DeFi landscape changes: RWA surpasses DEX with $17 billion TVL, entering the top-tier track

According to the latest data from DefiLlama, the total value locked (TVL) in Real World Asset (RWA) protocols has surpassed $17 billion, successfully overtaking decentralized exchanges (DEX) by the end of 2025, ranking as the fifth-largest category in DeFi lock-up volume, just behind lending, liquidity staking, cross-chain bridges, and re-staking sectors. This milestone signifies that the driving force behind DeFi’s development is shifting from purely on-chain financial experiments to the large-scale absorption of traditional yield assets and safe-haven assets. The core drivers of this wave are not speculative, but rather institutional asset-liability management needs in a “higher and longer” interest rate environment, as well as macro allocation demands sparked by rising gold and silver prices. This silent transformation indicates that the integration of the crypto economy with the trillion-dollar traditional financial markets has entered a phase of substantial acceleration.

Quietly Ascending: How RWA Surpassed DEX to Become a New Pillar of DeFi

If you open the lock-up volume leaderboard of the DeFi sector in early 2025, the category of Real World Assets (RWA) might not even make it into the top ten. However, market changes are always faster than most people’s perceptions. By the end of this year, RWA protocols have quietly risen at an impressive pace, with total lock-up value increasing from approximately $12 billion in Q4 2024 to the current $17 billion. Not only has the scale grown, but it has also achieved a historic surpassing of the former foundational infrastructure of DeFi—the decentralized exchange (DEX)—securing the fifth position.

This surpassing carries far greater symbolic significance than the numbers alone. DEXs were the core narrative of the last DeFi summer, representing decentralized, permissionless trading freedom, with their rise and fall closely tied to market speculation sentiment. RWA’s ascent, on the other hand, tells a completely different story: it reflects capital seeking certainty, yield, and stability. When Bitcoin and Ethereum experienced dramatic fluctuations in 2025, retracing all gains before the deleveraging crash in October, RWA was one of the few sectors whose token prices maintained positive growth throughout the year. This resilience and growth potential attracted substantial funds seeking refuge amid volatility.

The structural changes in the market have provided fertile ground for this. Kronos Research’s Chief Investment Officer Vincent Liu precisely pointed out that the growth momentum of RWA stems from “balance sheet incentives, not experiments.” In other words, the growth is driven less by tech enthusiasts’ curiosity or retail speculation, and more by the real asset management needs of traditional institutional investors, corporate treasuries, and high-net-worth individuals. They view on-chain assets as a more efficient, transparent channel for asset allocation rather than a casino. This fundamental shift in motivation is the deep reason why RWA narratives can traverse cycles and continue to attract capital inflows.

RWA Market Core Data Panorama

To intuitively grasp the current scale and structure of the RWA track, here are key insights based on publicly available data:

Overall Scale and Ranking:

• Total Lock-up Value: approximately $17 billion
• DeFi Category Rank: 5th (overtaking DEX)
• Annual Growth: from about $12 billion in Q4 2024

Main Components:

• Tokenized Sovereign Bonds: core driver, propelled by funds like BlackRock’s BUIDL, reaching tens of billions of dollars.
• Private Credit: an important yield source, providing on-chain financing solutions for institutions and enterprises.
• Tokenized Commodities: mainly gold and silver, with a total market cap approaching $4 billion.

Representative Products:

• Sovereign Bonds: BlackRock USD Institutional Digital Liquidity Fund (BUIDL)
• Gold: Tether Gold, Paxos Gold
• Key Trend: shifting from “whether it can be tokenized” as a technical issue to “liquidity, issuance rights, and secondary markets” as financial issues.

Peering into TVL: Exploring the Three Real Drivers of RWA Growth

The $17 billion TVL is an outcome, not a cause. To understand why RWA can stand out in 2025, we must look beyond the numbers and examine the three solid, interconnected growth engines behind it.

The primary driver is undoubtedly the “higher and longer” global interest rate environment. In a high-rate era, cash and cash-like assets generate substantial yields themselves. This makes tokenized U.S. Treasuries an almost perfect entry product. They offer the risk-free benchmark yield in traditional finance—USD interest—while also providing 24/7 tradability, fast settlement, and programmability characteristic of crypto assets. Institutional-grade products like BlackRock’s BUIDL fund inject significant credibility and liquidity into this market, pushing the tokenized sovereign bond sector past tens of billions of dollars. It is no longer just a proof of concept but a thriving asset class.

Second, the strong rise of gold and silver prices in 2025 injects macro-level momentum into the RWA track. Amid global inflation concerns and doubts about the dollar’s credibility, precious metals have long been a safe haven. Tokenized gold (such as Tether Gold, Paxos Gold) allows investors to hold and transfer physical assets with lower barriers and higher liquidity. Currently, the total market cap of tokenized commodities approaches $4 billion, with gold products dominating. This trend expands RWA from purely financial instruments into commodities and physical assets, closely linking its narrative to broader macroeconomic concerns.

Third, and more structurally, is the continuously improving regulatory clarity. Despite ongoing challenges, major jurisdictions like the EU with MiCA and discussions around US legislation are advancing digital asset regulation frameworks, significantly reducing compliance friction and uncertainty for traditional financial institutions entering the space. The “gray areas” of regulation are being delineated, prompting large asset managers, pension funds, insurance companies, and family offices—who manage vast sums and require strict compliance—to seriously consider allocating some assets to on-chain RWAs. This institutional capital flow, steady and potentially large, far exceeds the speculative retail money.

From “Tokenization” to “Financialization”: RWA’s Paradigm Shift in DeFi

The rise of RWA is not just adding a new category to the DeFi leaderboard; it is fundamentally changing the game rules and ecosystem. We can summarize this process as a profound paradigm shift from “tokenization” to “financialization.”

Early RWA explorations faced the core challenge of “how to reliably map assets onto the chain,” i.e., solving ownership verification, custody, and offline legal enforcement issues. As traditional financial giants like BlackRock entered and mature solutions emerged, this technical barrier is rapidly being overcome. Vincent Liu points out that the current constraints are no longer on tokenization itself but on deeper financial questions: who controls issuance rights? Where can RWA assets be used as collateral? Which trading venues can capture secondary market liquidity? These questions mark a shift of industry focus from “on-chain” to “building the on-chain financial ecosystem.”

This transformation has revolutionary implications for DeFi’s original structure. First, it introduces entirely new sources of yield linked to real economy interest rates. Previously, DeFi yields mainly came from lending spreads, liquidity mining subsidies, and trading fees—highly correlated with crypto market volatility. Tokenized sovereign bonds and private credit, however, derive their yields from USD interest rates and corporate credit, providing a more stable, predictable income base that attracts conservative capital seeking steady cash flows.

Second, RWA greatly enriches DeFi’s collateral types. Historically, DeFi lending protocols overly relied on highly volatile crypto assets as collateral, posing systemic risks. Stable, cash-flow-generating, and transparent valuation RWA assets (such as government bonds, high-quality corporate bonds, physical gold certificates) can significantly improve the safety margins and capital efficiency of lending protocols, creating credit cycles more closely connected to real-world economic activity.

Finally, this points to a fundamental evolution of DeFi’s role: from an independent, self-circulating “parallel financial system” to an efficient, transparent, programmable “settlement layer and complementary ecosystem” for traditional finance. Blockchain no longer seeks to replace everything but leverages its unique advantages (transparency, composability, openness) to optimize and connect inefficient, opaque segments of traditional finance.

The Path to Integration: Challenges, Opportunities, and the Next Decade

Standing at the point where RWA has locked in $170 billion and surpassed DEX in ranking, we see not just a category victory but the beginning of a grand narrative. However, the road to integrating into a trillion-dollar market remains fraught with challenges and ripe with unprecedented opportunities.

The key challenges are clearly visible. Foremost is the “interoperability” bottleneck. Vincent Liu believes that true acceleration will occur when tokenized assets are no longer isolated products but can seamlessly flow across different platforms and blockchain networks. Currently, most RWA assets are confined within relatively closed ecosystems or specific chains, with fragmented liquidity. Building cross-chain, standardized asset representation and transfer protocols is critical to unlocking their full potential. Additionally, the ultimate form of regulation remains the greatest uncertainty. While frameworks like the EU’s MiCA and US legislative discussions are progressing, issues such as privacy (disclosure of transaction details), taxation, and legal coordination across jurisdictions still require exploration and clarification.

On the other hand, the opportunities are immense. RWA provides the crypto industry with the most scarce resource: access points connected to the trillion-dollar real economy, stable cash flows, and traditional credit. This can significantly boost the overall market value and stability of the crypto economy, while also enabling a series of new financial innovations. For example, stable cash-flow RWA assets could underpin more complex structured financial products (like asset-backed securities); combining RWA with DeFi Lego components could spawn unprecedented automated treasury management tools, offering intelligent asset-liability optimization for enterprises and DAOs.

Looking ahead, RWA development will deepen along several key directions: expanding from standardized assets like government bonds and gold to more complex, non-standard assets such as real estate, art, and private equity; moving from on-chain assets to native issuance of assets (e.g., issuing bonds directly on the blockchain); and integrating with emerging trends like AI agents and privacy blockchains, such as autonomous AI-driven RWA portfolio management based on real-time data, or handling sensitive institutional transactions in fully private environments.

In summary, the “top” of RWA in late 2025 is not an endpoint but a declaration. It signals that the crypto industry now possesses the capacity to carry large-scale, serious economic value and has officially entered the next decade of deep integration with the global mainstream financial system. For builders who can overcome interoperability barriers, deeply understand traditional finance logic, and establish compliant bridges, a broader battlefield than all previous cycles combined is gradually unfolding.