DeFi: Sectors to Watch After Tokenization

1. Rapid Growth of the Tokenization Market and Expansion Attempts of Major DeFi Protocols

The tokenization market is experiencing rapid growth. According to RWA.xyz, as of August 2026, the size of tokenized U.S. Treasury bonds has surpassed $16 billion, and the size of tokenized stocks has exceeded $2 billion. Considering that just a year ago, these figures were approximately $6.5 billion and $360 million respectively, tokenized U.S. Treasury bonds have grown about 2.5 times, and tokenized stocks have increased about 5.6 times in just one year.

This growth trend is likely to continue. Traditional financial institutions such as BlackRock, DTCC, and NYSE are entering the tokenization market. Major investment bank Citi has projected that the global tokenization market will grow to $5.5 trillion by 2030.

Meanwhile, interesting trends are emerging in the DeFi market in line with this movement. Recently, major DeFi protocols have been launching new products and features to capture the trading and liquidity demand generated by tokenized assets. For instance, Uniswap has launched 'Permissioned Pools' to accommodate the participation of financial institutions that need to meet regulatory requirements, while Morpho has introduced a lending service called 'Midnight' aimed at institutions and high-net-worth individuals. DeFi protocols, which have primarily grown in the permissionless market, are now actively seeking to absorb institutional funds and high-net-worth investor demand through tokenized assets.

This article will examine how major DeFi protocols are evolving in response to the growth of the tokenized asset market and analyze whether these changes can lead to new growth opportunities in the future expansion of the tokenization market.

2. Uniswap Permissioned Pools: Decentralized Trading Infrastructure for Regulated Assets {#rps-2}

Uniswap is a leading decentralized exchange (DEX) that supports digital asset trading through automated market makers (AMMs) without centralized intermediaries. Smart contracts automatically process trades based on the assets deposited by users in liquidity pools.

Uniswap has rapidly grown based on its strengths, allowing anyone to provide liquidity and earn fee income, and trade digital assets 24/7 without separate approvals. However, this structure, which does not require permission, has limitations in accommodating regulated assets such as tokenized stocks and funds. Issuers need to manage who trades and holds the assets. However, decentralized exchanges find it challenging to apply Know Your Customer (KYC), investor eligibility checks, and country-specific trading restrictions.

In response, Uniswap has launched 'Permissioned Pools' to facilitate trading of tokenized regulated assets. Permissioned Pools are trading pools that add access restriction features to the extensible protocol of Uniswap v4, allowing only wallets approved by the issuer to participate in trading and liquidity provision.

Specifically, Permissioned Pools operate through Uniswap v4's 'hook'. A hook is a program that can add separate conditions or functions before and after a trade. When a user attempts to trade or provide liquidity, the hook first checks whether the wallet is registered on the issuer's approval list. Only requests from registered wallets are executed, while requests from unapproved wallets are denied.

Previously, access restrictions were often limited to the website, allowing the possibility of circumventing regulations by accessing the pool through other interfaces. In contrast, Permissioned Pools directly verify approval within the smart contract, ensuring that the same rules apply regardless of the access route.

This allows issuers to maintain the necessary control required by regulations while utilizing Uniswap's automated trading and liquidity provision features. Uniswap can also expand its trading scope beyond the existing permissionless market to include tokenized assets and institutional investor demand.

3. Aave Horizon: An Institution-Exclusive Lending Market Secured by Real-World Assets {#rps-3}

Aave is a leading decentralized lending protocol that allows users to deposit digital assets into liquidity pools to earn interest or borrow funds against digital assets as collateral. As of August 7, Aave has approximately $14 billion in assets deposited, making it the largest among all lending protocols.

Launched in 2020, Aave has expanded its lending services primarily around Bitcoin, Ethereum, and stablecoins. Recently, in line with the rising trend of the tokenization market, it has launched 'Horizon', an institution-exclusive lending market. Horizon is based on Aave Protocol V3.3, which provides collateral-based on-chain lending and borrowing functions, designed to allow borrowing stablecoins against tokenized real-world assets (RWAs).

Specifically, institutions can deposit tokenized government bonds or collateralized loan obligations approved by the issuer's whitelist and borrow stablecoins based on the collateral value and collateral recognition ratio. In contrast, general users can supply stablecoins like USDC, RLUSD, and GHO to the liquidity pool and earn interest on loans.

A key feature of Horizon is that it applies different participation rules for borrowing and liquidity provision. The entities that can borrow funds against RWAs are limited to approved institutions, while anyone can supply stablecoin liquidity. This structure connects the regulated RWAs with the public liquidity of DeFi in a single market.

Ultimately, Horizon enables institutions to secure on-chain liquidity without selling their tokenized assets, while providing stablecoin holders with a new source of income from institutional lending demand. Through this, Aave aims to connect digital asset-centered lending markets with institutional funding and on-chain credit markets.

4. Morpho Midnight: Fixed-Rate Lending Infrastructure for Tokenized Assets {#rps-4}

Morpho is a representative DeFi lending protocol designed to allow anyone to create independent lending markets. Users can individually set lending assets, collateral assets, oracles, and liquidation collateral recognition ratios to create separate lending markets. Unlike the approach where the entire pool shares the same risk settings, it allows for the separation of risks by market. As of August 7, Morpho has approximately $7.8 billion deposited, making it the second largest after Aave.

Launched in 2022, Morpho has rapidly grown around Bitcoin, Ethereum, and stablecoins. The lending market of Morpho primarily operates on a variable interest rate model that changes based on lending demand and liquidity. While variable interest rates can quickly reflect market conditions, they have limitations for institutions or long-term fund seekers where predictability of funding costs and operational periods is crucial. Especially when utilizing assets with fixed maturities and cash flows, such as tokenized government bonds or private credit, managing assets and liabilities to match maturities becomes important, but in a variable interest rate and indefinite loan structure, it is difficult to pre-determine future funding costs and operational periods.

To address this, Morpho launched a fixed-rate and fixed-maturity lending protocol called 'Midnight' in July. In Midnight, independent markets are created where lending assets, collateral assets, and maturities are predetermined, and market participants present prices and volumes for trading in the form of offers. When the counterparty accepts the offer, the transaction is executed, and the loan yield and borrowing cost are determined based on the transaction price and remaining maturity of the unit. Unlike the rates in existing Morpho Blue, which are determined by algorithms, the rates in Midnight are formed through transactions between market participants.

If the collateral value falls below a certain threshold or the borrower fails to repay at maturity, liquidation proceeds. Unpaid positions after maturity are processed in a way that increases liquidation incentives over time, encouraging rapid capital recovery.

In conclusion, Midnight represents Morpho's attempt to expand beyond crypto collateral-based variable rate lending to a financial infrastructure for tokenized assets and institutional credit. Institutions can pre-determine funding costs and operational periods, while issuers of tokenized assets can secure on-chain liquidity that matches the maturity structure of their assets.

5. DeFi: A Sector to Watch After Tokenization {#rps-5}

As the tokenization market grows, the pathways for traditional financial liquidity to move on-chain are also gradually widening. In this process, major DeFi protocols have the potential to secure new growth drivers. In fact, Aave's institution-exclusive RWA lending platform Horizon has gathered approximately $400 million in deposited assets within just two months of its launch, and actual lending activities are also emerging. This serves as a case showing that on-chain finance based on tokenized assets is evolving from a mere experimental stage to a real market where actual funds are moving.

It is important to note that the tokenization market is still in its early stages. Financial institutions are considering issuing stablecoins, and asset management companies are continuing experiments to tokenize various financial products such as government bonds and private credit. As these attempts transition into actual issuance and trading, the demand for investment in tokenized assets, as well as the demand for financial services that utilize them as collateral or for trading and lending, is likely to grow. This is where new markets for DeFi protocols may open up. As the number of tokenized assets increases, the demand for on-chain financial infrastructure that can utilize them may also rise.

However, just because the tokenization market grows does not mean that its liquidity will automatically flow into DeFi. Tokenized assets can still be traded within closed or permissioned networks established by existing financial institutions. Therefore, for DeFi protocols to connect the growth of the tokenization market to actual liquidity and revenue, they must meet both the conditions required by institutions and ensure trading efficiency. First, the ownership and collateral structure of tokenized assets must be legally recognized in each jurisdiction, and on that basis, compliance systems such as KYC and whitelisting must operate stably at the protocol level. At the same time, sufficient liquidity must be secured to handle the scale of transactions and loans desired by institutions, and a proven operational and security track record without incidents over a long period is also necessary.

In conclusion, DeFi is one of the most promising sectors to watch alongside the growth of the tokenization market. However, the key lies in how well DeFi protocols can meet the requirements of institutions and enterprises. Protocols with legal clarity, compliance systems, sufficient liquidity, and verified operational and security track records are more likely to attract institutional funds on-chain and connect them to sustained growth. It is essential to pay attention to how much of the assets and liquidity formed in the tokenization market can flow into DeFi in the future.

This content is provided for general informational purposes only and doesn't constitute financial, investment, legal, or tax advice. Any events, rewards, online promotions, or related information mentioned herein should not be considered a recommendation, solicitation, or invitation to purchase, sell, trade, or otherwise deal in any crypto assets. Crypto assets are highly volatile and may result in loss. The availability of WEEX services, products, and related events may vary by region. You are responsible for ensuring that your participation is in accordance with applicable local laws and regulations.