RWA Boom Signals TradFi’s Accelerated Embrace of Blockchain? Leveraged Tokens Could Be the Ideal Convergence of Traditio

A clear trend is emerging in the crypto market — a growing share of incremental capital is flowing in from traditional finance (TradFi).

In Hong Kong, despite the regulators’ cautious stance on crypto, traditional banks, major internet companies, and financial institutions are actively deploying strategies around stablecoins and real-world assets (RWAs). The momentum is so strong that it has even surprised some insiders: Why are TradFi institutions showing such enthusiasm? In contrast, we’re not seeing a simultaneous boom in crypto-native startups or innovation.

The U.S. market tells a similar story — giants like BlackRock and Fidelity have entered the space, fueling record-breaking inflows into Bitcoin ETFs. Meanwhile, RWA-related projects such as Ondo Finance and MakerDAO’s Dai Savings Rate adjustment are attracting substantial traditional capital.

This trend signals a broader transformation: TradFi is accelerating its embrace of blockchain, while the crypto market is increasingly adopting product models from traditional finance. Within this context, Leveraged Tokens — an innovative product combining the flexibility of DeFi with the advantages of traditional leveraged ETFs — are once again gaining the attention of investors.

Why Are Both TradFi and Crypto Exploring Leveraged Products?

Whether in the form of traditional leveraged ETFs or crypto-native leveraged tokens, the fundamental goal is the same: to provide investors with leveraged market exposure without the need for margin trading.

Traditional Leveraged ETFs: Institutionally Driven, Tightly Regulated

Leveraged ETFs have existed for years in traditional markets and are characterized by:

• Strict regulatory oversight and operational transparency
• Daily rebalancing to maintain target leverage ratios
• Suitable for mid-to-long-term allocation, with no rollover loss
• Lower fees and more user-friendly than futures contracts

In recent years, the scale of ETF investments in markets like China has grown steadily, thanks to their low cost, high transparency, and no liquidation risk.

Crypto-native Leveraged Tokens: Built for DeFi

Leveraged tokens go one step further, capitalizing on blockchain-native advantages:

• No liquidation risk: Leverage ratios are automatically maintained through rebalancing, unlike margin contracts
• 24/7 trading: Not limited by market open/close hours
• Decentralized custody: Users retain full control of their assets, no third-party trust required
• Low barrier to entry: No margin required; even small capital can participate

The RWA Boom: A Window of Opportunity for Leveraged Tokens

As RWAs — such as tokenized U.S. Treasuries or real-estate-backed stablecoins — move into the spotlight, traditional capital is entering crypto markets at an accelerating pace. These investors are familiar with structured financial products, and leveraged tokens can provide:

• A familiar experience akin to leveraged ETFs, with added flexibility
• The efficiency of decentralized finance (DeFi)
• Expanded use cases, such as creating leveraged yield strategies using RWA assets

Future Outlook: Convergence of TradFi and Crypto Leverage Products

1. Emergence of institutional-grade leveraged tokens
2. RWA + Leveraged Token combinations: e.g., tokenized Treasuries paired with leveraged strategies for enhanced stable yield
3. Cross-chain leveraged products: enabling seamless integration of assets across different ecosystems

Leveraged Tokens — The Ideal Intersection of Traditional and Crypto Finance?

The RWA boom is accelerating the influx of TradFi capital into crypto, and leveraged tokens — with their non-liquidation mechanism, cost efficiency, and flexibility — are likely to become a favored tool for these new entrants.

For investors, now is the time to take a closer look:

• If you're from a traditional finance background, leveraged tokens offer a similar experience to leveraged ETFs, with more innovation and accessibility
• If you're a crypto-native user, leveraged tokens provide safer exposure than futures and are ideal for short- to mid-term strategies

Regardless of background, leveraged tokens could become one of the most important tools in the next stage of the market. As RWAs and institutional players continue to expand their presence, the potential of these products is only beginning to unfold.

Leveraged tokens represent the cutting edge of financial innovation, offering investors more diverse and flexible choices. That’s also why Gate continues to invest in and develop this product category — to meet the evolving trading needs of a diverse user base.

Understanding the nuances of these tools will help you seize opportunities and manage risk effectively in a rapidly changing market.

🔗 Explore Leveraged Tokens on Gate now: 👉 https://www.gate.com/etf