By the third quarter of 2025, the total value of on-chain RWAs reached $30 billion to $33 billion, a 224% surge from less than $10 billion in 2024. This figure not only set a new industry record but also amazed the market: from experimental tokenization to true asset systematization, RWAs have completed the crypto industry's decade-long journey in just two years. But behind the revelry, a contradiction is becoming increasingly clear: as institutional funds pour in with compliance checks, and as US Treasuries become the on-chain "risk-free benchmark," can this rapidly expanding market resolve the critical risks of ambiguous legal ownership and liquidity mismatches? US Treasuries Hold Half of the Market: From Liquidity Anchor to Institutional Entry Ticket Within the $30 billion market, $7 billion to $8 billion of tokenized Treasuries are undoubtedly the brightest star. With an average daily on-chain transaction volume exceeding $1 billion, this asset class has become the undisputed "liquidity king" and is viewed by institutions as a "ticket to entry" into the RWA market. "Now, when we allocate RWAs, the first thing we look at is the U.S. Treasury bond ratio," a leading crypto fund manager stated. "It's like the Treasury yield curve on-chain; all credit assets are priced relative to it." This "anchoring effect" is driven by the persistently high interest rate environment. After the Federal Reserve maintained its benchmark interest rate above 5% through 2024, traditional financial institutions began shifting idle funds to on-chain U.S. Treasury products. Franklin Templeton's OnChain U.S. Government Money Market Fund is a prime example. Its tokenized units, issued through Ethereum, have exceeded $1.5 billion, making it the first SEC-approved on-chain money market fund. Ondo Finance's OUSG product directly integrates U.S. Treasury yields with DeFi protocols, allowing users to stake tokens and borrow stablecoins. Annualized returns are stable at 4.8% to 5.2%, attracting over $2 billion in investment. However, the "risk-free" label of U.S. Treasuries is facing challenges. A partner at a law firm revealed, "We've recently received three inquiries, all concerning the dispute over whether token holders truly own U.S. Treasuries." The core issue lies in the fact that most current tokenized treasuries utilize an "SPV (Special Purpose Vehicle) + Custody" model, where tokens merely represent claims on shares in the SPV, rather than direct ownership of the bonds. If the custodian defaults or faces a judicial freeze, investors could be faced with the awkward situation of having tokens but no assets. The Two-Way Journey Between Institutions and DeFi: A Growth Engine or a Risk Amplifier? The explosion of RWAs is no accident. In addition to the appeal of U.S. Treasuries, institutional entry and the maturation of infrastructure are two other major drivers. Data shows that between 2024 and 2025, traditional asset management giants such as Franklin Templeton, BlackRock, and State Street launched RWA products, collectively bringing in over $12 billion in incremental capital. More importantly, they have driven the maturity of infrastructure like KYC tokens, whitelists, and Chainlink oracles. Now, a qualified investor can complete the entire process from identity verification to purchasing private credit tokens on-chain, reducing the time from three days to 15 minutes. Demand for DeFi protocols has further amplified this trend. Lending platforms like Aave and Compound have incorporated RWA into their collateral pools, allowing users to borrow USDC using tokenized corporate bonds as collateral, with collateralization ratios up to 70%. Decentralized exchanges like Curve have dedicated RWA trading pairs, attracting market makers through liquidity mining rewards. This "traditional assets + DeFi Lego" model has transformed RWA from static tokens into composable financial building blocks. "Our users now use US Treasury tokens as a 'risk-free base position' and allocate 20% to high-yield private credit, achieving an annualized return of over 8%," said a product manager at a DeFi aggregator. However, amidst this boom, the risk of liquidity mismatch is accumulating. A prime example is a cross-border payment RWA project: its underlying assets were 180-day trade receivables, yet users could redeem them on-chain at any time. In June 2025, amid market panic, redemptions surged to $300 million in a single day, far exceeding the project's $120 million in cash reserves. The project was ultimately forced to suspend redemptions and trigger liquidations, causing the token price to plummet 40%. "This is like a crypto-version of a bank run—the time difference between on-chain immediacy and offline cash flow is the Achilles' heel of all current RWA products," commented a risk analyst. The race for multi-chain parallelism and compliance: Who will become the next "RWA powerhouse"? The divergence of the chain ecosystem is reshaping the RWA landscape. Ethereum, bolstered by its smart contract security and institutional trust, captures approximately 65% of institutional capital. In particular, large assets such as US Treasury bonds and corporate bonds are almost exclusively issued on Ethereum. However, the retail market is "fleeing" from high gas fees. The scale of small commodity tokens (such as gold and agricultural products) on Polygon has grown 300% in a year. Solana, with its low latency advantage, has become the preferred choice for cross-border RWA payments. Stellar has even reduced the cost of tokenized remittances from the traditional 7% to 1.2% through partnerships with Southeast Asian banks. Behind this "multi-chain parallelization" lies a hidden battle for compliance. In August 2025, the EU's Markets in Crypto-Assets Directive (MiCA) officially came into effect, requiring all RWA issuers to register as "Cryptoasset Service Providers" (CASPs) and implement strict KYC/AML screening for investors. The US SEC is more concerned with whether tokens are securities and has filed lawsuits against three unregistered private credit token issuers. "Currently, compliance costs for issuing RWAs account for over 30% of the total budget, even higher than technical development," the founder of one issuer said with a wry smile. "But this is a necessary step—the clearer the regulations, the more willing institutions are to enter the market." Faced with this market situation, how can practitioners break through? The Dune × RWA report provides a clear strategic framework: Product developers need to design an "on-chain + off-chain" dual clearing mechanism, for example, placing 50% of redemption reserves in a smart contract and 50% in bank custody. On the investment side, it is recommended to use US Treasuries as the "risk benchmark," and credit assets must undergo stress testing (such as simulating a 30% redemption shock). Compliance developers can adopt a "KYC whitelist + trust priority" structure to ensure that token holders have priority in legal disputes. Ordinary investors can monitor TVL changes, the concentration of large investors (currently the top 10 addresses hold 42% of US Treasury tokens), and redemption frequency on the Dune Dashboard to mitigate risks in advance. Conclusion: RWAs are undergoing a critical transition from "wild growth" to "systematization." The anchoring effect of U.S. Treasury bonds, institutional capital injections, and the division of labor across a multi-chain ecosystem have enabled this market to take shape. However, the ambiguity of legal ownership and the fragility of liquidity management remain a significant threat. As one industry veteran put it, "RWAs in 2025 are very similar to DeFi in 2017—full of opportunities, but also riddled with pitfalls." In the coming year, the true key to success may lie in the "balancing act between law and liquidity": whoever can first resolve the legal issues surrounding "token = ownership" and design a mechanism that allows for instant redemption without triggering a run on the bank will seize the initiative in this $300 billion wave of asset digitization. For analysts and newcomers, what they need to do now is not only to chase growth data, but also to see through the essence of the assets behind the numbers - after all, on the blockchain, any token that is divorced from real value is ultimately just a string of code.
Jasper
Davin
Hui Xin
Joy