Tokenized US Treasury Market Set to Reach $3 Billion as DAOs Seek Diversification
The tokenized US Treasury market is on track for substantial growth, according to analyst Tom Wan from 21.co. Wan predicts that this segment could reach $3 billion by the end of 2024, driven by a strategic shift towards real-world asset (RWA) tokenization within the decentralized finance (DeFi) ecosystem. This development marks a significant trend in how decentralized autonomous organizations (DAOs) and DeFi projects are managing their treasuries.
The primary drivers behind this anticipated surge are DAOs and DeFi projects seeking to diversify their treasuries and achieve greater stability. By incorporating tokenized US Treasuries, these entities aim to access risk-free yields while remaining within the blockchain ecosystem. This approach allows them to balance the volatility often associated with cryptocurrency holdings with the stability of traditional financial instruments.
Tom Wan highlighted the maturity of the tokenized US Treasury market as a key factor in its growth. He noted that there are now over 15 products available on Ethereum Virtual Machine (EVM) chains, with assets under management (AUM) approaching $2 billion. Wan expects this trend to continue in the long run, with DAOs increasingly including yield-bearing products such as BUIDL, USTB, USDY, and USDM in their treasuries.
Recent moves by DAOs illustrate this trend. In June 2024, the Arbitrum STEP Committee recommended diversifying 35 million ARB tokens, equivalent to approximately $27 million, from the Arbitrum DAO Treasury. The committee suggested allocating these funds across six selected tokenized treasury products, including Ondo Finance's USDY, BlackRock's BUIDL, Superstate's USTB, Mountain USDM, OpenEden's TBILL, and Backed Finance's bIB01.
MakerDAO, another significant player in the DeFi space, has also made moves in this direction. The organization proposed the Spark Tokenization Grand Prix competition, scheduled to begin on August 12, 2024. This competition aims to onboard up to $1 billion of tokenized assets, with a focus on short-term US Treasury Bills and similar products.
The growing interest in tokenized US Treasuries among DAOs and DeFi projects reflects a broader trend of convergence between traditional finance and the crypto ecosystem. By tokenizing real-world assets like US Treasuries, these organizations can benefit from the stability and yield of traditional financial instruments while maintaining the flexibility and programmability offered by blockchain technology.
