DeFi 2.0: The Rise of Primitives for Real-World Assets

DeFi 1.0 was built for highly volatile assets such as Bitcoin and Ethereum, which allowed early DeFi primitives to function relatively well due to their high volatility and speculative trading.

However, with the rise of real-world assets (RWAs) being tokenized on-chain, these primitives are failing to adapt to the new market structures.

A new set of primitives is becoming essential for RWAs, which include central limit order books (CLOB), request for quote (RFQ), propAMM, fixed-rate lending, vaults, interest rate derivatives, repurchase agreements, dark pools, portfolio margining, options, and futures with dates.

These DeFi 2.0 primitives are designed to handle lower-volatility assets such as U.S. Treasuries, equities, and corporate credit, which have better-defined maturities and cash flows, serve as superior collateral, feature clearer borrower identities, and are traded by large institutional participants.