Tokenized Credit Takes the Lead in DeFi Lending

A new report by Dune reveals that tokenized credit dominates real-world asset (RWA) collateral in DeFi lending, making up 76% of all RWA deposits. This represents around $1.61 billion, a significant margin ahead of other forms of RWA collateral. The broader tokenized RWA market has reached approximately $34.5 billion, with a growth of over 140% year-over-year.

The report highlights the contrast between tokenized credit and cash equivalents, with the latter accounting for about $17.8 billion but showing limited activity. Tokenized credit, on the other hand, is valued at $7.8 billion and demonstrates higher composability across DeFi. The $1.61 billion of credit in lending protocols represents roughly 19-21% of all tokenized credit supply.

The yields on tokenized credit are between 3.32% and 13.84%, making it an attractive option for strategies like carry trades. However, the lending activity is highly concentrated, with Morpho holding roughly $1 billion in RWA deposits and Morpho, Kamino, and Aave together accounting for 83% of RWA lending activity.