Tokenized Treasuries Are Soaring

Last month, we covered a new project, Backed Finance, which is an on-chain treasury management solution that tokenizes securities to provide attractive yields. In plain English, Backed allows users to invest in traditional assets like Treasuries or even popular equities like Google or Apple with their crypto.

This was intriguing to us because while yields on stablecoins are lower than treasuries at the moment, there are numerous advantages to holding assets on-chain, including that it’s a 24/7 market with limited barriers to entry.

Backed provides the best of both worlds by taking the strong yields from traditional assets and putting them on-chain.

Well, it appears we weren’t the only people fascinated by on-chain treasuries. As it turns out, demand for on-chain treasuries is soaring, with the market-cap of tokenized money market funds now sitting at a robust $500 million, 4x what it was last year.

Some of the notable projects in this niche include:

• Franklin Templeton’s Franklin OnChain U.S. Government Money Fund, which now has $276 million in assets

• Ondo Finance’s OUSG tokenized product, which has swelled up to $132 million in assets

• Matrixdock’s SBT, which contains $72 million in funds

Overall, this is all part of a wider trend toward the tokenization of real-world assets (RWA). This is a use-case that TradFi entities like JP Morgan and Bank of America are in love with.

It’s not hard to see why so many people are attracted to tokenized RWAs: it solves issues existing in both crypto and traditional finance.

For crypto, tokenizing an RWA gives a steady source of yield and provides crypto with the “real” asset that many feel it currently lacks. While for TradFi, tokenized assets spice these boring investment objects up with some much-needed liquidity, flexibility, and dynamism.

For these reasons, tokenized RWAs will likely continue to grow, especially if the yields in DeFi remain inferior to those found in TradFi.