Real-world Asset (RWA) TVL surpasses $17 billion: surpassing DEX and ranking as the fifth largest sector in DeFi

By the end of 2025, the Real-World Asset (RWA) protocol, with a total value locked (TVL) of approximately $17 billion, officially surpasses decentralized exchanges (DEX) to become the fifth largest sector in decentralized finance. This structural shift marks a change in DeFi’s development focus, transitioning from purely on-chain native asset trading to the large-scale capture of traditional world yields and values.

The total market cap of tokenized gold has exceeded $4.2 billion, more than doubling in less than a year. Among them, Tether Gold (XAUt) and Paxos Gold (PAXG) together account for nearly 90% of the market share.

Sector Rotation: RWA Protocol Enters Top Five in DeFi, Reaching $170 Billion TVL Milestone

According to the latest data from DefiLlama, the total value locked (TVL) in Real-World Asset (RWA) protocols has grown from about $12 billion in Q4 2024 to approximately $17 billion currently. This growth has enabled RWA to successfully surpass decentralized exchanges (DEX) and rise to the fifth position in the DeFi sector rankings. Behind this sector rotation are bond tokenization products, private credit, and commodities rapidly becoming core components of on-chain finance.

The growth in TVL is not evenly distributed. Looking at asset classes, tokenized U.S. Treasuries, private credit, gold, and stocks are the main drivers of growth. From the protocol ecosystem perspective, Ethereum dominates, carrying about 65% of the RWA market value, with a clear head effect. This indicates that market funds are selectively flowing into assets and protocols that can provide real, stable cash flows and compliant frameworks.

Core Assets: Gold, Stocks, and Treasury Bonds, Three Pillars Driving Growth

The expansion of the RWA market is built on the large-scale on-chain representation of several key traditional assets. Tokenized gold is one of the fastest-growing areas. Its total market cap has surged from about $1.3 billion at the beginning of the year to over $4.2 billion. Among them, Tether Gold (XAUt) has a market cap of about $2.24 billion, and Paxos Gold (PAXG) about $1.5 billion, together accounting for nearly 90% of this segment. Each XAUT and PAXG token is backed 1:1 by physical gold reserves, allowing investors to conveniently hold and transfer gold ownership on the blockchain.

The tokenized stock market has also reached a new high of approximately $1.2 billion in total market cap. This scale is compared by industry observers to the explosive growth phase of stablecoins in 2020, showing huge early potential. Institutional push is key; issuers like Backed Finance, Securitize, and others are becoming active, and Nasdaq has even submitted an application to the U.S. Securities and Exchange Commission (SEC) for listing tokenized stocks.

Tokenized U.S. Treasuries are another major pillar, mainly driven by protocols like Ondo Finance and Securitize. These products bring the stable yields of U.S. Treasuries into the DeFi world, attracting institutional and individual funds seeking low-risk on-chain returns.

Leading Protocols: Ethereum Dominates, Securitize, Ondo, and Circle Building Ecosystems

The RWA ecosystem is highly concentrated, with the Ethereum network holding about 65% of the market share due to its strong security and mature financial protocol ecosystem.

Currently, the three leading protocols by market cap are mainly deployed on Ethereum:

• Securitize leads with a TVL of about $2.42 billion, focusing on tokenization of securities.
• Ondo Finance follows closely, with a TVL of approximately $1.95 billion, with core products including tokenized short-term U.S. Treasuries (OUSG) and yield-bearing stablecoins (USDY).
• Circle’s USDC-backed U.S. Treasury token also holds a significant position, with a TVL of about $1.52 billion. Circle has strengthened its position in the tokenized money market sector by acquiring Hashnote, which has a TVL of $1.25 billion.

Ondo Finance’s growth is particularly representative. The protocol employs a multi-chain strategy, deploying on Solana, Mantle, and other blockchains beyond Ethereum to reach a broader user base. Its OUSG product allows users to invest in U.S. Treasuries with low thresholds and earn an annualized yield of around 4%-5%.

Market Impact: 24/7 Trading and DeFi Composability Create New Value

The rise of RWA is not just about assets being “on-chain” but also about creating new value dimensions for traditional assets through blockchain’s fundamental features. The most direct transformation is “around-the-clock trading.” Tokenized stocks, treasuries, or gold are no longer limited by traditional exchange opening and closing hours, enabling 24/7 global trading possibilities.

Deeper still is the impact of “DeFi composability.” These tokenized real-world assets can be seamlessly integrated into the broader DeFi ecosystem. For example, tokenized U.S. Treasuries can serve as collateral in lending protocols or provide liquidity on decentralized exchanges, unlocking capital efficiency that is difficult to achieve in traditional finance. This composability is fostering new financial use cases and yield strategies, attracting more crypto-native capital and traditional institutional funds seeking diversification.

Future Challenges: Liquidity and Compliance Remain Key for a Market Worth Trillions of Dollars

Despite rapid growth, the RWA sector still faces two core challenges to leap from hundreds of billions to trillions of dollars. Liquidity depth is the primary challenge. While top-tier tokenized gold or treasuries have some liquidity, on-chain market trading depth still lags far behind traditional financial markets. Increasing liquidity requires attracting more market makers and large institutional participants. Regulatory and compliance issues are more complex long-term challenges. Tokenized securities are inherently subject to traditional securities regulations. Protocols must evolve in tandem with regulatory frameworks to ensure compliance throughout issuance, trading, and custody processes.

For example, Paxos has applied to the U.S. SEC to become a clearinghouse, aiming to establish a compliant foundation for native issuance of on-chain stocks and bonds. Clear regulation and robust compliance infrastructure will be the final keys to unlocking institutional capital.

Market Perspective: Using ONDO as an Example to Observe RWA Sector Development

The business development and market performance of RWA protocols are partly reflected in their ecosystem tokens’ prices. Taking Ondo Finance’s native token ONDO as an example, its price fluctuations are closely related to protocol TVL growth, new product launches, and market attention to RWA narratives. As of December 31, 2025, according to Gate data, ONDO’s price over the past year has experienced significant value discovery, rising from lower levels to over $1.9 billion in protocol TVL.

The market cap of tokenized gold surged from $1 billion to $4.2 billion within a year, with Tether Gold and Paxos Gold acting as digital vaults, occupying nearly 90% of the market share. On Ethereum, Securitize, Ondo Finance, and Circle’s USYC manage nearly $60 billion in on-chain assets, forming the backbone of the RWA ecosystem.

As Nasdaq submits applications for tokenized stock listings and U.S. Treasuries’ yields quietly accrue in wallets via OUSG tokens, the outline of transformation becomes clear. The $17 billion TVL is just a prelude; behind it lies a traditional asset world worth hundreds of trillions of dollars, waiting to be redefined by blockchain.