Tokenization Will Extend the Dollar's Network Dominance Before It Erodes It

The lens suggests we should expect the first tokenized collateral and settlement layer to reach institutional scale to be dollar-denominated—tokenized Treasury bills and money-market funds, dollar stablecoins backed by those same instruments, and bank deposits tokenized in dollars—rather than a layer built around a rival or neutral unit. Tokenization lowers conversion friction, and it lowers it fastest for the asset that already has the deepest liquidity and the widest cultural legibility.

The diagnostic logic: The framework's treatment of network dominance argued that network constraints compound—liquidity attracts liquidity, and new infrastructure is adopted first where it reduces friction for flows that already exist. A technology that makes any asset easier to move does not level the field; it amplifies the advantage of the asset most participants already hold and understand. The dollar's reserve share may continue its slow decline for reasons the framework describes elsewhere, but the rails being built for the next monetary era are being laid in dollars first.