Aave Dominates Tokenized Treasury Lending, But Utilization Remains Low

The tokenized US Treasury market has grown to approximately $16.19 billion in total distributed value, but when it comes to actual utilization in decentralized lending and borrowing protocols, the numbers are much lower.

According to available data, only 0.7% of all tokenized Treasuries are currently being used in DeFi protocols, with Aave V3 commanding a significant 64.1% share of this market.

The broader tokenized RWA sector is estimated to range between $33 billion and $60 billion depending on the measurement approach. Despite the large on-paper market size, market analyst Mackenzie Spencer highlighted the stark contrast between the massive market size and sluggish actual utilization of these assets across DeFi protocols.

Aave's Horizon market, launched in August 2025, has attracted between $440 million and $510 million in deposits, supporting tokenized Treasuries including VanEck's VBILL product. However, regulatory uncertainty, liquidity fragmentation, and compliance requirements create friction for institutions to deploy tokenized assets into DeFi protocols.