DeFi Sees Shift to Tokenized Real-World Assets as Deposits Decline
The decentralized finance (DeFi) space has seen significant changes in the past year, with total deposits in DeFi lending and trading venues falling by about 15% between Q2 2025 and Q2 2026. This decline is attributed to both investor withdrawals and lower crypto prices.
However, tokenized real-world assets (RWAs), primarily consisting of Treasury funds, private credit, and delta-neutral strategies, have seen a substantial increase in deposits, more than tripling from $2.3 billion to $7.4 billion during the same period.
This shift in capital allocation is largely driven by investors seeking collateral that earns while pledged, which lowers the opportunity cost of borrowing against it. Tokenization has become structural, not cyclical, as argued by CoinShares' CEO Jean-Marie Mognetti.
Aave's Horizon market and wrappers like sUSDS and syrupUSDC are examples of how institutional Treasury tokens require know-your-customer (KYC) checks while DeFi is meant to be permissionless. However, these approaches aim to balance the need for regulation with the desire for liquidity and accessibility.