Key Takeaways:
Decentralized finance is set to become the foundational infrastructure for a tokenized financial market that could reach $4 trillion by 2028, according to a new report from Standard Chartered. The bank’s analysis, published May 18, suggests trillions of dollars in real-world assets (RWAs) and stablecoins will move onto public blockchains, relying on DeFi for core financial services.
"DeFi protocols are the infrastructure native to tokenized assets," Geoffrey Kendrick, Standard Chartered's global head of digital assets research, said in the report. He argued that as these assets move on-chain, they will increasingly use DeFi for trading, lending, and collateral management instead of traditional financial rails.
The report forecasts the $4 trillion market will be evenly divided, with $2 trillion in tokenized real-world assets like bonds and funds, and another $2 trillion in stablecoins. This growth hinges on "composability," a key feature of blockchains where assets and applications on a shared ledger, like Ethereum, can interact seamlessly. This allows a tokenized asset to generate yield, act as loan collateral, and remain tradable at the same time.
This structural shift stands to benefit established DeFi protocols and accelerate the move away from siloed traditional finance systems. As more assets are managed on-chain, the report suggests this will drive higher throughput on DeFi protocols, supporting the valuation of their native tokens. The price of Ether (ETH) was up 2.29% to $2,143.35 as of the report's publication.
The integration of traditional assets onto blockchains is already underway. Standard Chartered highlighted BlackRock’s BUIDL fund, a tokenized U.S. Treasury fund issued by Securitize, as a prime example. The fund demonstrates how a tokenized asset can be used within DeFi applications without needing separate, costly integrations.
The tokenization space is populated by a growing number of institutional-grade platforms. Securitize, which powers BUIDL, has over $4 billion in assets under management. Other key players include Ondo Finance, with over $2.75 billion in platform TVL across its tokenized Treasury products, and Centrifuge, a real-world asset protocol on Ethereum with a TVL of $1.6 billion, according to DefiLlama.
On the stablecoin front, the report’s projection of a $2 trillion market points to significant growth for issuers like Circle (USDC) and Ripple (RLUSD), which are building out regulated, multi-chain offerings to capture institutional demand.
Clearer regulation in the U.S. is seen as a critical factor that could speed up the adoption of on-chain finance. Kendrick specifically pointed to the CLARITY Act, which advanced in the Senate Banking Committee last week, as a potential catalyst. If passed, such legislation could provide the legal certainty needed for more institutional assets to move onto blockchain rails.
While the DeFi space still faces challenges from exploits and hacks, the report notes that larger, well-established protocols are becoming more resilient through rigorous audits, on-chain insurance mechanisms, and more professional governance. This increasing maturity is crucial for building the institutional links required to manage trillions of dollars in assets.
This article is for informational purposes only and does not constitute investment advice.
