DeFi Embraces Institutional Investors Amid $24 Billion RWA Growth and $50 Billion TVL Surge

The DeFi sector, once seen as a direct rebellion against traditional finance, now faces a crucial crossroads as institutional investors, known as “suitcoiners,” increasingly enter the space. Kevin Rusher, founder of RAAC, argues that rather than resisting this shift, DeFi should embrace it as a path to maturity and long-term sustainability. The rise of institutional participation, led by major players like BlackRock—now the second-largest holder of Bitcoin—highlights a significant change in the crypto landscape, with traditional asset managers exploring opportunities in both Bitcoin and tokenized real-world assets (RWAs). Despite this, trust in crypto remains a major hurdle, with 38% of non-crypto owners expressing no interest in the asset class due to volatility and inaccessibility [1]. In the U.S., crypto adoption has even dipped below pre-2022 levels, reaching 28%, a drop from 33% in 2022, the year that saw the Terra collapse erase $60 billion in value [1].

DeFi, in particular, has struggled with a reputation problem. Critics often liken it to a casino due to its association with meme coins, volatile hype cycles, and frequent hacks. However, Rusher points out that DeFi is evolving and beginning to meet the standards expected by institutional investors. Recent developments show DeFi protocols offering cleaner user experiences, compliance-ready frameworks, and stable returns that often outperform traditional benchmarks. An Artemis and Vaults report identifies a growing trend of “invisible DeFi,” where protocols like Morpho, Spark, and Aave integrate directly into fintech apps and exchanges, simplifying user access to DeFi’s yield-generating features. In June 2025 alone, collateralized lending platforms surpassed $50 billion in total value locked (TVL) [1].

Meanwhile, tokenized RWAs have emerged as a significant bridge between traditional finance and DeFi. The RWA market has grown to over $24 billion in market capitalization, up from $11.5 billion in June 2024, with private credit leading the segment at 58% of the market [1]. This surge has not been driven by hype or influencers but by institutional investors seeking the benefits of DeFi’s open infrastructure and liquidity. Analysts like VanEck predict RWAs will exceed $50 billion by the end of 2025 [1].

Rusher acknowledges that institutional involvement does not come without risks. If blockchain technology is adopted through centralized and permissioned systems, it could undermine the decentralization principles that DeFi was built on. However, he argues that the sector must find a way to coexist with institutional players on equal terms, ensuring that DeFi remains true to its foundational values while also embracing growth and evolution. The key to this balance lies in clear regulation and liquidity, which can provide the structure necessary to build a system that is resilient to market shocks and not reliant on viral tweets for its survival [1].

By integrating traditional financial assets and institutional capital, DeFi is on the path to becoming a more robust and credible player in the global financial system. If done correctly, this evolution could ensure a prosperous future for DeFi, where stability and structure replace the wild volatility that has long defined the sector [1].

Source: [1] DeFi shouldn’t fear ‘suitcoiners’ (https://cointelegraph.com/news/defi-shouldn-t-fear-suitcoiners?utm_source=rss_feed&utm_medium=rss&utm_campaign=rss_partner_inbound)