25% of tokenized fund assets on Ethereum now deployed in DeFi

The utilization of tokenized fund assets within DeFi protocols on Ethereum has surged from 8% to 25% over the past three years, signaling a shift toward productive on-chain capital. Major financial institutions, including BlackRock, JPMorgan, and UBS, are increasingly tokenizing money market funds and Treasury products to leverage 24/7 settlement capabilities. BlackRock’s BUIDL fund, launched in 2024, serves as a primary example, having been integrated as collateral by protocols like Ethena and Spark before enabling direct trading on Uniswap. Other firms like VanEck have launched funds specifically designed for DeFi collateral utility, moving beyond standalone investment products. This integration improves the quality of collateral within DeFi, replacing speculative assets with high-quality, yield-bearing instruments. However, this transition introduces new systemic risks, including unresolved regulatory frameworks for permissionless interaction and potential infrastructure-level vulnerabilities on Ethereum. As Standard Chartered projects a multi-trillion dollar market, the ability to bridge traditional finance settlement cycles with on-chain liquidity remains a critical development for institutional adoption.