The market for tokenized versions of US government bonds has grown by nearly 600% this year, reaching more than $700 million as of Tuesday, according to RWA.xyz, a platform that tracks real-world assets on blockchains. The surge in demand for these digital assets reflects the increasing interest in crypto-based alternatives to traditional fixed-income products.
Tokenized Treasuries are created by protocols that use smart contracts to represent the ownership and cash flows of real-world bonds on blockchains. These tokens can be traded, lent, or used as collateral in decentralized finance (DeFi) applications, offering crypto investors access to regulated and low-risk assets with higher returns than most stablecoins.
The Tokenized U.S. Treasuries Have Grown Due to Several Key Players
The growth of the tokenized Treasury market has been driven by both new and existing players in the space. Ondo Finance, Maple, and Backed are some of the protocols that have seen a significant increase in deposits over the past few months. New entrants such as Tradeteq and TrueFi’s Adatp3r have also attracted millions of dollars in their offerings.
The tokenized Treasury market has also diversified across different blockchains, with Ethereum, Stellar, Polygon, and Solana hosting over $40 million of assets combined. Ethereum has recently overtaken Stellar as the leading network for tokenized Treasuries, while Solana and Polygon have emerged as fast-growing alternatives.
Another trend in the tokenized Treasury market is the emergence of permissionless yield-bearing stablecoins, such as Ondo Finance’s USDY and Mountain Protocol’s USDM. These stablecoins are backed by tokenized Treasuries and pass on the yield earned from the underlying assets to the holders, unlike traditional stablecoins such as USDT and USDC.
Tokenized Treasuries are part of the broader effort to bring real-world assets to blockchain platforms. Crypto analysts expect that the market for tokenized assets could reach $10 trillion by the end of the decade, as more investors seek exposure to regulated and diversified assets in the crypto space.