Tokenized Assets Borrow Below Face Value Due to Inherent Structures

Tokenized real-world assets (RWAs) are not financing at face value. Instead, they borrow below their face value due to the inherent structures that make them safe for lenders.

The RWA market is growing, with tokenized Treasuries reaching roughly $11-13 billion by March, May 2026, according to CoinGecko. However, despite this growth, liquidity remains patchy, with around 56% of tokenized RWA value having no weekly on-chain activity as of May 2026.

The structures that determine how much value lenders can safely advance are explicit in public documentation. For example, Centrifuge's Tinlake pools split collateral into a senior DROP token and a junior TIN token with an explicit first-loss buffer. The New Silver 2 (NS2) term sheet lists a minimum 20% junior risk buffer and targets a 7% DROP yield, meaning that only about 80% of pool value is senior-backed at any moment.

The protocol-level limits and haircuts enforced by governance are another factor. Maker's vaults accept senior DROP tokens with a debt ceiling and conservative parameters. The result is materially less than 100% collateral value to borrow against, even though the underlying loans have higher face value.