For nearly two years, decentralized finance (DeFi) operated under a core assumption: native crypto assets could serve as the monetary foundation of a parallel financial system.
Staked Ether via Lido underpinned billions of dollars in DeFi loans. Wrapped Bitcoin secured perpetual swaps. Algorithmic stablecoins recycled protocol rewards to synthesize “on-chain dollars.”
The entire structure was built on a belief that crypto could bootstrap its own collateral base — without touching the $27 trillion U.S. Treasury market.
That assumption has quietly collapsed over the past 18 months.
What is emerging in its place is not a rejection of DeFi, but a structural re-anchoring:
DeFi is increasingly rebuilding itself around tokenized U.S. Treasuries and government money market funds.
From Native Crypto to Tokenized Treasuries
Tokenized U.S. Treasuries and money market funds have now reached approximately $9 billion in circulation, spread across more than 60 products and over 57,000 holders.
The average 7-day yield sits near 3.8%, and growth during this period has been more than five times faster than in previous cycles.
When zooming out to the broader Real World Asset (RWA) category, total tokenized RWAs on public blockchains are approaching $19 billion, with government bonds and yield-bearing instruments dominating, according to rwa.xyz.
In effect, U.S. Treasuries have become the backbone of on-chain finance, mirroring their role in the $5 trillion U.S. repo market — where nearly all other financial assets are ultimately settled and referenced.
This is no longer an experiment.
BlackRock’s BUIDL fund has grown to nearly $3 billion, is accepted as collateral on Binance, and has expanded to BNB Chain.
Franklin Templeton’s BENJI token represents over $800 million in a registered U.S. government money market fund, with shareholder records maintained across seven blockchains.
Circle’s USYC quietly surpassed $1.3 billion after partnering with Binance, enabling institutional derivatives margining.
JPMorgan launched a $100 million tokenized money market fund on Ethereum, with subscriptions and redemptions settled in USDC.
The infrastructure linking Wall Street custodians and Ethereum is no longer theoretical — it is operational.
Two Evolutionary Paths for Crypto Collateral
The issuance landscape reveals two distinct models for how crypto collateral is evolving.
1. Tokenized Institutional Liquidity Pools
BlackRock’s BUIDL operates as a fully regulated, institutional-grade liquidity fund, tokenized via Securitize and custodied by BNY Mellon.
The token represents an interest in cash, U.S. Treasuries, and repo, redeemable in USDC with a $250,000 minimum.
BUIDL is explicitly positioned as high-quality USD collateral for derivatives, basis trades, and institutional DeFi — not retail composability.
2. Blockchain-Native Shareholder Registries
Franklin Templeton’s approach goes further.
In its OnChain U.S. Government Money Fund, the shareholder ledger itself lives on-chain. Each BENJI token equals one registered share.
The fund remains regulated, but blockchain becomes the primary system of record, not a wrapper.
This model implicitly bets that public blockchains can function as core securities infrastructure, not just tokenization layers.
DeFi-Native Issuers and the Middle Ground
Between TradFi giants and fully permissionless DeFi lie hybrid models:
Ondo Finance (OUSG, USDY) allows 24/7 minting and redemption using USDC or PayPal’s PYUSD, targeting crypto-native institutions.
Anemoy (Janus Henderson) emphasizes multi-chain deployment and structured ratings from S&P.
Matrixdock’s STBT offers daily repricing, backed by short-duration T-bills and reverse repo.
OpenEden’s TBILL, rated “A” by Moody’s, is already usable as DeFi collateral.
On Solana, over 50% of tokenized RWA value is now U.S. Treasuries — with USDY functioning as a yield-bearing stablecoin primitive across DeFi apps.
Composability Is Real — But Permissioned
Mechanically, most products follow a similar structure: A regulated fund or SPV holds Treasuries at traditional custodians. Tokens represent fund shares, not direct claims on CUSIPs at the Fed.
This introduces constraints:
KYC-gated wallets
Minimum redemption sizes
Allowlisted smart contracts
As a result, composability is strongest in KYC-DeFi and institutional environments, not fully permissionless pools.
Still, progress is tangible:
Tokenized Treasuries are now used as OTC derivatives collateral
Margin can move 24/7, bypassing banking hours
Products like USYC scaled nearly 6× post-integration with Binance
DeFi Protocols Are Rebuilding Around RWA Yield
At the protocol layer, the shift is unmistakable:
MakerDAO held roughly $900 million in RWA, largely Treasuries, and is expanding this under Sky Protocol
Frax’s sFRAX buys Treasuries directly and tracks overnight repo yields near 5%
Pendle is constructing on-chain yield curves by splitting principal and yield tokens from RWA-backed assets
On Solana, RWA-backed stable yield instruments dominate liquidity flows
In effect, tokenized Treasuries are becoming the crypto equivalent of the repo market — the neutral, yield-bearing collateral layer everything else references.
Legal Friction and Systemic Risk
Regulatory clarity is improving:
BENJI operates under U.S. securities law
TBILL falls under BVI professional fund regulation
MiCA and U.S. stablecoin proposals explicitly address tokenized government debt
Yet risk remains concentrated at the stablecoin intersection.
By mid-2024, Circle held over $28 billion in short-term Treasuries backing USDC.
Tokenization simply brings this collateral on-chain, making it rehypothecatable, marginable, and composable.
Stablecoins monetized Treasuries quietly.
Now, DeFi is doing so explicitly.
Yield Cycle — Or Structural Shift?
Two forces are at play.
Cyclically, high interest rates (2023–2025) made Treasury yields irresistible versus non-yielding stablecoins.
Structurally, the data points elsewhere:
Tokenized RWA exceeds $18.5 billion
Major banks are building on Ethereum
Treasuries are accepted as crypto derivatives collateral
DeFi yield curves now reference government debt
DeFi’s monetary base is no longer purely crypto-native.
It is becoming a hybrid system, anchored by stablecoins and tokenized sovereign debt.
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Final Thought
Tokenized U.S. Treasuries are evolving into crypto’s repo market:
A state-backed, USD-denominated collateral layer upon which perpetual swaps, stablecoins, prediction markets, and structured products increasingly depend.
Whether today’s $9 billion grows to $80 billion will depend on regulation and rates.
But the infrastructure is already live — on Ethereum and Solana.
The question is no longer if TradFi moves on-chain.
It’s how fast DeFi will rewire itself around it.
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