Why DeFi Is Getting a Tiny Share of the Tokenization Boom

The market for tokenized real-world assets (RWAs) is approaching the $30 billion mark on blockchain networks, yet only a small share is actively participating in decentralized finance.

Recent figures from DeFiLlama indicate that while nearly $28.6 billion worth of tokenized assets exists on-chain, just $2.47 billion is currently deployed in DeFi systems. The numbers highlight a growing divide between digital ownership of traditional assets and their actual usability within open crypto ecosystems.

Much of the sector’s value remains parked outside lending pools, collateral systems, and other mechanisms that make digital assets flexible in decentralized markets. Money market products and bonds represent the largest category, exceeding $16.6 billion in blockchain-based value. However, less than $1 billion of that total is being used inside DeFi protocols.

Tokenized gold and related assets account for roughly $5.7 billion on-chain, yet only a fraction, around $183 million, is circulating through decentralized applications. Stocks and tokenized shares tell the same story, with approximately $2.7 billion recorded on-chain compared with under $80 million integrated into DeFi activity.

Private credit remains the strongest exception, with more than $3.2 billion represented digitally and over $1.25 billion deployed in decentralized systems. Industry observers attribute this progress to platforms such as Centrifuge and Maple Finance, which were designed from the beginning to function as lending infrastructure.

Tokenization has often been promoted as a pathway connecting traditional financial systems with crypto-based liquidity. Current figures, however, suggest that connection remains limited. If tokenized products continue to operate within permissioned or closed systems, decentralized markets may struggle to gain meaningful collateral depth, secondary trading opportunities, or proof that RWAs can function as genuinely open financial building blocks.

Large institutions have largely developed tokenized products with regulation and restricted participation in mind. Funds backed by government debt, precious metals, and equities are often built for institutional investors operating within strict compliance frameworks. One example is BlackRock’s BUIDL money market fund, which DeFiLlama classifies as permissioned and shows only modest participation in decentralized finance.

Reports from the International Organization of Securities Commissions (IOSCO) have pointed to structural barriers in such systems. According to the organization’s 2025 findings, tokenized funds frequently operate on public blockchains while still restricting access to approved investors. Transfers often require verification through intermediaries, meaning blockchain activity alone does not determine ownership.

These restrictions create friction for DeFi adoption. Since many tokenized assets can only move between approved participants, direct use in open applications such as decentralized exchanges or lending markets becomes difficult without additional compliance layers.

Despite those challenges, some projects are testing more flexible models. Ondo Finance has expanded its USDY product across multiple blockchain networks, surpassing $1 billion in total value locked earlier this year. Meanwhile, Ondo Global Markets has gained traction by offering tokenized U.S. stocks and exchange-traded funds to international investors, emphasizing broader transferability and DeFi compatibility.

Lending platforms focused on real-world assets are also gaining momentum. Research from RedStone highlighted more than $620 million in deposits on Morpho and over $423 million in market activity on Aave Horizon, suggesting that tokenized collateral can function effectively when built for decentralized circulation.

Industry leaders increasingly believe the market is splitting into two distinct paths. One side prioritizes ownership and regulatory control, favoring closed systems for institutions. The other seeks a balance between compliance and open-market usability, allowing tokenized assets to circulate more freely and participate in decentralized finance.

The long-term outlook remains uncertain. Financial institutions such as Standard Chartered forecast that tokenized assets could grow to $2 trillion by 2028. Yet analysts warn much of that expansion could remain concentrated within banking and institutional infrastructure rather than flowing into open blockchain markets.

For now, the data points to two separate realities under the same RWA label. One market centers on regulated blockchain-based finance, built around custodians, compliance checks, and controlled access. The other focuses on permissionless systems where assets can move freely through lending, collateral, and yield-generating strategies.

Blockchain industry actors like Marathon Digital Holdings Inc. (NASDAQ: MARA) will continue to watch how further tokenization of RWAs reshapes the DeFi landscape.

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