Tokenized assets, despite their promise of capital mobility and access to traditional finance, are plagued by illiquidity and structural inefficiencies. While liquidity is crucial for market confidence and usability, many tokenized assets operate in shallow markets that can't absorb significant trading volumes. As a result, participants face high trading costs, which become evident when attempting to execute larger trades. For instance, a $1 million swap into TSLAx incurs around 5% slippage, compared to just 18 basis points for the same trade in traditional markets. The article highlights how these illiquid markets lead to price discovery issues and increased volatility. In October 2025, the PAXG market experienced flash events where prices fluctuated dramatically due to orderbook fragility, resulting in widespread liquidations across interconnected platforms. The interconnected nature of these markets means that instability in one venue can have cascading effects, leading to losses for participants who weren't even involved in the original trades. Market makers, essential for providing liquidity, face significant barriers. The process of minting tokenized assets incurs costs and delays, often requiring hours or days for redemption. This makes it difficult for market makers to manage risk effectively, leading them to allocate capital elsewhere. Current market structures, like Automated Market Makers (AMMs), further complicate matters by shifting inventory risk onto liquidity providers without addressing the fundamental liquidity constraints. Unless market structures evolve to support deeper liquidity, tokenized assets will struggle to gain traction and become reliable financial instruments.