuable private company, with Starlink projected to generate $11.8 billion in revenue in 2025, control of over 85% of global orbital payload launches, and more than $20 billion in government contracts since 2008. Both would attract retail trading volume for reasons that include the businesses and are not limited to them.

Crypto-native companies carry a built-in audience. Kraken is preparing for a Q1 2026 listing, reported revenue above $1.5 billion with adjusted earnings of $380 million in 2024, and has seen the SEC drop its case against it. Circle, the USDC issuer, has a clear revenue model based on reserves and payments infrastructure and a compliance record that supports credibility.

Among high-growth private companies, OpenAI represents the peak of retail recognition, having completed the largest private funding round on record at $40 billion raised on a $300 billion valuation in March 2025, with ChatGPT reaching 500 million weekly users and revenue projected to triple to $12.7 billion by the end of 2025. Discord and Stripe attract interest for related reasons: very large user bases and products that retail investors use directly.

What the Current Evidence Shows

Institutional adoption is accelerating. Hamilton Lane has tokenized portions of its Global Private Assets Fund in Singapore and is expanding its digital asset offerings, and BlackRock's chief executive has described tokenization as the future of securities markets. Real estate tokenization alone is projected to reach $1.9 billion by 2030, which indicates infrastructure maturing across asset classes.

On the retail side, decentralized finance protocols show participation heavily weighted toward individuals, which suggests retail investors will engage with complex instruments when they are accessible. The GameStop and AMC episodes demonstrated a willingness to drive substantial volume in assets retail investors feel connected to. And the popularity of fractional share trading shows appetite for access to expensive assets in smaller denominations.

What the Market Structure Would Look Like

Retail-driven markets typically show higher trading velocity than institutional ones, which could produce more liquid secondary markets. They also tend to be more volatile, which would mean wider price swings in tokenized private equity than in traditional private markets. Retail trading often follows seasonal patterns that could carry across.

Platforms serving that market would need to prioritize user experience over institutional features, provide more educational material than institutional venues do, and would likely find that social and discussion features drive engagement.

The Shape of It

The evidence suggests that successful tokenized private equity platforms will be built with retail investors as the primary traders and institutions as asset suppliers. Hamilton Lane's initiatives and BlackRock's focus indicate institutional recognition of retail demand for private market access. Blockchain infrastructure has matured enough to support the trading. The regulatory environment has improved, and pending listings create conditions for expansion.

What follows, if this holds, is a two-tier market: institutions continuing to operate in traditional private markets while retail investors gain access through tokenized instruments. The platforms that matter will be the ones that bridge those worlds with structures satisfying both regulatory requirements and retail demand for accessible, liquid private market exposure. Whether the demand proves as durable as the interest is the part no current evidence settles.

Sources: the Blockworks Research prediction is attributed to analyst Carlos Gonzalez Campo. The projected growth of the tokenized asset market from $40 billion to $317 billion by 2028, the Security Token Market figures of 826 projects and $63 billion as of May 2025, the McKinsey projection of $2 trillion by 2030, and the real estate tokenization projection of $1.9 billion by 2030 are as reported at the time of writing. Company figures, including the xAI valuation of $80 billion and reported talks above $120 billion, the SpaceX valuation of $350 billion as of December 2024 with Starlink revenue projected at $11.8 billion for 2025, the Kraken revenue and earnings figures for 2024 and its Q1 2026 listing preparation, and the OpenAI round of $40 billion at a $300 billion valuation in March 2025 with 500 million weekly ChatGPT users, are as reported in or before May 2025 and were not independently verified. Hamilton Lane's tokenization of portions of its Global Private Assets Fund and BlackRock's stated position on tokenization are as reported. These items carry no individual citation in the original. Figures, company details and market state are as of 28 May 2025 and have not been updated since; several of the companies described have since changed materially in ownership, valuation or listing status.

This is market commentary, not investment advice. It is not a recommendation to acquire, hold or redeem any Tessera product, or to take or avoid exposure to any company mentioned.

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