On-chain finance is still growing, but the source of that growth has changed.
A report released jointly by CoinShares and Token Terminal on Aug. 6 said total DeFi deposits fell about 15% year over year in the second quarter of 2026. During the same period, deposits tied to real-world assets, or RWA, rose from $2.33 billion to $7.44 billion, an increase of more than 200%. Total DEX spot trading volume dropped about 70% year over year, while RWA spot volume moved the other way and grew about 220%.
The split is stark. What has been shrinking is the crypto-native side of DeFi. What has been expanding is mostly the tokenization of traditional financial assets, including U.S. Treasuries, money market funds, private credit, gold, crude oil, and equity index futures.
DeFi contracted as RWA deposits expanded
DeFi total value locked kept falling through 2026. It started the year at roughly $115 billion and slid to an intra-year low of $69.4 billion in early June, a decline that at one point approached 40%.
The report broke that weakness down across several ecosystems. Ethereum’s DeFi base fell 43%, Arbitrum dropped 55%, and Plasma was down nearly 75%.
It also listed several drivers behind the retreat. BTC entered a down cycle after setting a record above $122,000 in October 2025, pushing the broader crypto market into deleveraging. Lower yields unwound arbitrage loops and recursive lending strategies. Security losses added more pressure: 121 hacks had already taken place in 2026, with cumulative losses of about $942 million. After Kelp DAO was hacked for $293 million on April 18, Aave users withdrew about $15 billion in deposits over the next four days.
The report’s framing is straightforward: confidence has been fading, leverage has been coming out, and speculative capital has been leaving the crypto-native side of DeFi.
RWA deposits moved in the opposite direction. According to the report, the largest components were tokenized Treasury funds, yield-bearing stablecoins, multi-strategy funds, and private credit. These assets can still generate income while being used as on-chain collateral or lending assets, so investors do not have to give up the underlying yield in order to access blockchain-based liquidity.
BlackRock’s BUIDL was highlighted as a key example. Its assets under management had reached about $2.87 billion by mid-July, making it the largest single tokenized Treasury product. In yield-bearing stablecoins, Sky Protocol’s sUSDS led the category in the second quarter.
Lending markets are taking more RWA collateral
Aave, Morpho, and Kamino have been accepting RWA as collateral at a growing scale. Users can borrow stablecoins against tokenized Treasuries instead of being limited to ETH or BTC. The report notes that the latter can move 30% with ease, while the former has close to zero price volatility.
That changes the risk profile for both sides of the market. Lending protocols face less liquidation risk. Borrowers get higher capital efficiency. Ethereum now accounts for close to 70% of the RWA lending collateral market.
CoinShares said both lenders and borrowers still prefer deeper liquidity venues, and Ethereum remains unmatched for large transactions and institution-sized capital flows. Solana has been growing faster on the spot side, while Hyperliquid has stood out in derivatives.
By mid-2026, total on-chain RWA value excluding stablecoins had reached about $37.89 billion, spread across nearly 789,000 holder addresses. Tokenized U.S. Treasuries alone grew from less than $1 billion at the start of 2025 to more than $15 billion, with BlackRock controlling about 40% of that category.
RWA perpetuals became a major on-chain trading segment
If deposit data shows where assets are moving, derivatives data shows where trading is moving.
RWA perpetual contracts went from an almost nonexistent segment to one of the main engines of on-chain trading in less than six months. Quarterly volume jumped from $12.37 billion in the fourth quarter of 2025 to $202.7 billion in the second quarter of 2026, roughly a 16-fold increase. Data from DWF Ventures at the end of July showed RWA perpetuals at one point accounted for 37% of total perpetuals volume across the market.
TradeXYZ on Hyperliquid was identified as the largest player in the segment, with cumulative volume of $350.7 billion, far above Binance at $42.1 billion. Open interest in Hyperliquid’s RWA perpetuals hit a record $2.65 billion in May and doubled over two months.
Most of the trading has been concentrated in commodities, which represented 70% to 95% of activity. Equity perpetuals, though, surged 121% month over month in May. The S&P 500, the Nasdaq 100, and tech stocks were the fastest-growing categories.
The implication drawn in the report is unusual for crypto markets: on a decentralized exchange built on crypto-native infrastructure, nearly half of trading volume is tied to crude oil, gold, the S&P 500, and Nvidia stock rather than digital assets. In that framing, Hyperliquid is no longer just a DeFi protocol. It is becoming a 24/7 global trading venue for financial assets.
Not replacement, but integration
Circle co-founder Jeremy Allaire said after seeing the data that the crypto market is shifting away from “speculation on endogenous digital commodities” and turning outward.
The article argues that the 2021 on-chain boom was built on a token-incentive loop: protocols issued tokens, users deposited assets to earn them, token prices rose, and more capital followed. That cycle was largely internal to crypto. Once the market cooled, it broke down quickly, and the decline in DeFi TVL through 2026 is presented as a continuation of that unwind.
The growth seen in 2026 is being driven by something else. The article says BlackRock moved U.S. Treasuries onto Ethereum because blockchain-based settlement is faster, cheaper, and always on. Institutional investors use tokenized Treasuries as collateral on Aave because they can keep a 4.5% Treasury yield while accessing on-chain liquidity. Traders use crude oil perpetuals on Hyperliquid because if a geopolitical event breaks on a Sunday night, traditional markets are closed and blockchain markets are not.
CoinShares CEO Jean-Marie Mognetti offered a broader conclusion in the report: when an asset class grows during a downturn in its host ecosystem, demand is being driven by financial utility rather than by the market cycle.
Under that view, RWA growth does not depend on a crypto bull market, token incentives, or speculative sentiment. It depends on actual gains in settlement efficiency, round-the-clock liquidity, and capital efficiency.
Regulation and institutional product buildout are moving together
One comparison in the article shows how early the market still is. Global equities are worth more than $100 trillion, yet only about $2.2 billion of that is currently tokenized on-chain, for a penetration rate of 0.002%. CoinShares compared the current phase to stablecoins in 2019: the concept has been validated and the infrastructure is being laid, but broad adoption still needs time.
On regulation, the GENIUS Act was signed into law in July 2025, creating a federal framework for stablecoins. The Office of the Comptroller of the Currency, or OCC, has already issued national trust bank charters to companies including Circle and Paxos. The article says regulatory clarity is starting to unlock institutional capital that had stayed on the sidelines.
BlackRock filed with the U.S. Securities and Exchange Commission in May for two new tokenized funds, along with on-chain shares for a $7 billion money market fund. The article says the firm, which manages more than $10 trillion in assets, is moving tokenization from an experiment to a product line.
Only a fraction of on-chain RWA has entered DeFi
The report also points to how much room remains. With $7.44 billion in RWA DeFi deposits against $37.89 billion in total on-chain RWA, DeFi has absorbed only about 20% of tokenized real-world assets so far.
It estimates that roughly $2.5 billion in RWA is currently deployed in DeFi lending, compared with a tokenized asset base above $30 billion. That implies about 12x expansion potential, assuming technical and regulatory barriers keep easing.
The article closes with a simple contrast between cycles. In the last cycle, crypto argued that DeFi would replace banks. The data in this cycle says something different. Replacement has not happened. What is happening is that bank-linked assets are starting to use blockchain as a settlement layer.
Blockchain is not replacing Wall Street. It is becoming a new pipe for Wall Street.