Tokenization of real-world assets (RWA) is already approaching $30 billion on-chain, but less than 10% of these funds are used in DeFi. This shows that the closed and restricted asset issuance model still hinders the main idea of the crypto market, namely, free interoperability between protocols.
According to DefiLlama, the total volume of RWA on the blockchain has almost reached $30 billion. However, only $2.47 billion of this amount is involved in DeFi protocols as active TVL, meaning it is used in third-party lending services, liquidity pools, and other DeFi applications.
The rest of the tokenized asset market essentially remains outside the DeFi ecosystem. Most of the funds are not used in lending, collateral mechanisms, or other tools that typically make crypto assets flexible and interconnected.
The largest category remains bonds and money market funds. Their volume already exceeds $16.6 billion on-chain, but in DeFi only about $920 million is used from this amount.
Tokenized gold and commodities account for about $5.7 billion, but only about $183.6 million is active in DeFi. Stocks and equity instruments show a similar picture: about $2.7 billion on-chain versus only $78.27 million in DeFi.
The private lending sector stands out. Here, the ratio is noticeably higher: out of $3.226 billion in tokenized assets, about $1.257 billion is already involved in DeFi. That is about 39% of the entire segment.
This result is largely due to projects like Maple Finance and Centrifuge, which were initially built as lending protocols and immediately focused on using assets within DeFi.
Meanwhile, many other RWA categories, including treasury funds, gold, and tokenized stocks, were originally created more for institutional investors and regulated financial structures, not for free use within DeFi.
A logarithmic chart compares on-chain capitalization and active TVL in DeFi across four RWA categories. Source: DefiLlama
Closed Architecture Hinders RWA Integration With DeFi
On DefiLlama, the BUIDL money market fund from BlackRock is marked as a restricted-access product. At the same time, only about $18.9 million of its assets are currently used in DeFi.
A IOSCO report from November 2025 states that BUIDL operates as a closed system on a public blockchain. It handles token issuance, asset custody, secondary trades between approved investors, dividend payments, and redemptions.
To access the fund, investors must pass verification and be included in the list of approved participants, which is controlled by Securitize. Moreover, on-chain transactions themselves are not considered final until they are confirmed through an off-chain registry with the transfer agent.
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Essentially, BUIDL uses blockchain more as technical infrastructure for transferring and accounting for assets among institutional participants.
Because the fund's contracts only work with approved addresses, it is not possible to use BUIDL directly in open DeFi protocols like Aave or Uniswap without additional intermediaries and wrappers.
In February 2026, BlackRock did integrate part of BUIDL into Uniswap, but control over the whitelist remained with Securitize. Access is still limited to qualified investors with at least $5 million in assets.
The IOSCO report also noted that secondary trading of tokenized money market funds is generally arranged in a similar way. Because of this, the sector has not yet been able to provide the liquidity and freedom of circulation that tokenization originally promised.
A RedStone report from March 2026 says that the most difficult part of tokenization remains compliance requirements: identity verification, transfer restrictions, sanctions rules, and operating in multiple jurisdictions at once.
That is why projects like Morpho and Aave Horizon are now considered some of the closest examples of full RWA integration into DeFi.
The problem is that each new restriction makes the asset less compatible with DeFi protocols. And tokenized bonds, money market funds, and treasury products were originally created with such restrictions, as they are primarily aimed at regulated institutional investors.
| Restriction | What It Means | Why It Hinders DeFi |
| KYC / whitelist of approved participants | Only approved wallets can hold or transfer the asset | Open DeFi pools cannot freely accept such a token |
| Verification through a registration agent | On-chain transfers may require additional off-chain confirmation | Smart contracts alone do not confirm final ownership |
| Restrictions for qualified investors | Only institutions or large investors get access | Regular DeFi liquidity remains outside the system |
| NAV / redemption windows | Fund share redemption occurs on the issuer's schedule | Difficult to use in AMMs and real-time liquidation mechanisms |
| Trading through centralized platforms | Main activity takes place on CEXs or issuer platforms | Such assets are almost not reflected in DeFi Active TVL |
The tokenized gold and commodities sector adds another problem to this situation. According to CoinGecko, the spot trading volume of tokenized gold in the first quarter of 2026 reached $90.7 billion and has already surpassed the result for all of 2025.
However, most trading of such assets still takes place through centralized exchanges.
That is why only about $183.6 million of the total volume of this segment is currently used in DeFi. Most activity remains outside DeFi protocols tracked by DefiLlama.
Where the RWA Market Is Still Showing Growth
Meanwhile, part of the market is moving in a completely different direction.
At the beginning of 2026, the TVL of the USDY stablecoin from Ondo exceeded $1 billion. The project already operates on nine blockchains.
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The Ondo Global Markets platform, launched in September 2025 for trading tokenized US stocks and ETFs outside the US, initially focused on free asset circulation and the ability to use them as collateral in DeFi.
The platform now has about $650 million TVL and over $12 billion in total trading volume.
A RedStone report also says that Morpho already has more than $620 million in RWA deposits, and the total market volume in Aave Horizon has reached about $423.5 million. Both protocols are actively developing the use of RWA as collateral within DeFi.
These projects show that compatibility with DeFi is possible if assets are initially created for free use within the crypto market.
In April 2026, DWF Labs held a roundtable with Centrifuge, Falcon Finance, and xStocks. Participants concluded that the RWA market is gradually splitting into two directions.
The first is built around closed systems with restricted access, primarily focused on asset ownership and regulatory compliance.
The second direction focuses on compatibility with DeFi, free asset circulation, and secondary market activity.
Centrifuge representative Graham Nelson noted that strict whitelist restrictions actually prevent assets from entering open liquidity pools, since each user has to be checked and connected manually.
At Centrifuge, they are trying to solve this problem through the DeRWA model. It combines regulated asset issuance with freer token circulation on the secondary market.
Falcon Finance representative Artyom Tolkachev stated that compatibility with DeFi and proper exit mechanics could become the link between traditional assets and the crypto market.
The main hope of RWA supporters now is that more and more projects will move in this direction. If this happens, the share of RWA actually used within DeFi could rise significantly from the current 9%, especially if the total tokenized asset market approaches $50 billion.
The Bearish Scenario Is Also Clearly Reflected in the Numbers
According to Standard Chartered, by 2028 the volume of tokenized assets could grow to $2 trillion. But they also warn: most of this market may remain within banking infrastructure, and open DeFi may hardly benefit from the growth.
A IOSCO report from November 2025 says that tokenized assets still heavily depend on the traditional financial system. This is especially true for trading and asset distribution, as DLT platforms still lag in liquidity and accessibility.
A similar problem was noted by the European Central Bank. In a study from April 2026, it is stated that the lack of unified standards is gradually turning the tokenization market into a set of closed ecosystems.
Each such system has its own compliance rules, settlement mechanisms, and access restrictions. As a result, liquidity is simply distributed among separate closed platforms instead of forming a single market.
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The numbers show this clearly. For bonds and money market funds, only 5.5% of assets are actually used in DeFi. For gold and commodities, this figure is about 3.2%, and for tokenized stocks, about 2.9%.
The problem is also that many tokenized bonds and funds were initially created to meet the requirements of large regulated investors.
They often have a minimum entry threshold, mandatory KYC, additional checks through registration agents, and redemption windows tied to the fund's NAV.
Because of this, such assets are poorly suited for DeFi mechanics like AMMs, instant pricing, and open collateral systems.
These are exactly the restrictions regulators required, and issuers originally built products to comply with these rules.
Two Different Markets Under the Same RWA Name
The $30 billion total RWA market and $2.47 billion in active TVL in DeFi actually show two different systems, which are usually combined under the single term “real-world asset tokenization.”
The first is regulated on-chain infrastructure for traditional finance. This includes money market funds, treasury products, custodial solutions, and accounting systems that operate through registration agents and controlled platforms.
The second is the DeFi environment, where assets are freely used within lending protocols, serve as permissionless collateral, and participate in automated yield strategies.
For now, most of the RWA market remains in the first category. Therefore, the volume of tokenized assets is growing rapidly, but DeFi itself receives only a small share of the liquidity.
The chart shows the possible volume of DeFi TVL if the RWA market grows to $50 billion.
At the same time, Morpho already has more than $620 million in RWA deposits, and USDY operates on nine blockchains. This shows that there is demand for full RWA integration into DeFi.
But for the share of assets actually used in DeFi to rise above the current 9%, issuers will have to design products for free circulation within DeFi from the outset.
For now, however, most projects follow the BUIDL model, where restrictions, checks, and access control remain the main elements.
Because of this, most of the current RWA market at $28.56 billion still looks more like a regulated on-chain financial system than an open DeFi market.
