Investors are increasing allocations to tokenized U.S. Treasuries, according to market research firm The Kobeissi Letter, adding fresh momentum to the growth of on-chain Treasury products. Data cited by Kobeissi shows the total market capitalization of on-chain U.S. Treasury funds has climbed to a record $16.2 billion, up about 77% since the start of the year.
Kobeissi said demand for on-chain yield has been a key driver behind the expansion. More users are using tokenized Treasuries as collateral to borrow stablecoins, then deploying that capital into decentralized finance, or DeFi, strategies to improve capital efficiency. On some on-chain lending platforms, users can also employ looping strategies, repeatedly posting tokenized Treasury products as collateral, borrowing stablecoins, and re-entering the market.
According to Kobeissi, some of those strategies can generate annualized yields above 10%. The firm added that as more traditional financial assets move on-chain, tokenized U.S. Treasuries are becoming a core piece of on-chain finance and could develop into an important component of future blockchain-based capital markets.
Investors are stepping up allocations to tokenized U.S. Treasuries, according to market research firm The Kobeissi Letter, a shift that is continuing to expand the on-chain market for Treasury-backed products.
Data cited by Kobeissi shows the total market capitalization of on-chain U.S. Treasury funds has reached a record $16.2 billion, up about 77% from the beginning of the year.
Kobeissi said the market’s growth is being driven mainly by demand for on-chain yield. A growing number of users are using tokenized U.S. Treasuries as collateral, borrowing stablecoins against those holdings, and deploying the borrowed funds into DeFi strategies to increase capital efficiency.
Some on-chain lending platforms also support looping strategies, allowing users to repeatedly pledge tokenized Treasuries, borrow stablecoins, and put that capital back into the market. Kobeissi said some of those strategies can produce annualized yields of more than 10%.
The firm said that as traditional financial assets continue moving onto blockchain rails, tokenized U.S. Treasuries are turning into key infrastructure for on-chain finance and could become an important part of future on-chain capital markets.
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