The rise of tokenized Real World Assets (RWAs) in decentralized finance (DeFi) gained traction as traditional bond yields surpassed low-risk DeFi yields during the 2022-2023 bear market. The Federal Reserve's aggressive interest rate hikes made U.S.
Treasury yields competitive with stablecoin yields in DeFi, despite their lower risk. As of June 13, one-year Treasury bills offered an average yield of 5% to 5.24%, while Aave's stablecoin yields varied from 3.73% to 7.46%.
Several protocols seized on higher borrowing costs and reduced DeFi activity by introducing tokenized U.S. Treasurys and private loans on blockchain platforms. By early June, tokenized private loans yielded an average annual percentage of 9.57%. With the crypto market's recovery and increased institutional involvement in 2024, the Total Value Locked (TVL) in RWA projects reached $8 billion.
Asset management giant BlackRock entered the space, swiftly becoming the largest provider of tokenized U.S. Treasurys through its BUIDL fund. Initially launching with a $180 million market cap, it has since grown to $462.27 million, commanding a 30% market share and surpassing Franklin Templeton's Benji Investments fund.
The growth of the RWA market is evident not only in TVL but also in token performance. In May alone, RWA tokens appreciated by 55.20% and have risen by 224.57% year-to-date. Leading contributors to this growth include TrueFi, Ondo, Dusk, Clearpool, and TokenFi.
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