Aave V3 captures 64% of tokenized US Treasuries used in DeFi, but that’s a tiny slice of a $16B pie

The tokenized US Treasury market has ballooned to roughly $16.19 billion in total distributed value. But zoom in on how much of that capital is actually doing anything in DeFi, and the picture gets a lot less impressive. Just 0.7% of all tokenized Treasuries are currently being used in decentralized lending and borrowing protocols. Of that sliver, Aave V3 commands 64.1% of the market. The big names, the bigger paradox The tokenized Treasury space is now home to some of the most recognizable brands in finance. Circle’s USYC product leads with approximately $3.0 billion, followed by BlackRock’s BUIDL at $2.7 billion and Ondo’s USDY at $2.1 billion. The broader tokenized RWA sector is estimated to sit somewhere between $33 billion and $60 billion depending on how you measure it. Treasury products offer attractive, relatively risk-free yields. When you’re earning a solid return just by holding an asset, the incentive to deposit it into a lending protocol and take on smart contract risk drops considerably. Market analyst Mackenzie Spencer highlighted this dynamic, pointing to the stark contrast between the massive on-paper market size and the sluggish actual utilization of these assets ...