DeFi Lending Takes Backseat as Tokenized Treasury Funds Soar

The second quarter of 2026 saw a significant shift in DeFi (decentralized finance) landscape, with total deposits in lending and trading venues falling by about 15% compared to Q2 2025. This decline reflects both investor withdrawals and lower crypto prices.

However, tokenised real-world assets (RWAs), mainly Treasury funds, private credit, and delta-neutral strategies, experienced a massive surge, more than tripling from $2.3 billion to $7.4 billion. Most of this growth came in the form of tokenized T-bill funds, which now pay around 3% with no smart contract risk.

The bottom of the band for on-chain yields is now set by Treasury yields, not DeFi lending rates. This shift has led to a situation where some crypto-native pools are paying less than government bills, while carrying hacking risks. The majority of stablecoin holders have stopped accepting this trade, as evidenced by CoinShares' data.

RWAs are not a 'vampire attack' on DeFi; instead, they're attracting capital that would otherwise sit in DeFi vaults. Tokenisation is structural, not cyclical, and the $7.4 billion influx of RWAs didn't leave DeFi, it went into Aave, Morpho, and Kamino as collateral.