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Wall Street Has $7B in Tokenized Funds — But Less Than 1% Is Actually Being Used in DeFi. Here's Why That Gap Matters

(54 days ago) · 1 source · Summarized by CryptoBipto

Wall Street institutions have poured approximately $7 billion into tokenized funds, bringing traditional financial assets onto blockchain infrastructure. However, less than 1% of those tokenized assets are actually being deployed in decentralized finance (DeFi) protocols, highlighting a significant disconnect between institutional tokenization efforts and the broader crypto-native ecosystem.

WHY IT MATTERS

Imagine a big bank puts its financial products into a digital format that lives on a blockchain — that's tokenization. It's like converting a paper stock certificate into a digital token. Now, DeFi (decentralized finance) is like an open marketplace where anyone can lend, borrow, or trade these digital tokens without needing a bank as a middleman. The surprising finding here is that while Wall Street has put $7 billion worth of assets into this digital format, almost none of it is actually being used in that open marketplace. It's as if a company built electric cars but only drove them on private tracks instead of public roads. This matters because the real power of blockchain comes from connecting these assets to a global, open financial system — and right now, that connection barely exists. For crypto to reach its full potential, these two worlds need to start talking to each other.

This statistic reveals a fascinating tension at the heart of the tokenization movement. Major financial institutions like BlackRock, Franklin Templeton, and others have embraced blockchain technology to tokenize money market funds, treasuries, and other traditional assets — but they're largely keeping those assets within controlled, permissioned environments rather than plugging them into the open DeFi ecosystem that crypto was built to enable.

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