The tokenized real-world asset market has reached $34.6 billion onchain, but only $3.79 billion has been deployed in protocols, leaving about 89% of issued value idle.
DefiLlama data shows a sharp difference between the value of tokenized assets issued onchain and the amount being used inside decentralized finance protocols.
BlackRock’s BUIDL has a utilization rate of 0.64%, while Franklin Templeton’s BENJI stands at 0% and Circle’s USYC at 0.52%, according to the platform. Each product gives holders exposure to yield-bearing assets, but little of their issued value has moved into the protocols covered by DefiLlama’s utilization measure.
Products created for use as collateral show a different pattern. Centrifuge’s tokenized Janus Henderson Anemoy AAA CLO Fund, known as JAAA, has reached 97.97% utilization, while Re Protocol’s reUSD stands at 97.87% and Maple Finance’s SyrupUSDT at 88.84%.
Artem Tolkachev, chief RWA officer at Falcon Finance, told crypto.news that the gap cannot be understood from one utilization figure alone. In his view, analysts must first examine what the asset was created to do and then identify where holders are using it.
“Low utilization is weak utility when a product was built and priced to be borrowed against and stays flat after launch,” Tolkachev said.
“An underlying fund that is held for yield and redeems on time is doing its job at zero utilization.”
Tokenized RWA utilization requires more than one measure
Tolkachev separates utilization into two levels. At the asset level, he examines redemption speed, the party responsible for honoring redemptions, the stability of the yield, and the losses holders could face after a default.
At the use level, he looks at whether an asset is being held for yield, posted as collateral at a centralized exchange, or supplied to a DeFi protocol. Each route carries different terms and risks, he said, making protocol utilization an incomplete measure of total demand.
Assets held by custodians or supplied as margin at derivatives venues may perform an economic function without appearing in DeFi utilization data. Money market funds, for example, are commonly purchased as cash-management products rather than assets that must circulate through lending pools.
Wrappers designed specifically for DeFi require a different test, according to Tolkachev. If their main purpose is to support borrowing or other onchain activity, a low utilization rate after launch can point to weak adoption.
A similar gap has appeared at the network level. An August report found that Stellar’s RWA market had grown from about $785 million in January to more than $3 billion in July, while RWA-enabled pools on its Blend lending protocol held only slightly more than $2 million.
RedStone attributed part of the gap to the difficulty of pricing traditional assets around the clock. U.S. Treasuries, money market funds and corporate credit do not produce continuous market prices in the same way as Bitcoin or Ether, leaving lending protocols to manage stale valuations when the underlying markets are closed.
Falcon applies five tests before accepting RWA collateral
Before Falcon accepts assets such as JAAA, the JTRSY Treasury fund, or tokenized Mexican CETES, Tolkachev said its underwriting process focuses on two outcomes: how quickly the protocol can turn seized collateral into cash and how much value it could recover under stressed conditions.
The first test covers the token holder’s legal claim. Falcon examines whether the token provides a perfected claim on assets held through a bankruptcy-remote structure or merely an unsecured promise from the issuer. The review also considers what would happen to holders if the issuer failed.
Redemption terms form the second test. Some tokenized money market funds can redeem directly into a stablecoin onchain, while liquidity facilities may buy fund shares at net asset value onto their own balance sheets. Other products depend on the issuer and the timetable written into the fund documents.
“We read the documents, not the deck,” Tolkachev said. “A collateral asset you cannot exit in stress is not collateral.”
Falcon then examines secondary-market liquidity to determine whether another buyer exists or whether redemption is the only exit. A limited secondary market can slow a liquidation or force the protocol to accept a lower price when it needs to close a position.
The fourth test covers the price feed, including how the asset is valued and whether the data can resist manipulation when its underlying market is closed. Credit quality completes the review through an assessment of ratings, duration, issuer exposure, and portfolio concentration.
Falcon classifies JAAA as exposure to AAA-rated collateralized loan obligations, while JTRSY holds short-term U.S. government debt and CETES represents short-dated Mexican sovereign bills. The protocol has added JAAA and JTRSY as accepted collateral and separately integrated tokenized Mexican bills.
“If any one of those five legs fails, it does not become collateral, however attractive the yield,” Tolkachev said.
Closed markets increase liquidation risk for tokenized RWAs
DeFi loans run continuously, but the securities behind many RWA tokens trade during limited hours. Tolkachev said Falcon sets collateral factors by measuring price volatility, the time needed to sell the asset, and the period during which the protocol could be unable to transact or obtain a fresh valuation.
Structured credit and non-U.S. sovereign bills may not trade overnight or during weekends. A borrower can still approach a liquidation threshold during that period, leaving the protocol with collateral it cannot immediately sell.
To account for the mismatch, Falcon applies larger haircuts when an underlying market has long closures or limited secondary liquidity. Its liquidation thresholds also include a buffer for periods when the asset cannot be traded, while its pricing process may hold or discount a stale valuation instead of relying on a thin off-hours trade.
Weekend news creates another risk because the credit or sovereign asset may reopen at a different price. Tolkachev said Falcon adds a cushion for such gaps and sizes borrowing capacity according to what the protocol could liquidate during the asset’s most difficult trading window, rather than using its full face value.
The issue has direct relevance for tokenized U.S. Treasuries and funds holding American government securities. Although their blockchain tokens can move at any hour, reliable prices and access to the underlying Treasury market still depend on traditional trading, settlement, and redemption systems.
A June guide to RWA tokenization noted that putting an asset onchain does not alter its legal character. Token holders still depend on fund structures, custodians, transfer restrictions, and the laws governing the underlying claim.
RWA underwriting capacity remains concentrated
Few DeFi protocols accept structured credit or sovereign debt as collateral because the review requires legal, credit, and operational expertise, according to Tolkachev. Most lending protocols were built to list liquid crypto tokens with continuous exchange prices, a model that does not cover fund documents, bankruptcy claims, or issuer-managed redemptions.
Underwriting also requires protocols to create liquidation procedures for assets whose markets may be closed when a loan becomes undercollateralized. Since much of that work is specific to each product, Tolkachev said it cannot be fully automated.
Capacity has consequently gathered at a small number of venues able to complete such reviews. Pools that accept assets built for collateral use can fill quickly, even as much larger tokenized funds remain outside lending and borrowing markets.
Centrifuge offers one example of demand concentrating around an asset with a defined use. In August 2025, its total value locked crossed $1.1 billion, supported by more than $653 million in JAAA and over $392 million in its tokenized Treasury fund. At the time, JAAA was available to non-U.S. professional investors with a minimum investment of $500,000.
Tolkachev said expanding underwriting capacity would require common standards covering the legal rights attached to RWA tokens and the process for redeeming them. He also called for reliable price feeds for assets with closed-market hours and detailed disclosures covering portfolio composition, issuer exposure and concentration.
