Risk-Off Capital Shifts Toward Tokenized Assets as DeFi Pulls Back

Tokenized real-world assets are showing steady growth despite a bearish market—a divergence that experts say reflects capital maturing within crypto rather than fleeing it entirely.

The RWA sector posted 8.68% growth in distributed asset value over the past month, reaching $24.84 billion, according to RWA.xyz. 

Represented asset value, which tracks tokenized assets that cannot move between wallets or leave the issuing platform, remained largely flat, growing just 0.51% to $372.97 billion.

DeFi’s total value locked, on the other hand, has plunged 25% over the past month to $94.84 billion, according to DeFiLlama data.

The drop is a result of nearly every major protocol, including Aave, Lido, Eigen Layer, and Binance Staked ETH, posting double-digit declines in the last 30 days.

Still, the divergence reflects a maturing market where capital rotates rather than retreats, experts told Decrypt. 

“DeFi yields were compressed, so lending and staking decreased alongside the market,” Sergej Kunz, co-founder of 1inch, told Decrypt. “At the same time, tokenized treasuries offer 4% on-chain returns with minimal risk. People are not leaving the space, they’re entering in a slightly less risky way.”

Unlike DeFi’s declining TVL, the distributed asset value of tokenized real-world assets, excluding stablecoins, has shown sustained growth across multiple sectors.

Tokenized U.S. Treasury debt, commodities, and private credit with $10.7 billion, $6.9 billion, and $2.9 billion in distributed value are up 10%, 20% and 15%, respectively, over the past month. 

The rotation, rather than exit, makes the shift structural, according to Rico van der Veen, CEO of Programmable Credit Protocol.

“RWA protocols offer what DeFi never could: enforceable rights, regulatory clarity, and cash flows that don’t depend on token emissions,” he told Decrypt. 

Despite the strong fundamentals for RWA assets, tokens linked to the sector have struggled—a dynamic both experts said was a result of the broader market downturn.

“Prices across the entire market are down. This is not specific to RWA projects,” Kunz said. “TVL is still growing, which shows demand is still there. Sentiment hasn’t yet caught up with the fundamentals. When it does, these projects will likely reprice very quickly.”

Van der Veen offered a more sobering take, explaining that the value is accruing to the instruments, not the tokens. 

“BlackRock’s BUIDL has $1.5 billion-plus under management. That value sits in the fund, not in any governance token,” he said. “Most RWA tokens are still utility tokens with no claim on the revenues flowing through the protocol. Adoption and token price are decoupling, permanently.”