DeFi Contraction Met by Explosive Growth in Real-World Assets

The cryptocurrency market is undergoing a significant shift, with DeFi deposits shrinking by 15% year-over-year and RWA (Real-World Asset) deposits skyrocketing by over 200%. The report from CoinShares and Token Terminal highlights this trend, which is driven by the increasing adoption of tokenized traditional assets such as U.S. Treasury bonds, money market funds, private credit, gold, crude oil, and stock index futures.

The decline in DeFi deposits can be attributed to the cooling of the crypto market, with Bitcoin entering a downward cycle from its historical high of over $122,000 in October 2025. Additionally, declining yields have led to arbitrage cycles and recursive lending unwinding, while hacking incidents have also contributed to the decline.

However, RWA deposits are growing rapidly, with the total on-chain value reaching around $37.89 billion by mid-2026. This growth is driven by institutional investors using tokenized treasury bonds as collateral for lending on platforms such as Aave, aiming to achieve both a 4.5% treasury yield and on-chain liquidity simultaneously.

Hyperliquid, a decentralized exchange built on crypto-native infrastructure, has seen its trading volume surge from $12.37 billion in Q4 2025 to $202.7 billion in Q2 2026, an increase of about 16 times. The trading targets are concentrated in commodities, but equity perpetual contracts have also surged by 121% month-on-month in May.

BlackRock's entry into the tokenized market has been a significant driver of this growth, with its AUM (Assets Under Management) reaching around $2.87 billion by mid-July. The company is upgrading tokenization from an experimental project to a product line, and regulatory clarity is releasing previously hesitant institutional capital.