> ## Documentation Index > Fetch the complete documentation index at: https://docs.rwa.xyz/llms.txt > Use this file to discover all available pages before exploring further. # Tokenization Structure > How the token legally connects the holder to the underlying asset Most tokenized asset issuers describe their products as "backed by" an offchain asset, which says nothing about the legal relationship between the token and the underlying. What rights do holders actually have, and against whom? Consider two tokenized products that both reference dollar-denominated money-market instruments. Under the [asset classification framework](/frameworks/asset-classes), both are U.S. Treasuries. But depending on the tokenization structure, they can represent materially different investments. One may be an equity interest in a fund, the other a contractual claim against an issuer whose collateral is the underlying. The tokenization structure framework classifies every tokenized asset on RWA.xyz into one of five structures based on the legal relationship between the token and the underlying asset. ## Framework | Category | Description | Examples | | -------------- | -------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------- | | **Direct** | The token represents the underlying asset itself, and serves as the legally-operative record of ownership. | Securitize EXOD, Superstate GLXY, Figure HELOCs | | **Depositary** | The token represents a beneficial-ownership entitlement to an underlying asset held by a custodian. | Tether XAUT, Paxos PAXG, Dinari dShares | | **Vehicle** | The token represents an ownership interest in a legal vehicle that holds or references the underlying asset. | BlackRock BUIDL, FT BENJI, Apollo ACRED | | **Claim** | The token represents a contractual claim against an issuer whose obligation is the exposure to the underlying asset. | Ondo USDY, Ondo GM Stocks, Kraken xStocks | | **Protocol** | The token represents a protocol-defined position created and enforced by onchain logic. | Maple syrupUSDC, Nest Vaults, Centrifuge deJAAA | ## Direct The token holder owns the underlying instrument directly. Ownership sits onchain, reflected in an authoritative blockchain-based register maintained by a registered transfer agent or through native onchain issuance. No custodian or legal vehicle stands between holder and asset. This is the cleanest legal model available, as ownership is legally recognized rather than derived through an intermediary. It is also rarer, as most jurisdictions have not yet adapted their securities law to treat onchain registers as the system of record. Examples include Securitize's Exodus Inc class A shares (EXOD) and Superstate's Opening Bell product for Galaxy Digital common shares (GLXY). SEC-registered transfer agents maintain the company's shareholder register onchain, and token transfers update the register in real time. **Strengths** * Fewest legal layers between holder and asset, with no intermediary or custodial exposure * The token is the legally operative record of ownership, not a representation of a separate entitlement held elsewhere * No additional wrapper-level expense drag **Trade-offs** * Dependent on a jurisdiction that legally recognizes an onchain register as authoritative * Transfer agent and registrar infrastructure must be built to operate onchain end-to-end ## Depositary The token holder has a beneficial-ownership entitlement to a specific, identified underlying asset held on the holder's behalf by a custodian or a network of custodians. Legal title sits with the custodian, the holder's rights run through that custodian's regulated regime, and the holder is identified in the custodian's own records. This is a custodial entitlement represented onchain, and replicates the legal structure of holding stock through a broker-dealer or bullion through an allocated-metal custodian. The quality of the protection depends heavily on the custodian's regulatory regime, which can vary between jurisdictions. Examples include tokenized gold offerings from Tether (XAUT) and Paxos (PAXG), as well as Dinari's tokenized equities. **Strengths** * Holder is specifically identified in the custodian's records, providing strong segregation from custodian insolvency * Custodian's fiduciary and regulatory obligations run directly to the holder **Trade-offs** * Operational dependency on custodian solvency, record-keeping, and reconciliation * Beneficial ownership is distinct from legal title; the custodian remains the asset-of-record holder * Custody fees, creation/redemption costs, and redemption minimums create economic drag and can cause the token to trade away from NAV in stress ## Vehicle The token holder owns an equity, membership, partnership, or beneficial-trust interest in a legal vehicle (a fund, SPV, trust, or operating company) whose assets include or reference the underlying. The interest may be pro-rata residual equity or a multi-class carve-out with bounded economic rights set by the vehicle's governing instrument. This is the most commonly used structure for tokenized Treasuries and Private Equity/Venture Capital which utilizes fund structure. Because the vehicle sits between the holder and the underlying, vehicle-level operational and governance risks (manager behavior, service-provider failures) flow through to holders. Examples include BlackRock/Securitize's BUIDL (a tokenized private fund) and Franklin Templeton's BENJI (a tokenized 40 Act Fund). **Strengths** * Familiar regulatory model; existing institutional diligence frameworks apply * Class structures enable tailored economics (yield-share, waterfall, voting/non-voting) without disturbing the underlying * Class structures and active management can deliver yield or exposures direct ownership cannot **Trade-offs** * Adds a legal layer between holder and asset, and vehicle-level risks pass through * Access mediated by the vehicle's governing instrument and manager discretion, which add operational friction and gate risk * Management and administration fees create structural drag ## Claim The token holder holds a contractual claim against an issuer. The issuer's obligation to pay or perform is the source of the holder's exposure. Any collateral backing the obligation is the issuer's collateral, not the holder's property. Claim is the most flexible structure for tokenized assets, but also needs to be understood carefully as the holder doesn't have ownership of the underlying or through a custodial entitlement. The obligation can be secured or unsecured, with different seniority on the claim against the issuer, guaranteed or unguaranteed, tranched or single-class. Examples include: * **Ondo's USDY:** senior secured notes issued by a bankruptcy-remote Delaware SPV, collateralized by short-duration Treasuries and bank demand deposits * **Ondo Global Markets tokenized stocks:** secured-note SPVs with independent security trustees * **Kraken's xStocks:** Swiss-law tracker certificates against 1:1 custodied reference shares, with holder rights running against the issuer rather than the shares **Strengths** * Highly flexible, and can deliver economic exposure to almost any underlying * Can be implemented efficiently without fund-level overhead * Can be structured for permissionless transfer at the token level depending on issuer regulatory strategy **Trade-offs** * Holder bears issuer credit risk directly as collateral belongs to the issuer, not the holder * Recovery in issuer insolvency depends on structural features like security trustees, segregation, and governing law * Secondary pricing reflects market confidence in issuer credit, not just the reference asset ## Protocol The token holder has a position defined and enforced by smart-contract logic. There is no disclosed legal title, no formal custody arrangement, no interposed legal vehicle, and no contractual obligation from any issuing entity. Protocol is the native structure for DeFi products and for onchain wrappers that re-expose other tokenized assets without passing through their legal rights. In practice, this shifts diligence from legal documents to code, as the holder's recourse lives in smart-contract logic, oracle design, and governance controls. Examples include DeFi smart-contract vaults on tokenized assets (deJAAA wrapping Anemoy's JAAA), onchain basket tokens (Nest vaults), and permissionless yield-bearing receipt tokens over segregated SPV loan pools where the holder has no disclosed legal rights against the SPV (Maple's syrupUSDC). **Strengths** * Programmable and permissionless composability with onchain capital markets * Enables strategies and exposures that are impractical or uneconomic in traditional legal structures **Trade-offs** * No disclosed legal rights against any party in connection with the underlying, and recourse is limited to what the code enforces * Smart-contract risk becomes the primary risk, requiring in-depth diligence of the codebase, oracle design, and governance controls * Price can delink from the referenced exposure under stress (depeg risk), with no legal mechanism to force convergence ## Applying the framework in practice Each structure has a distinct set of diligence considerations: * **Direct:** the transfer agent's regulatory status, the legal recognition of the blockchain as the register in the relevant jurisdiction, and the dispute forum if title is contested. * **Depositary:** the custodian's regulatory status and segregation regime, the bankruptcy-remoteness of segregated assets, whether the token and the underlying share the same ISIN (a strong corroborating signal), and whether the holder is identified in the custodian's own records rather than a platform sub-account. * **Vehicle:** the vehicle's legal form and registration, the investment manager's regulatory status, the qualified custodian holding the vehicle's own assets (which merits a separate Depositary-style analysis), redemption mechanics, audited financials, and whether the tokenization wrapper is ring-fenced or cross-collateralized with other sponsor products. * **Claim:** the obligor and its bankruptcy-remoteness, the holder's position in the capital stack, whether an independent security trustee exists, the collateral's custody chain, covenants and events of default, and the likely recovery profile on default. * **Protocol:** the smart-contract code and audit history, admin-key and multisig controls, oracle dependencies and failure modes, how redemption works in practice, and the tokenization structure classification of the underlying collateral, which determines economic risk even though the wrapper itself is Protocol. Understanding the structure is important because it determines how the investment behaves during stress: * **Counterparty.** Who is the holder ultimately exposed to? Identifying where risk is concentrated (custodian, manager, obligor, code) is the first step. * **Bankruptcy.** What happens when those counterparties fail? Segregation, seniority, and bankruptcy-remoteness determine the recovery outcome. * **Enforcement.** How does the holder actually claim the rights the product promises? Each path (regulated custody, fund governance, contract law, onchain logic) has a different forum, speed, and cost. * **Regulation.** How does the investor's own regulator classify the position? The classification flows through to compliance, capital treatment, and operations on the investor's books. ## Why it matters Paired with [asset classification](/frameworks/asset-classes), the tokenization structure framework lets an institutional investor evaluate a tokenized product along two independent dimensions: what the token references, and how the token legally connects the holder to that reference. An institution is never simply buying a "tokenized Treasury" or a "tokenized stock" — it is buying one of five legally distinct positions, and those positions can produce materially different outcomes even when the economic story sounds identical.