Why are 89% of tokenized RWAs in the $34.6 billion market idle? Falcon executives reveal

Tokenized real-world asset market: US$34.6 billion in on-chain value, only 1.79% is called by the protocol

The total on-chain size of the tokenized real-world asset (RWA) market has reached US$34.6 billion, but only US$3.79 billion is deployed in the Decentralized Finance (DeFi) protocol. This means that approximately 89% of the issued value is idle.

Data shows that in the US$34.6 billion tokenized RWA market, only about 11% of the value is actually put into use. Among them, BlackRock's BUIDL, Franklin Templeton's BENJI and Circle's USYC all have utilization rates below 1%. In contrast, JAAA and reUSD utilization exceeds 97%, according to DeFiLlama.

Falcon Finance will conduct a rigorous review of its legal claims, redemption mechanisms, liquidity, pricing and credit quality before accepting RWA as collateral. Data from DeFiLlama shows that there is a huge difference between the value of tokenized assets issued on the chain and the amount used within the DeFi protocol.

The utilization rate of different products shows significant differentiation

According to platform data, BlackRock's BUIDL utilization rate is 0.64%, Franklin Templeton's BENJI is 0%, and Circle's USYC is 0.52%. Although these products are designed to allow holders to reap the benefits of interest-bearing assets, very little of their issue value flows into the agreements covered by DeFiLlama.

Products specifically designed to be used as collateral take on a different pattern. The tokenized Janus Henderson Anemoy AAA CLO Fund (JAAA) issued by Centrfuge has a utilization rate of 97.97%, Re Protocol's reUSD is 97.87%, and Maple Finance's SyrupUSDT is 88.84%.

A single indicator cannot fully reflect the effectiveness of RWA

Artem Tolkachev, chief RWA officer of Falcon Finance, pointed out to the media that this gap cannot be understood based on a utilization figure alone. He believes analysts must first examine why the asset was designed for and then determine where the holder would use it.

Tolkachev said: "If a product is specifically built and priced for mortgage loans, but utilization stagnates after launch, that really means weak utility." However,"if an underlying fund aims to generate income and can be redeemed on time, it is doing its job well even if its utilization rate is zero."

RWA utilization evaluation requires multi-dimensional measures. Tolkachev divides utilization into two levels:

• Asset level: examines the speed of redemption, the entity responsible for executing redemption, the stability of the yield, and the losses that the holder may face in the event of default.
• Usage Level: Observe whether assets are held for income, deposited as margin on centralized exchanges, or provided to DeFi protocols. He noted that each path has different terms and risks, so just looking at utilization within the agreement does not fully reflect total demand.

Assets held by custodians or margin provided in derivatives venues may serve an economic function outside of DeFi utilization data. For example, money-market funds are often viewed as cash management tools purchased rather than assets that must be circulated in a lending pool.

Tolkachev believes that Wrappers designed specifically for DeFi require different testing standards. If its main purpose is to support lending or other on-chain activities, low utilization after launch may point to insufficient adoption.

Similar gaps and pricing challenges at the network level

This gap also exists at the network level. An August report found that the size of the RWA market on Stellar grew from approximately $785 million in January to more than $3 billion in July, while the pool supporting RWA on its Blend Loan Agreement held just over $2 million in funding.

RedStone attributed part of the gap to the difficulty of pricing traditional assets around the clock. Unlike U.S. Treasury bonds, money-market funds, and corporate credit, crypto assets such as Bitcoin or Ethereum generate continuous market prices, while traditional assets expose lending agreements to outdated valuations when markets close.

Falcon's five-fold collateral review mechanism

Tolkachev said that before Falcon accepted assets such as JAAA, JTRSY Treasury funds or tokenized Mexican CETES, its underwriting process focused on two outcomes: how quickly the agreement could convert confiscated collateral into cash, and how much value could be recovered under stressful conditions.

1. Review of legal claims: Check whether the token has a sound claim on the assets in custody through the bankruptcy isolation structure or simply relies on the issuer's unsecured commitments. At the same time, evaluate the situation of the holder if the issuer goes bankrupt.
2. Review of redemption clauses: Some tokenized money market funds can directly redeem stablecoins online, or buy fund shares at net asset value through liquidity facilities. Other products depend on the timetable in the issuer and fund documents. "We read documents, not presentations. Assets that cannot be exited under pressure cannot be called collateral."
3. Secondary market liquidity: Determine whether there are other buyers or whether redemption is the only exit route. Limited secondary markets can cause slow clearing or force agreements to accept lower prices when positions need to be closed.
4. Price feed review: Including how assets are valued and whether data is resistant to manipulation when the underlying market is closed.
5. Credit Quality Review: Assessed by rating, duration, issuer exposure and portfolio concentration.

JAAA is classified as AAA secured loan obligation (CLO) exposure, JTRSY holds short-term U.S. government debt, and CETES stands for short-term Mexican sovereign notes. Falcon has listed JAAA and JTRSY as accepted collateral and has separately integrated tokenized Mexican notes.

Tolkachev emphasized: "If any of these five links fails, no matter how attractive the yield is, it will not become qualified collateral."

Closing times increase liquidation risk of tokenized RWAs

DeFi loans run around the clock, but the securities behind many RWA tokens are traded only for limited periods of time. Tolkachev said Falcon determines collateral factors by measuring price volatility, the time it takes to sell assets and the period during which agreements may not be able to trade or obtain new valuations.

Structured credit and non-U.S. sovereign notes may not be traded at night or on weekends. During this period, borrowers may still hit the liquidation threshold, resulting in agreements to hold collateral that cannot be sold immediately.

To deal with this mismatch, Falcon applies larger discount rates (Haircuts) when the primary market is closed for a long time or when secondary market liquidity is limited. Its liquidation thresholds also include buffers during periods when assets cannot be traded, and its pricing process may hold or discount outdated valuations, rather than relying on weak non-trading session transactions.

Another risk posed by weekend news is that prices could change when credit or sovereign assets reopen. Tolkachev said Falcon added a cushion for such spreads and sized the borrowing line based on the value the agreement could clear during the window period when the asset was most difficult to trade, rather than using its full face value.

This issue is directly related to tokenizing U.S. Treasury bonds and funds holding U.S. government securities. Although its blockchain tokens can be moved around the clock, reliable prices and access to the underlying treasury bond market still rely on traditional trading, settlement and redemption systems.

A guide on RWA tokenization states that listing assets does not change their legal attributes. Token holders still rely on fund structures, custodians, transfer restrictions, and laws governing underlying claims.

RWA underwriting capabilities remain concentrated

Tolkachev said that because the review requires legal, credit and operational expertise, few DeFi agreements accept structured credit or sovereign debt as collateral. Most lending agreements are built to list liquid crypto tokens with continuous exchange prices, and this model cannot cover fund filings, bankruptcy claims, or issuers managed redemptions.

In addition, when loans become undercollateralized and the market may close, underwriting also requires agreement to establish liquidation procedures for such assets. Because a lot of work is specific to each product, Tolkachev says this cannot be fully automated.

Therefore, sites capable of completing such reviews aggregate most of the capacity. Even if the larger tokenized funds remain outside the lending market, the pool of assets built specifically for collateral purposes could fill up quickly.

Centrifuge provides an example of a concentration of requirements around a specific purpose asset. In August 2025, its total locked value (TVL) topped $1.1 billion, of which more than $653 million came from JAAA and more than $392 million from its tokenized Treasury fund. At the time, JAAA was open to non-U.S. professional investors with a minimum investment of $500,000.

Tolkachev said expanding underwriting capabilities requires the development of common standards covering the legal rights attached to RWA tokens and their redemption process. He also called for a reliable price feed for assets with closed times and disclosure of detailed information including portfolio composition, issuer exposure and concentration.