The T-Bill Beats The Lending Pool?

Between the second quarter of 2025 and the second quarter of 2026, total deposits in decentralised finance (DeFi) lending and trading venues fell by about 15 percent, reflecting both investor withdrawals and lower crypto prices. 

At the same time, deposits of tokenised real-world assets (RWAs), chiefly tokenised Treasury funds, private credit and delta-neutral strategies, more than tripled, rising from $2.3 billion to $7.4 billion, according to the second CoinShares and Token Terminal report on Hybrid Finance, published on 6 August.

The wider backdrop shows a difficult year for DeFi. According to DeFiLlama, aggregate total value locked (TVL) fell to roughly $72 billion in mid-June, more than a third below where it started the year, and has since recovered to about $85 billion. Stablecoin supply has meanwhile held above $300 billion, showing that, while capital has not left crypto, where it is being put to work is changing.

Risk-Free Rates On DeFi 

CoinShares puts stablecoin-denominated on-chain yields at roughly 3.2 percent to 5.5 percent, with tokenised Treasury funds at the bottom and private credit, lending markets, curated vaults and funding-rate strategies stacked above, each with a different risk profile.

The bottom of the band is now the benchmark. With the Federal Reserve holding at 3.50 percent to 3.75 percent and three Federal Open Market Committee (FOMC) members dissenting in favour of a hike in July, a tokenised T-bill fund pays something in the mid-3 percent range with no smart contract risk. On 3 September, USDC supplied to Aave’s main Ethereum market was paying 3.39 percent, while JTRSY and BUIDL were paying around 3.56 percent on the same venue. The crypto-native pool was paying less than the bill.

DeFi lending rates are set by utilisation: they rise when traders borrow stablecoins to go long and fall when nobody wants leverage. Treasury yields do not respond to crypto sentiment. So when a downturn drains borrowing demand from Aave, Morpho or Kamino, the crypto-native pool pays the same as a government bill, or less, while carrying hacking risk following six months where more than $1.3 billion was stolen. Most stablecoin holders have stopped accepting that trade, as the CoinShares data shows.

Futures pricing for a 25 basis point hike at the Fed’s 16 September meeting is now at 50 percent, according to CME FedWatch, after Chairman Kevin Warsh’s Jackson Hole speech on 28 August. A hike would lift the on-chain reference rate without lifting DeFi borrowing demand. The reference rate for on-chain dollars is increasingly influenced in Washington, and less so by a utilisation curve.

The Venues Survived. The Collateral Changed.

But RWAs are not a vampire attack on DeFi. In fact, the $7.4 billion did not even leave DeFi. It went into Aave, Morpho and Kamino as collateral, and almost 70 percent of it sits on Ethereum.

The assets doing the work are Janus Henderson’s JTRSY, BlackRock’s BUIDL and Sky’s sUSDS, followed by private credit such as Centrifuge’s JAAA and Maple’s syrupUSDC, then Ethena’s sUSDe. CoinShares explains that investors want collateral that earns while pledged, which lowers the opportunity cost of borrowing against it.

“Tokenisation is structural, not cyclical,” writes CoinShares chief executive Jean-Marie Mognetti in the report’s foreword, going on to argue that RWA usage grew by attracting capital that would have otherwise sat in DeFi vaults. 

The venues have paid for it, though. CoinShares is candid that RWA activity has not yet moved the revenue needle for any major lending or trading application, because crypto-native volumes still dominate the fee base and those fell. Deposits changed composition faster than business models did.

Different Approaches to KYC

The obvious objection is that institutional Treasury tokens require know-your-customer (KYC) checks and DeFi is meant to be permissionless. The market is currently trialling different approaches.

Aave’s Horizon market, launched in August 2025, is one example. Issuers and their transfer agents, Superstate among them, whitelist wallets that complete their subscription and KYC process, and only those wallets can hold the fund token.

Aave describes the result as a protocol that remains permissionless to use while issuers control who may hold the token. On Horizon, the collateral base as of 4 September is about $390 million, led by Invesco’s USTB, Bitwise’s USCC, Janus Henderson’s JAAA and Midas’s mGLOBAL, all posted against roughly $134 million of stablecoin borrowing.

The second route is the wrapper. sUSDS, sUSDe and syrupUSDC are freely transferable tokens whose yield derives from Treasuries, funding rates or private loans held by a permissioned entity underneath. 

Here, the issuer knows which entity has economic exposure, but that visibility gets clouded when it comes to who holds the wrapper. A retail wallet on Solana can earn the bill rate without ever completing a subscription form. This means the distribution restriction that the KYC was built to enforce loses enforceable power, one contract away from the issuer.

The cost appears at liquidation. If only whitelisted wallets can hold USTB or USCC, only whitelisted liquidators can buy it when a loan goes underwater. That thins the liquidation market, which is why risk providers set tighter loan-to-value ratios and lower caps on permissioned collateral than on ETH. The permissioned side is safer per asset and more fragile per liquidation, and it has yet to be tested through a market-wide credit event.

Regulation pushes yield the same way. The US GENIUS Act of July 2025 bars permitted stablecoin issuers from paying holders interest or yield on the stablecoin itself. How far that reaches into yield paid by affiliates and third parties is a question the OCC’s proposed implementing rules are still settling. Whether a wrapper one contract removed from an issuer sits inside or outside a rule is still to be settled.

Two Markets, Two Kinds Of User

CoinShares’ chart divides assets under management by holder count. BUIDL’s average wallet holds tens of millions of dollars. Tokenised equities distributed through xStocks are held in balances consistent with retail, and retail products are adding holders far faster than institutional ones, with tokenised stocks the fastest-growing category by user count over the year.

Institutions want balance-sheet efficiency. A Nasdaq and ValueExchange survey of 203 institutions, published in February, found that Tier 1 firms hold roughly $36.8 billion in excess or non-remunerated collateral. It estimated that mobilising this value through tokenisation could be worth around $346 million a year in extra interest to such a firm. A T-bill that earns while sitting as margin is the direct answer, and Horizon-style markets are where it is being tested.

Retail wants access to markets it could not previously reach, at hours those markets are shut. Tokenised equities are the fastest-growing RWA category by holder count, and RWA perpetual futures the fastest-growing by volume. Activity on tradeXYZ, the RWA venue on Hyperliquid, has grown roughly 20-fold since launch, led by oil, precious metals and equity indices such as the S&P 500, with SK Hynix becoming one of its largest markets soon after listing. None of that is a yield story.

Where retail does reach Treasury yield, it is through wrappers or exchange-listed products with low minimums and platform-level KYC. On Bitfinex Securities, USTBL gives eligible investors tokenised exposure to short-dated US Treasury bills from a $1 minimum on the Liquid Network, with issuer NexBridge whitelisting verified accounts through Blockstream AMP. 

Furthermore, the platform also added notes tracking Strategy’s STRC preferred stock and the shares of four listed bitcoin treasury companies, alongside ALTERNATIVE‘s USDt-denominated bonds, and says its listed tokenised assets now exceed $500 million.* 

Collateral Is The Endgame

Six months ago, our blog argued that the institutional opportunity in tokenisation lay in the gap between issuance and deployment: more than $25 billion of tokenised assets existed on-chain and a large share of it sat idle. The CoinShares data is the first hard evidence the gap is closing, and closing inside DeFi venues rather than bank-run networks.

It’s early days yet. RWA deposits of $7.4 billion sit against a US money market fund industry of $7.9 trillion, and $2.2 billion in tokenised stocks against a global equity market above $100 trillion. Most tokenised structures still represent claims on assets in traditional custody, and on-chain transfer does not yet carry legal finality in many jurisdictions. 

On Bitfinex Securities, every holder is verified and authorised by the issuer, so that ownership is never in doubt. DeFi venues have attracted deposits this year. Whether they keep them depends on legal structures still being settled by legislators, and continued adoption.

* Currently not available to US persons.