On-Chain Finance Shifts Toward Tokenized Treasuries and RWA

The on-chain finance landscape is shifting, and tokenized US Treasuries are at the forefront. With a total supply of $15.3B, assets like USYC, BUIDL, and USDY are attracting investors who want to retain on-chain liquidity while earning exposure to short-term US government debt.

This growth is driven by a simple yet compelling value proposition: these tokenized Treasuries offer a low-risk alternative to stablecoins when crypto-native yields become less competitive. As more capital flows into these products, they may increasingly become a base collateral and liquidity layer for on-chain finance.

The divergence between RWA (Regulated Wallet Assets) and traditional DeFi is striking. While RWA market capitalization has risen by over 550% since 2025, DeFi TVL (Total Value Locked) has fallen by approximately 54%. This decline can be attributed to the drop in ETH and other asset prices that make up a significant share of total TVL.