How RWAs Are Used in DeFi: Collateral, Stablecoin Reserves and Yield

Tokenized real-world assets started as a way to bring traditional yield onchain. They have since become building blocks inside DeFi itself.

1. Stablecoin reserves

Stablecoin and synthetic dollar protocols hold large reserves and want them to earn a return. Holding tokenized treasury funds lets them earn T-bill yields while keeping reserves onchain and redeemable quickly. Ethena’s USDtb, for example, is backed mainly by tokenized treasury funds, and Sky (formerly MakerDAO) allocates part of its reserves to tokenized treasuries.

2. Collateral

Tokenized fund shares can be posted as collateral while still earning interest:

• Lending protocols accept some tokenized treasuries, letting holders borrow stablecoins against them.
• Exchanges and prime brokers accept fund tokens like BUIDL and USYC as margin for derivatives trading.

For traders, that turns idle margin into a yield-bearing asset.

3. Base yield for strategies

Vaults and structured products use tokenized treasuries as the low-risk base layer, then add other strategies on top. Yield-bearing dollar tokens such as USDY are designed to be used this way.

The risks DeFi adds

• Oracle risk: fund tokens often update their price daily, so a lending market’s price feed can lag reality.
• Liquidation risk: if collateral has to be sold quickly and redemption is slow or restricted, liquidators may not be able to clear positions.
• Compliance constraints: permissioned tokens only work with approved contracts, which limits where they can go.
• Stacked risk: a vault that holds a token that holds a fund that holds T-bills carries the risks of every layer.

See the risks of tokenized assets for a fuller checklist.