BlackRock, Circle, and Franklin Templeton tokenized funds added $7.1B YTD. DeFi utilization is near zero, while smaller credit tokens hit 50-97% — a two-tier market grows.
Alpha Score of 66 reflects moderate overall profile with strong momentum, weak value, moderate quality, strong sentiment.
Three tokenized funds from BlackRock, Circle, and Franklin Templeton have added roughly $7.1 billion in market cap since the start of the year. The fund category is now the single largest driver of growth across the entire tokenized asset landscape, according to data tracked by DeFiLlama and other platforms.
Circle’s USYC leads with an active market cap of about $3 billion. BlackRock’s BUIDL follows at roughly $2.7 billion. Franklin Templeton’s iBENJI sits at approximately $1.5 billion. Each product is a blockchain-native wrapper around traditional money-market or Treasury instruments, offering institutional investors on-chain exposure to short-term government debt.
Despite the billions in assets, these funds have almost no interaction with decentralized finance protocols. DeFi utilization for the three major funds hovers between 0% and 1.05%, DeFiLlama shows. The vast majority of holdings remain in custody or direct wallets, functioning more like digital certificates of deposit than active DeFi building blocks.
The contrast with smaller credit-focused tokens is sharp. Maple and Janus Henderson’s tokenized credit offerings show DeFi utilization rates ranging from 50% to 97%. Those tokens are actively deployed as composable collateral across lending and borrowing markets. The gap creates a two-tier system within tokenized real-world assets. Large institutional funds use blockchain rails for issuance and record-keeping but avoid on-chain activity. Smaller credit tokens are deeply embedded in DeFi.
The low DeFi utilization rate reveals the current state of institutional tokenization. The promise of tokenized real-world assets has always been composability: a tokenized Treasury bill could serve as collateral in a lending protocol, then be rehypothecated into a structured product, all without leaving the blockchain. That vision remains almost entirely theoretical for the largest funds in the space.
If even a fraction of BUIDL or USYC’s market cap eventually becomes composable within DeFi, the liquidity implications for on-chain lending markets would be significant. A 5% utilization rate across $7 billion in tokenized fund assets would inject roughly $350 million in new collateral into DeFi protocols, according to calculations based on the current market caps.
The concentration of growth in just three funds raises questions about market structure. When three products from three issuers account for the majority of a sector’s year-to-date expansion, any regulatory action targeting one of these issuers, or a significant redemption event, could ripple across the broader tokenized asset market in ways that a more distributed landscape would absorb more easily. The total on-chain tokenized asset market currently ranges between $33.9 billion and $36.7 billion depending on the tracking platform.
For now, the largest tokenized funds remain isolated from DeFi. The path to integration would require regulatory clarity from the SEC and the CFTC, as well as demand from institutional investors for on-chain collateral use. Until then, the billions sit idle in wallets, waiting for the composability promise to catch up to the fundraising.
Drafted by a large language model from the source reporting linked above, then screened by automated publishing checks. It is not read by a journalist before publication. Some articles cite our Alpha Score. Verify prices and figures against the original source. Educational coverage, not personalized advice.