A new report from Arrakis Finance suggests that while institutional-sized capital dominates the tokenized real-world asset (RWA) market, much of that funding is not coming from traditional financial institutions.
After analysing 71,697 wallets and approximately $91.3 billion in onchain RWA acquisitions across ten tokenized yield-bearing products, the study found that protocol treasuries, decentralized autonomous organizations (DAOs) and crypto-native institutions remain the primary source of capital flowing into the sector.
The findings challenge the widely held assumption that traditional finance has already become a major participant in the onchain RWA market, indicating that most current adoption is still being driven by the digital asset ecosystem itself.
No Clear Evidence of Traditional Financial Institutions
One of the report’s most notable conclusions is the apparent absence of identifiable capital from major traditional financial institutions.
Among the $12.4 billion in transactions that Arrakis was able to classify by buyer type, researchers found no clearly attributable allocations from pension funds, banks, insurance companies, traditional asset managers or other conventional financial institutions.
Instead, roughly two-thirds of the identifiable capital originated from protocol treasuries and DAO-managed funds, highlighting the continued dominance of crypto-native organizations in funding tokenized assets.
While traditional financial firms continue developing tokenization infrastructure and blockchain products, the report suggests that large-scale onchain investment by those institutions has yet to materialize in a measurable way.
Large Investors Control Nearly All Capital
Although retail participation appears widespread, capital remains highly concentrated among a relatively small number of investors.
According to the study, wallets investing $1 million or more represented only around 4% of all buyers, yet collectively controlled approximately 93% of the capital invested across the tokenized products examined.
This concentration indicates that institutional-scale investors, rather than retail users, continue to drive liquidity within the RWA sector.
The findings also suggest that tokenized financial products remain primarily an institutional market despite growing public interest in blockchain-based real-world assets.
Traditional Credit Products Attract the Largest Allocations
Among the tokenized products analysed, traditional credit strategies attracted the largest institutional investments.
Arrakis found that Centrifuge’s JAAA recorded the highest median institutional allocation, with typical investments of approximately $29 million.
That figure was roughly three times larger than the next-highest product included in the research.
The trend indicates that institutional investors entering the RWA sector may currently favour relatively familiar credit and fixed-income structures over more experimental blockchain-native financial products.
USDC Remains the Primary Settlement Currency
The report also highlights the growing role of USDC as the preferred payment currency for tokenized asset purchases.
Approximately 80% of the total product notional, representing around $17.4 billion, was settled using Circle’s USDC stablecoin.
The dominance of USDC reinforces its position as the leading settlement asset for institutional blockchain transactions, particularly within regulated and tokenized financial markets.
As tokenized securities continue expanding, stablecoins are increasingly functioning as the payment infrastructure connecting traditional assets with blockchain-based markets.
Most Capital Represents New Entrants
Another interesting finding concerns the age of participating wallets.
Arrakis observed that the median first onchain activity for RWA buyers dates back only to mid-2024, suggesting that many investors allocating capital to tokenized assets are relatively new participants rather than long-established DeFi users.
The data may indicate that tokenized real-world assets are attracting fresh capital entering blockchain markets instead of simply redistributing liquidity already circulating within decentralized finance.
If that trend continues, RWAs could become one of the primary entry points for new institutional and professional investors adopting blockchain-based financial products.
DeFi Leverage Around RWAs Remains Limited
The report also examined how investors use leverage with tokenized assets.
Researchers found that most RWA products currently have limited integration with DeFi lending markets, reducing opportunities for investors to borrow against their holdings.
Among the products that do support lending, borrowing activity has generally declined from previous peaks.
The primary exceptions were products associated with Pareto Credit and FalconX’s AA_FalconXUSDC, where borrowing levels remained comparatively stable over time.
Overall, the findings suggest that leverage currently plays a relatively modest role in the tokenized RWA ecosystem compared with other areas of decentralized finance.
Tokenized RWAs Continue to Mature
The research paints a picture of a rapidly expanding market that is becoming increasingly institutional, but not necessarily through participation from traditional financial firms.
Instead, crypto-native organizations, DAO treasuries and large blockchain-focused investors remain the dominant source of liquidity supporting tokenized real-world assets.
As banks, asset managers and financial institutions continue building tokenization infrastructure, many industry participants expect traditional capital to become more visible onchain over the coming years.
For now, however, Arrakis Finance’s analysis suggests that the current RWA boom is still being funded largely from within the crypto ecosystem itself, with institutional-sized crypto capital leading adoption while traditional finance watches from the sidelines.
