As global financial markets continue to evolve, the market size for the tokenization of real world assets (RWA) has exceeded the $10 billion mark. This trend not only attracts the attention of many institutional investors, but also signals that the integration between traditional finance (TradFi) and decentralized finance (DeFi) is accelerating.
Advantages of Tokenized RWA
Proponents of tokenized RWA believe that this innovation has multiple advantages. First, tokenization makes it easier for investors to diversify their portfolios, trade assets, and gain access to more investment options. Secondly, tokenized assets provide greater liquidity and simplify the transfer process of assets. In addition, tokenization also enhances regulatory compliance through the application of smart contracts, which provides greater protection for investors.
According to OurNetwork’s on-chain data, the size of the tokenized RWA market has exceeded $10.9 billion. That number has grown by more than $2 billion since the start of the year, driven by strong demand for private loans and U.S. Treasuries. Specifically, the private credit market is $8.1 billion, while the tokenized Treasury market is $1.9 billion, with the remaining tokenized asset classes all below $1 billion.
The rise of the tokenized Treasury market
In 2024, the tokenized U.S. Treasury market experienced significant growth. The total value of this segment expanded from $726.23 million to $1.94 billion this year. BlackRock’s BUIDL fund has emerged as a leader in this space, and its rising dividend yield shows institutional investors’ growing interest in tokenized money market funds. DeFi protocols like Ondo are using BUIDL to develop derivative products and further expand their application scenarios.
The OpenEden team stated that tokenized Treasury bonds can expand the investor base by attracting international investors who may not have easy access to the U.S. Treasury market. This is especially important because U.S. Treasuries are the most common asset for creating cash management products that help companies generate income from working capital or cash reserves.
Key players and market dynamics
In the field of tokenized RWA, companies such as Franklin Templeton and Grayscale also play important roles. Franklin Templeton’s Nasdaq-listed Onchain U.S. Government Currency Fund (FOBXX) has recently been deployed on Arbitrum and Avalanche. Grayscale also operates tokenized RWA funds on Avalanche and offers a broad portfolio of crypto investment trusts covering a variety of tokens.
Interest from institutional investors continues to grow, with financial giants such as Goldman Sachs also exploring the possibility of tokenizing Treasury bonds. At the same time, State Street partnered with Swiss cryptocurrency company Taurus to launch a service that supports RWA tokenization. These initiatives demonstrate the growing call for integrating traditional finance into the decentralized financial ecosystem.
ONDO: Promoting RWA Tokenization in DeFi
Against this backdrop, Ondo Finance (ONDO), as a leading provider of tokenized U.S. Treasury securities, is playing a key role. According to DefiLlama, the total value locked (TVL) on ONDO has exceeded $536 million, representing cash equivalent products. This makes ONDO an important player in the growing field of tokenized finance, building a bridge between traditional assets and decentralized finance.
ONDO’s growth has been driven by its focus on increasing the token’s adoption, integration, and liquidity. Its yield-based stablecoin USDY is available on multiple blockchains, including Ethereum, Solana, Cosmos, Aptos, Mantle and Sui. This diverse usage scenario enables ONDO to better meet market needs and attract more investors.
Gradual acceptance of institutional investors
The rise of tokenized RWA comes at a critical time as institutional investors become increasingly exposed to cryptocurrencies. The approval of Bitcoin (BTC) and Ethereum (ETH) ETFs not only brings these assets to Wall Street, but also attracts more institutional capital. Tokenized RWA meets the needs of institutional clients for a secure banking partner and cryptocurrency custody solution. By tokenizing assets, blockchain technology provides a more secure alternative to less secure exchanges or wallet providers, while also simplifying operational processes and opening up new investment opportunities.
Challenges and future prospects: Although tokenized RWA holds great promise, the industry still faces some challenges before achieving widespread adoption. Issues such as establishing token legitimacy, ensuring legal recognition by courts, and ensuring smart contract security are all obstacles that need to be resolved for tokenized RWA to become mainstream in traditional and decentralized finance.
“The main challenge hindering the tokenized adoption of these RWAs is the need for clear regulatory regulations for this new technology. However, with the emergence of spot Bitcoin and Ethereum ETFs, Wall Street took notice of changes in the blockchain ecosystem. Once With a clearer operating framework drafted and implemented, restrictions that could hinder mainstream adoption will be removed," said Alex Malkov, co-founder of HAQQ Network.
In short, ONDO token is an important force in promoting the tokenization of real-world assets, and its performance in the DeFi field is worthy of attention. As the market continues to mature and institutional investors gradually accept it, RWA tokenization is expected to usher in a broader development space in the future.