The RWA sector outpaces DEX in growth, steadily establishing its position in the DeFi TVL rankings

As shown by the latest data from DefiLlama, real-world asset (RWA) protocols have made remarkable progress over the past few months. Surpassing decentralized exchanges (DEX), they have risen to the 5th position in total value locked (TVL) within the decentralized finance sector. This phenomenon, which has grown to a scale second only to lending, liquid staking, bridging, and re-staking, symbolizes increasing institutional investor interest.

Particularly noteworthy is the rapid expansion of RWA TVL from $12 billion in Q4 2024 to approximately $17 billion. According to DefiLlama, RWA was not even in the top 10 categories at the beginning of the year. Achieving such a leap in just a few months has generated significant buzz among market participants.

The Fundamental Background of RWA Growth Why Tokenized Assets Attract Institutional Capital

Vincent Liu, Chief Investment Officer at Kronos Research, provides an insightful analysis of the expansion of the RWA sector. He states that this growth is “not merely experimental but rooted in balance sheet incentives.” In other words, a long-term environment of stable yields makes tokenized U.S. Treasuries and private credit attractive as on-chain assets.

This growth trajectory is progressing amid clear regulatory guidance and efforts to reduce friction. Industry experts also support Liu’s view, attributing the rapid expansion of RWA mainly to the growth of tokenized U.S. Treasuries and private credit.

Tokenized U.S. Treasuries, in particular, are highly popular among investors. Institutional platforms like BlackRock USD Institutional Digital Liquidity Fund (BUIDL) and similar funds have grown this segment to several billion dollars as of December 2025. These serve as gateway products, bridging traditional finance and digital assets.

Liquidity and Integration: The Next Challenges for RWA

According to Liu’s current understanding, the constraints are no longer technological but lie in securing liquidity and deepening the integration of crypto assets with traditional finance. He states that by 2026, the market focus should shift from headline TVL to more fundamental factors.

Specifically, who is leading asset issuance, how RWAs are deployed as collateral, and which platforms will gain liquidity in the secondary market will become increasingly important.

As reported by Cryptopolitan, 2025 was one of the few sectors to generate positive returns in price. During the same period, Bitcoin and Ethereum gave up their all-time highs achieved before the famous leverage unwind in October.

Precious Metal Tokenization Creates Real Demand in the RWA Sector

Another key factor supporting the RWA sector’s strong performance is the rising value of physical assets like gold and silver. Investors facing inflation concerns and a relative decline in the dollar’s value have flowed capital into these traditional stores of value.

As demand for tokenized precious metals has expanded, the market capitalization of this segment has now approached $4 billion. Gold products like Tether Gold and Paxos Gold are leading this field, contributing to market trust.

The trends set by gold and silver have transformed the tokenized commodities space from a niche RWA category into a macro-related asset class with genuine demand. Supported by more transparent price discovery mechanisms and storage standards, integration into DeFi systems and institutional infrastructure is becoming easier—and it is actually happening.

Interoperability as the Next Growth Driver

Another significant driver of RWA growth is interoperability. Liu believes that the true acceleration will occur when tokenized assets move beyond functioning as isolated products and gain the ability to seamlessly transfer across different platforms and blockchains.

Through this deepening connectivity, the RWA sector will evolve into a more mature market structure.