Are We Undervaluing RWAs by Thinking Too Narrowly?
In the past 18 months, “Real-World Assets” (RWAs) have evolved from a crypto niche to a core narrative, but is that narrative too narrow?
Tokenized U.S. Treasuries, private-credit pools, and on-chain money markets now command headlines and billions in volume.
From BlackRock’s USD Institutional Digital Liquidity Fund (BUIDL) — a tokenized institutional money-market fund issued on public blockchains for enhanced liquidity and digital settlement, to Franklin Templeton’s OnChain U.S. Government Money Fund (FOBXX), which records ownership directly on public infrastructure.
RWAs have officially gone mainstream.
But as Real-World Assets rise to prominence, their definition has subtly narrowed.
In practice, “RWA” has come to mean yield-bearing financial instruments that fit neatly inside existing DeFi primitives, which, in this landscape, are most often tokenized Treasuries and money-market products, which today account for nearly half of all on-chain RWA activity (TechFlowPost, 2025).
Analysts note that demand is driven almost entirely by yield, not innovation, with most protocols competing to tokenize the same low-risk, short-duration instruments (Blockhead, 2026). Even at major industry summits, panels on “RWA adoption” orbit around Treasuries, compliance wrappers, and liquidity strategies, rather than the broader question of what off-chain value can become when it’s made programmable (LinkedIn commentary, 2026).
This framing makes sense, particularly when considering early adoption and the pursuit of standardization, while demonstrating that yield-bearing instruments can indeed be tokenized. From this perspective, this approach is well-suited to a smoother pathway for pilot products that can be tokenized in a compliant manner while validating behavioral assumptions.
However, focusing on pilots as final product strategies overlooks a much bigger story: that portfolio strategies will fundamentally transform asset management and wealth management approaches in the next century.
At The RWA Ledger, we believe RWAs aren’t just off-chain securities.
They’re the entire framework through which the world will operate its ability to own, price, and transfer value. To understand where DeFi is going, we have to understand - and appreciate - the story of what’s being digitized and why.
The Crypto View: RWAs as Yield-Bearing Instruments
It’s not hard to see how we ended up here. The hyper-exuberance of 2021 pushed DeFi to its speculative limits, fueled by leverage, liquidity mining, and reflexive tokenomics. The correction that followed in 2022–2023 forced the ecosystem to mature. From that point forward, DeFi’s search for legitimacy required two things: real cash flows and a new narrative that could channel the industry’s imagination toward something tangible, defensible, and institutionally credible.
Real-World Assets (RWAs) as we know them today didn’t emerge overnight, but does that fully capture the story?
The idea of representing off-chain economic value on a blockchain long predates the recent RWA boom. Tokenization itself emerged as one of the earliest use cases for distributed ledger technology, appearing in academic and industry discussions as early as the 2017–2018 era, when proponents first envisioned digital “twins” of physical assets on programmable ledgers. These early concepts framed tokenization as the digital representation of physical or financial assets on a distributed ledger, enabling fractional ownership, transferability, and enhanced liquidity in markets that had previously been opaque or illiquid.
Experimentation began with tokenizing basic financial rights and collectible items, gradually expanding into more complex rights and ownership structures. Projects in the late 2010s sought to represent real estate, commodities, and other asset claims on blockchain networks, ideas that laid the conceptual groundwork for what would later be recast as “RWAs.” One early commercial example from 2018 was Harbor, a platform raising significant venture funding to tokenize real-world securities and bring blockchain efficiencies into traditional finance.
As blockchain ecosystems matured through the early 2020s, the vocabulary and rationale shifted. Early experiments in decentralized finance (DeFi) proved that smart contracts could execute trustless economic logic; the NFT boom highlighted that unique, tradable on-chain representations of value could capture broad interest; and institutional actors began to see tokenization not just as a technology experiment, but as a way to bridge traditional markets with decentralized infrastructure. By the mid-2020s, tokenizing liquid financial assets like government securities and money-market instruments became both technologically viable and far more institutionally palatable - effectively reframing RWAs from a broad philosophical idea into a practical narrative anchored in yield and regulation.
RWAs became that bridge.
The first wave of projects gravitated toward the familiar: assets that could produce yield, satisfy compliance teams, and plug seamlessly into DeFi’s existing architecture.
As a result, most current RWA initiatives cluster around a narrow, well-understood corner of the asset universe:
Short-dated Treasuries → Ondo, MatrixDock, Maple
Private credit and receivables → Centrifuge, Goldfinch
Tokenized real-estate shares or structured notes → RealT, Tangible
These products make intuitive sense; they’re standardized, yield-generating, and relatively liquid. They also map neatly onto on-chain primitives - ERC-20 tokens, liquidity vaults, collateral modules, and stablecoin ecosystems.
In short: they fit the model.
But when RWAs are defined solely as tokenized bonds, we’ve already limited the conversation - treating the “real world” as whatever fits inside a bond wrapper.
That isn’t wrong - it’s just, quite frankly, incomplete.
For institutions and DAOs alike, this was the low-hanging fruit. U.S. Treasuries offered a “risk-free” yield of 5%; DeFi protocols could tokenize that yield and offer composable, permissioned access. It was the perfect narrative: crypto finds real yield.
And so far, it’s proven effective.
RWA-based stablecoin reserves, vaults, and funds helped restore confidence after the collapse of speculative DeFi. MakerDAO’s RWA program, for instance, generated over 60 % of its revenue from off-chain T-bill exposure by late 2024.
This shift demonstrated something powerful: on-chain infrastructure can, in fact, support institutional-grade assets safely and transparently.
But that same success story also defined the boundaries of the conversation.
Because when RWAs are defined solely as tokenized bonds or fixed-income products, we’ve already constrained the imagination of what’s possible.
We’ve equated the “real world” with yield-bearing paper, the safest, smallest slice of a much larger balance sheet.
For comparison:
The global bond market is roughly $130 trillion.
Real estate exceeds $330 trillion.
Infrastructure, commodities, IP, and cultural assets combined dwarf both.
Yet almost all RWA volume today is concentrated in that first category, the one that already has liquidity, credit ratings, and custody infrastructure. We’re tokenizing the assets that least need tokenization while leaving trillions in illiquid, opaque, or inaccessible value off-chain.
That isn’t wrong, it’s just incomplete.
The next phase of RWAs extends beyond just trading and settling bonds faster. It focuses on transforming the very idea of provenance and ownership into assets that can be traded, transferred, and combined across all asset types. Whether it’s a Treasury bill, land, a music royalty, or a carbon credit, tokenization allows assets of any kind - regardless of jurisdiction - to be represented, securitized, and exchanged via interoperable platforms. This shift emphasizes not only control but also connectivity and the measurement of total and complete individual value.
Reframing the Bridge: Where TradFi and DeFi Infrastructures Meet
If the first wave of RWAs in 2016–2018 was about proving that tokenization is technically feasible, and today’s wave is about showing that compliant pilots are achievable, then the next logical step is more fundamental: we have to ask what, exactly, is being connected and what kind of system we are building.
And before diving in, if you’re thinking of this as the creation of a new asset class, it’s not. We’re laying the groundwork for a new operating system for trust and value that keeps pace with today’s rapidly evolving world. So far, a narrow definition of RWAs primarily as yield-bearing financial instruments has shaped how both TradFi and DeFi have approached tokenization:
TradFi optimizes for compliance, custody, and legal enforceability. Its core question is: Can we hold and enforce this asset in accordance with existing regulatory and fiduciary duties?
DeFi optimizes for transparency, composability, and access. Its core question is: Can this asset be made programmable, permissionless, and interoperable on-chain?
Each side has built systems that work remarkably well on their own terms. But both are incomplete with respect to the full reality of ownership — the messy, jurisdictional, private, and multi-dimensional fabric of how value actually exists in the world.
TradFi: Trust Through Intermediation
Traditional finance establishes trust through intermediation - institutional infrastructure, yes, but in practice it’s far less about the systems themselves and far more about the relationships that sustain them. The banks, custodians, and asset managers, CFAs, CPAs, and attorneys have defined the last two centuries of finance as ultimately resting on a framework of human trust. Beneath that relational layer, TradFi’s infrastructure is built in tiers: custody, settlement, and securitization. These functions convert illiquid or complex positions into standardized, investable products. Custodians safeguard assets, registrars track ownership, and intermediaries, often private banks, advisors, and fiduciaries, coordinate execution and ensure compliance.
So, when we think about clients with multi-generational, multi-entity structures, cross-border exposure, or complex tax planning, those intermediaries become something far more than just service providers; they are trusted interpreters of the system - and look to those interpreters to advise them on the best ways to ensure their interests. There inlies the nuance and nature of the relationship: we will hold your assets, protect your information, and make the complexity disappear.
The result is a system optimized for scale and legal enforceability, one that fosters trust through oversight, discretion, and reputation rather than code. It works, but it does so by concentrating trust in institutions and relationships, and by accepting fragmentation as the price of privacy and control.
Privacy as Foundation, Fragmentation as Cost
Behind that operational machinery lies the real foundation of TradFi: privacy.
For clients with complex portfolios, the ability to preserve privacy while coordinating across legal, tax, and investment strategies enables wealth managers and family offices to act as stewards rather than transaction agents.
That same structure delivers trust, but it also creates fragmentation. The reality is that while some clients may maintain a single relationship with one advisor throughout their lives, many don’t; in fact, they use more than one institution during their lives and those of their families, for whom they are beneficiaries of those portfolios. Each firm maintains its own records and its own definitions of ownership. As a result, a client’s true balance sheet - their net worth, liquidity, and exposures - exists only as a composite view, stitched together across multiple systems and counterparties.
Fragmentation isn’t accidental; it’s structural. The same safeguards that enable and enforce privacy also widen the cracks where data can slip - and often do - creating duplication at best and exposure or breaches at worst. For advisors and institutional allocators, this holistic reality is a peripheral nuisance, undermining the accuracy of net-worth measurement, which remains the central metric on which mandates, strategies, and risk frameworks are built.
This is also why a narrow definition of RWAs as a handful of yield-bearing instruments is ultimately insufficient. If “real-world assets” are reduced to tokenized Treasuries and money-market products, we are only capturing a small, already-efficient slice of a client’s balance sheet. The reality of net worth - especially for complex, cross-border, or multi-entity clients - spans operating businesses, real estate, donor-advised funds, intellectual property, private holdings, and so-called “unmanaged assets held away” that rarely appear in consolidated reporting. Those positions matter just as much to the economics of a family, fund, or institution as a short-duration bond ladder.
That tension is one of the reasons client needs are evolving. But it is not the only one. There are broader drivers behind shifting expectations: demand for faster visibility, cross-border coordination, more granular risk attribution, and real-time access to underlying data — not just periodic, reconciled reports. The current architecture has begun to strain under its own design. The closed networks, restricted access, and institutional opacity that once guaranteed safety now limit agility, integration, and truly holistic portfolio construction.
Seen through that lens, the trade-off remains what it has always been: the system is safe, but siloed. And as long as ownership records, valuation logic, and legal claims remain fragmented across institutions and jurisdictions, it will be difficult - if not impossible - to credibly treat RWAs as merely a category of yield products. They are, instead, the infrastructure for representing the full balance sheet — and until we address that, we are only tokenizing the most convenient corner of it.
DeFi: Trust Through Transparency and the Architecture That Could Fix Fragmentation
Where TradFi built trust through relationships and discretion, DeFi set out to rebuild it through verification and code. In the aftermath of the 2008 financial crisis - and later, the speculative COVID-19 crisis cycle of 2021 - that shift became more permissive at the industry level, an opportunity to philosophically reset the narrative for blockchain-based technology, and proof that the financial system of tomorrow will be on-chain.
DeFi’s core principle was simple and radical: if every transaction can be verified, and every rule enforced by code, then integrity becomes a property of the system itself, not the institutions that operate within it. In that version, audits are continuous, risk is observable, and settlement is final, while eliminating the ability to change or redact records of transactions - the footprint of the owners and actions becomes forever embedded into the system - finality. As with any period of maturation, ideology, and infrastructure. For DeFi to bridge into the real economy, to interact with regulated capital markets, institutional treasuries, or sovereign funds, trust could no longer rest solely on transparency. It had to integrate privacy, compliance, and verifiability - all coexisting on a programmable layer.
This is where DeFi’s real potential begins to intersect with an expanded view of RWAs. Because if we define “real-world assets” solely as tokenized financial instruments, we miss the broader opportunity: using blockchain infrastructure to unify fragmented ownership data without sacrificing confidentiality.
From Transparency to Trust Architecture
In traditional finance, trust is conferred by intermediaries; in DeFi, it is created by verifiability. The emerging model - the one that RWAs actually demand - is neither purely intermediated nor purely transparent.
On-chain proofs don’t replace institutions; they inform them. Smart contracts become the connective layer that synchronizes how ownership, value, and risk are tracked across disparate systems. Oracle networks like Chainlink already provide the data infrastructure that bridges off-chain information with on-chain logic, securing over $9 trillion in transaction value by enabling verifiable feeds for real-world events, from market prices to proof-of-reserves.
And that bridge now extends even further through Chainlink’s Cross-Chain Interoperability Protocol (CCIP), which enables secure, programmable communication between blockchains and traditional financial systems.
CCIP acts as a universal transaction and messaging layer, enabling tokenized assets, collateral data, and settlement instructions to move across public and private networks without manual reconciliation. In essence, it’s the missing interoperability fabric: a neutral protocol that lets assets and information flow between ecosystems without breaking compliance, custody, or risk controls.
The same infrastructure that makes ownership transparent to a protocol can keep it private to the world, through technologies like zero-knowledge proofs (ZKPs) and privacy-preserving computation. A validator can confirm that a family office holds sufficient collateral or meets a jurisdiction’s reporting standard without revealing underlying positions, counterparties, or strategy. In that sense, DeFi’s transparency does not inherently threaten institutional privacy; it can enable verifiable discretion, a critical step in ensuring compliance and solvency while preserving confidentiality.
“The future of financial infrastructure lies not in choosing between privacy and transparency, but in proving both can coexist.”
— Bank for International Settlements, Project Mariana Report (2023
Why Defining RWAs Broadly Matters
The future of verifiable privacy and interoperable ownership - and how we actually get there - depends on refusing to define RWAs narrowly as yield products and instead treating them as infrastructure primitives. Not as a new asset class, but as the mechanisms that ensure existing assets can be properly tokenized, managed, and operated within an environment that allows each of them to become a living object of proof:
Proof of ownership - via legal enforceability and clear title.
Proof of value - via verifiable oracles and market data.
Proof of authenticity - via ZK-proven metadata, custody, and provenance.
In this model, the “real world” is no longer whatever happens to sit off-chain by default; it is what has been digitally reconciled across chains, custodians, and institutions. The broader the definition of RWAs, the more of that real-world complexity these proofs can represent - and the more of it the system, and the individuals within it, can protect. Confinement of RWAs to a narrow set of tokenized bonds and stable-yield instruments will risk the rebuilding of the very silos DeFi was designed to dissolve. We will have reproduced fragmentation - only this time, encoded in smart contracts instead of spreadsheets.
The goal is not to make everything transparent. It is to make ownership coherent - visible where it matters, and private where it must be. That coherence is what connects DeFi’s infrastructure to the institutional systems it once sought to replace. RWAs, broadly defined, are how those two worlds finally converge: a programmable layer of trust that unites the verifiability of open systems with the discretion of private ones.
The outcome isn’t simply “DeFi meets TradFi.” It is the emergence of a new financial substrate that unites privacy, interoperability, and ownership within a shared infrastructure - one capable of meeting the demands of a rapidly changing economy. And, of clients who now expect their financial lives to function with the same fluidity as any other digital service in a hyper-connected world. That infrastructure only works if we stop thinking of RWAs as yield - and start thinking of them as design.
Next in The RWA Ledger:
“ How Language will Define Infrastructure & What that Means for the Future of RWAs.”
Regulation begins not with rules but with discussions that lead to realizations and updated definitions aimed at understanding the future of finance. Our definitions of terms like “digital asset,” “tokenized security,” or “real-world asset” will significantly influence custody models and capital flows.
In our next piece, we’ll examine how language and evolving understanding around the terminologies associated with TradFi and DeFi asset classes are informing infrastructure, shaping what can be built, who can participate, and how trust is enforced across systems.
Marina Mendenhall-Valente
Partner, Tiburon Advisory Group | Founder of The RWA Ledger
Bridging TradFi × DeFi Through Emerging Tech
Views are my own. This publication is for informational purposes only and does not constitute financial advice, endorsement, or investment solicitation.