Tokenized Real-World Assets in DeFi: Early-Stage Market Capture and Use Case Viability in 2025

The tokenization of real-world assets (RWAs) has rapidly evolved into a significant component of the decentralized finance (DeFi) ecosystem, with substantial market growth observed between 2022 and 2025. As of Q3 2025, the value of tokenized RWAs exceeded $30 billion, with projections indicating a potential market size of $2 to $4 trillion by 2030 and as high as $30 trillion by 2034 under optimistic scenarios. This surge is driven by advancements in institutional adoption, regulatory clarity, and technological infrastructure, which have made tokenization a viable solution for enhancing liquidity, fractional ownership, and operational efficiency across diverse asset classes.

Market Growth and Institutional Adoption

The DeFi market, of which RWA tokenization is a crucial subset, is projected to grow significantly, expanding from $87.11 billion in 2025 to approximately $954.59 billion by 2035, driven by innovations in decentralized applications (dApps), smart contracts, and global financial inclusion. Institutional players such as BlackRock, JPMorgan, and Franklin Templeton have launched tokenized funds, including BlackRock's BUIDL fund and tokenized U.S. Treasury products. These developments are supported by blockchain interoperability solutions like LayerZero and Wormhole, enabling cross-chain liquidity and reducing market fragmentation.

Tokenization enables the conversion of traditional assets like real estate, private equity, and government securities into blockchain-based tokens, which can be traded globally with near-instant settlement. For example, BlackRock's BUIDL fund, which focuses on tokenized U.S. Treasuries, has attracted significant institutional interest, highlighting the growing confidence in this asset class. By the end of 2025, tokenized U.S. Treasuries alone accounted for nearly $8.7 billion, signaling a broader shift toward digital representations of traditional assets.

Use Case Viability

Several asset categories are leading the tokenization wave in 2025, including real estate, private credit, U.S. Treasuries, and commodities like gold. Real estate tokenization allows investors to own fractional shares in high-value properties, providing liquidity and diversification opportunities. Private credit has also gained traction due to its attractive yields and efficiency of tokenized loan issuance and management. The tokenization of U.S. Treasuries has further demonstrated the potential of RWAs as stable, low-risk assets with programmable compliance and instant settlement capabilities. Additionally, gold tokenization has emerged as a hedge against economic volatility, offering investors the benefits of fractional ownership and global accessibility.

Challenges and Regulatory Landscape

Despite the momentum, challenges such as regulatory fragmentation, infrastructure limitations, and institutional education remain critical barriers to broader adoption. However, regulatory sandboxes in regions like the Middle East and Asia Pacific are and accelerating adoption. The adoption of zero-knowledge proofs (ZKPs) and advanced oracle integrations, such as those from Chainlink, are addressing privacy and compliance concerns while enabling real-time pricing and settlement.

Conclusion

The tokenization of RWAs represents a transformative shift in how traditional assets are accessed, traded, and managed. With institutional backing, technological advancements, and regulatory progress, the market is poised for exponential growth. However, sustained adoption will depend on overcoming infrastructure gaps and aligning global regulatory frameworks. For investors, early-stage participation in RWA tokenization offers a unique opportunity to capitalize on a market that could redefine liquidity and accessibility in finance.