Tokenized Credit Dominates DeFi Lending as Cash Equivalents Lag Behind

A new report from Dune reveals that tokenized credit dominates the real-world asset (RWA) collateral in DeFi lending, making up 76% of all RWA deposits. This represents a market value of approximately $1.61 billion. In contrast, cash equivalents account for about half of the broader tokenized RWA market, valued at around $17.8 billion.

The report highlights that while tokenized credit is highly active and composable across DeFi, most cash equivalents remain largely inactive with limited trading or lending activity. Tokenized credit's high yields make it more attractive for strategies like carry trades, where traders borrow against a credit token at a lower rate than its earning rate.

The lending activity in RWA is highly concentrated, with Morpho holding around $1 billion in RWA deposits and the top three protocols (Morpho, Kamino, and Aave) accounting for 83% of all RWA lending activity. However, only about 6.1% of total tokenized RWA supply is currently deployed in lending protocols.

The report suggests that private credit is driving growth in the tokenized credit market, making up 75% of its value. Issuers such as Maple and Centrifuge are among those highlighted for contributing to this growth.