What happened: The tokenized US Treasury market has swelled to around $16 billion, but the vast majority of this capital sits completely dormant—waiting out its existence until redemption. Major traditional asset managers are successfully issuing these assets, but they are mostly treating tokenization as a faster distribution channel rather than unlocking true financial infrastructure.
Why it matters: Getting assets onchain is no longer the main hurdle; making them useful is. Instead of redeeming tokens for cash—which kills the yield—protocols like Morpho and Aave are allowing investors to use tokenized assets as collateral to borrow stablecoins. For the crypto and DeFi markets, this shift from mere token representation to active utility unlocks billions in liquidity and bridges traditional finance with onchain lending rails.
