The headline number matters because the market has been circulating bigger claims. Even though some outlets have floated figures above $30 billion, the chain-level measurement that anchors this shift is the ~$17 billion TVL level, which is the clearest basis for ranking RWAs above DEXs. Inside the category, tokenized metals are gaining real weight as well. Tokenized precious metals are approaching a collective market capitalization near $4 billion, adding a tangible commodity segment to RWA growth.
RWAs have now surpassed DEXs to become the fifth largest category in DeFi by TVL.
At the start of this year, they weren't even in the top 10 categories. pic.twitter.com/EDMvPRQyWo
— DefiLlama.com (@DefiLlama) December 29, 2025
Why RWAs are pulling ahead
The main driver is not experimentation; it is balance-sheet logic. Vincent Liu, CIO at Kronos Research, calls it “balance-sheet incentives rather than experimentation,” and that framing fits a higher-rates environment where tokenized U.S. Treasuries and private credit look attractive as yield-bearing on-chain instruments. At the same time, clearer regulatory frameworks reduce friction for institutional adoption. Major institutions have accelerated tokenization efforts, with BlackRock’s BUIDL and Franklin Templeton’s BENJI both tied to traditional fixed-income exposure.
Ethereum remains the primary public settlement layer for RWA issuance, but capital is spreading beyond one chain. Polygon is associated with about $1.13 billion in RWA TVL, while BNB Chain, Avalanche, Solana, and Arbitrum sit in smaller low-to-mid single-digit shares. Institutional deployment leans even more heavily toward controlled environments. Permissioned infrastructure dominates the institutional segment, and the Canton Network is associated with over 90% of institutional RWA market share, reflecting demand for privacy-preserving, regulated settlement with interoperability into DeFi liquidity.
What changes for traders and treasuries
This reshuffle changes on-chain operating assumptions. Having RWAs in the top five expands access to more stable, yield-oriented collateral on-chain, which can reshape liquidity management and hedging choices that previously relied more heavily on volatile DeFi-native yield. It also signals a broader rotation in where liquidity wants to live. As RWAs gain share while DEX TVL slips, on-chain capital is moving from purely speculative yield-seeking toward instruments that resemble traditional finance cash-flow profiles.
RWAs taking the #5 TVL position is more than a ranking change. It marks a structural step toward deeper integration between DeFi rails and traditional assets, with real implications for collateral composition, liquidity distribution, and risk management across the ecosystem.