Institutional RWAs Hit $20 Billion: The Quiet Revolution Reshaping Finance

The institutional tokenization of Real-World Assets (RWAs) has quietly surged, now approaching a staggering $20 billion market capitalization. This isn’t merely speculative hype; it represents a tangible deployment of institutional capital onto blockchain infrastructure, marking a pivotal shift in traditional finance.

Over the past six months, the velocity of this transformation has been remarkable. From government treasuries and private credit to tokenized public equities, assets are migrating to blockchain-based systems at a pace exceeding market expectations.

At the forefront of this revolution are five foundational protocols: Rayls Labs, Ondo Finance, Centrifuge, Canton Network, and Polymesh. Crucially, these entities are not vying for the same clientele. Instead, they strategically address distinct institutional imperatives: banks demand privacy, asset managers seek efficiency, and Wall Street requires robust compliance infrastructure.

The narrative isn’t about a single “winner” but rather which infrastructure institutions will adopt, paving the way for trillions of dollars in traditional assets to transition onto the blockchain.

The Overlooked Market: Nearing the $20 Billion Mark

Just three years ago, tokenized RWAs were barely a recognized category. Today, on-chain deployments of government treasuries, private credit, and public equities are closing in on $20 billion. This substantial growth is evident when compared to the $6-8 billion range observed at the beginning of 2024.

Delving deeper, the performance of specific sub-segments offers a more nuanced view than the aggregate total.

According to a market snapshot from rwa.xyz as of early January 2026:

• Government Treasuries & Money Market Funds: Approximately $8-9 billion, constituting 45-50% of the market.
• Private Credit: Ranging from $2-6 billion, this segment boasts the fastest growth rate despite its smaller base, making up 20-30% of the market.
• Public Equities: Exceeding $400 million, this area is experiencing rapid expansion, primarily driven by Ondo Finance.

Three Key Drivers Accelerating RWA Adoption:

The accelerated embrace of RWA tokenization is fueled by a confluence of factors:

• Attractive Yield Arbitrage: Tokenized treasury products offer appealing returns of 4-6% with 24/7 access, contrasting sharply with the traditional market’s T+2 settlement cycles. Private credit instruments provide even higher yields, typically between 8-12%. For institutional treasurers managing billions in idle capital, the economic case is compelling.
• Evolving Regulatory Frameworks: The European Union’s Markets in Crypto-Assets (MiCA) regulation is now enforceable across 27 countries. Concurrently, the SEC’s “Project Crypto” is actively developing frameworks for on-chain securities, while “No-Action Letters” enable critical infrastructure providers like DTCC to tokenize assets.
• Maturation of Custody & Oracle Infrastructure: Robust infrastructure is now in place to meet stringent fiduciary standards. Chronicle Labs, for instance, handles over $20 billion in Total Value Locked (TVL), and Halborn has completed critical security audits for major RWA protocols.

Despite this momentum, significant challenges persist. Cross-chain transaction costs are estimated at $1.3 billion annually, leading to 1-3% trading spreads for identical assets across different blockchains due to high capital movement expenses. The fundamental tension between the need for institutional privacy and regulatory demands for transparency also remains unresolved.

Rayls Labs: Delivering Essential Privacy Infrastructure for Banks

@RaylsLabs positions itself as the compliant-first bridge connecting traditional banking with decentralized finance (DeFi). Developed by Brazilian fintech Parfin and backed by prominent VCs like Framework Ventures, ParaFi Capital, Valor Capital, and Alexia Ventures, Rayls’ architecture is a public permissioned, EVM-compatible Layer 1 blockchain specifically engineered for regulated institutions.

Its Enygma privacy technology stack has been under close observation. The true innovation lies not just in its technical specifications, but in its methodological approach: Rayls addresses the genuine privacy needs of banks, rather than catering to DeFi’s assumptions about what banks require.

Core Capabilities of the Enygma Privacy Stack:

1. Zero-Knowledge Proofs: Ensuring transactional confidentiality.
2. Homomorphic Encryption: Enabling computation on encrypted data.
3. Native Interoperability: Seamless operations across public and private institutional networks.
4. Confidential Payments: Supporting atomic swaps and embedded “payment vs. delivery” (DvP) mechanisms.
5. Programmable Compliance: Allowing selective data disclosure to designated auditors.

Real-World Application Cases:

• Brazilian Central Bank: Piloting CBDC cross-border settlements.
• Núclea: Regulated tokenization of accounts receivable.
• Multiple Undisclosed Node Clients: Utilizing private DvP workflows.

Recent Developments

On January 8, 2026, Rayls announced the successful completion of a security audit by Halborn. This institutional-grade security certification is particularly crucial for banks evaluating production deployments of RWA infrastructure.

Furthermore, the AmFi alliance has set an ambitious target to tokenize $1 billion in assets on Rayls by June 2027, supported by a reward of 5 million RLS tokens. As Brazil’s largest private credit tokenization platform, AmFi brings immediate transaction flow to Rayls and establishes concrete 18-month milestones. This represents one of the largest institutional RWA commitments seen within any blockchain ecosystem to date.

Target Market and Challenges

Rayls primarily targets banks, central banks, and asset managers requiring institutional-grade privacy. Its public permissioned model restricts validator participation to licensed financial institutions, while simultaneously ensuring the confidentiality of transaction data.

However, Rayls faces the challenge of demonstrating broader market traction. In the absence of publicly available TVL data or announced client deployments beyond pilots, the $1 billion AmFi target for mid-2027 serves as a critical benchmark for its success.

Ondo Finance: The Rapid Race for Cross-Chain Expansion

Ondo Finance has achieved the fastest expansion in RWA tokenization, bridging the gap from institutional to retail adoption. Evolving from a protocol initially focused on government treasuries, it has rapidly become the largest platform for tokenized public equities.

Latest Data as of January 2026:

• Total Value Locked (TVL): $1.93 billion.
• Tokenized Equities: Over $400 million, securing 53% of the market share.
• USDY Holdings on Solana: Approximately $176 million.

The Solana-based USDY product offers a remarkably seamless user experience, effectively merging institutional-grade treasuries with the accessibility of DeFi – a critical combination for broad adoption.

Recent Dynamics

On January 8, 2026, Ondo launched an impressive 98 new tokenized assets in a single release, spanning equities and ETFs in high-growth sectors such as Artificial Intelligence (AI), Electric Vehicles (EV), and thematic investments. This signals a strategic and aggressive move rather than cautious experimentation.

Ondo plans to launch tokenized US stocks and ETFs on Solana in Q1 2026, marking its most ambitious foray into retail-friendly infrastructure. The product roadmap indicates a target of over 1,000 tokenized assets as its expansion continues.

Industry Focus:

• AI Sector: Including Nvidia and data center REITs (Real Estate Investment Trusts).
• EV Sector: Featuring Tesla and lithium battery manufacturers.
• Thematic Investments: Specialized sectors traditionally constrained by high minimum investment thresholds.

Multi-Chain Deployment Strategy:

• Ethereum: Leveraging its deep DeFi liquidity and institutional legitimacy.
• BNB Chain: Targeting exchange-native users.
• Solana: Facilitating large-scale consumer adoption with sub-second transaction finality.

Significantly, Ondo’s TVL reaching $1.93 billion, even amidst a decline in its native token price, is a crucial indicator: protocol growth is prioritizing genuine utility over speculative interest. This expansion is largely driven by institutional demand for treasury products and DeFi protocols seeking yield on idle stablecoins. The TVL growth during the Q4 2025 market consolidation period further underscores real demand, not just market FOMO.

By establishing custodial relationships with broker-dealers, completing a Halborn security audit, and launching products across three major blockchains within six months, Ondo has gained a significant lead that competitors struggle to match. For example, its competitor Backed Finance holds only about $162 million in tokenized assets.

However, Ondo still faces certain challenges:

• Non-Trading Hours Price Volatility: While tokens can be transferred 24/7, pricing still relies on traditional exchange operating hours, potentially creating arbitrage spreads during US overnight trading sessions.
• Compliance Restrictions: Strict KYC (Know Your Customer) and accreditation verification mandated by securities laws inherently limit the “permissionless” narrative often associated with crypto.

Centrifuge: Empowering Asset Managers to Deploy Billions On-Chain

Centrifuge has solidified its position as the infrastructure standard for institutional-grade private credit tokenization. As of December 2025, the protocol’s TVL has surged to between $1.3 and $1.45 billion, a growth trajectory directly propelled by the actual deployment of institutional capital.

Key Institutional Deployments

• Janus Henderson Partnership: A global asset manager with $373 billion in Assets Under Management (AUM).

  • Anemoy AAACLO Fund: A fully on-chain AAA-rated Collateralized Loan Obligation (CLO).
  • Utilizes the same portfolio management team as its $21.4 billion AAACLO ETF.
  • Announced an expansion plan in July 2025, targeting an additional $250 million investment on Avalanche.

• Grove Fund Allocation: An institutional credit protocol within the Sky ecosystem.

  • Committed funding allocation strategy of $1 billion.
  • Initial seed capital of $50 million.
  • Founding team comprises veterans from Deloitte, Citigroup, BlockTower Capital, and Hildene Capital Management.

• Chronicle Labs Oracle Partnership (Announced January 8, 2026):

  • Asset Proof Framework: Provides cryptographically verifiable holding data.
  • Supports transparent Net Asset Value (NAV) calculations, custody verification, and compliance reporting.
  • Offers dashboard access functionalities for Limited Partners (LPs) and auditors.

The oracle problem in blockchain has been a long-standing concern, and Chronicle Labs’ approach is among the first to genuinely meet institutional requirements: delivering verifiable data without sacrificing on-chain efficiency. The January 8th announcement included a video demonstration, showcasing a solution already in practical application, not just a future promise.

Centrifuge’s Unique Operational Model:

Unlike competitors who merely wrap off-chain products, Centrifuge directly tokenizes credit strategies at the issuance stage. Its streamlined process includes:

• Issuers designing and managing funds through a single, transparent workflow.
• Institutional investors allocating stablecoins for investment.
• Funds flowing to borrowers upon credit approval.
• Repayments being proportionally distributed to token holders via smart contracts.
• AAA-rated assets offering Annual Percentage Yields (APYs) between 3.3-4.6%, with full transparency.

The multi-chain V3 architecture supports networks including Ethereum, Base, Arbitrum, Celo, and Avalanche.

Critically, asset managers need proof that on-chain credit can support multi-billion dollar deployments, a feat Centrifuge has demonstrably achieved. The Janus Henderson partnership alone provides billions in capacity.

Furthermore, Centrifuge’s leadership in industry standard-setting, including co-founding the Tokenized Asset Coalition and the Real-World Asset Summit, reinforces its position as foundational infrastructure rather than a single product.

While the $1.45 billion TVL validates institutional investment demand, the target APY of 3.8% pales in comparison to historically higher-risk, higher-reward opportunities in DeFi. Attracting DeFi-native liquidity providers beyond the Sky ecosystem allocation remains Centrifuge’s next significant challenge.

Canton Network: Wall Street’s Blockchain Infrastructure

Canton represents the institutional blockchain’s answer to DeFi’s permissionless ethos: a privacy-preserving public network backed by Wall Street’s titans.

Participating Institutions: DTCC (Depository Trust & Clearing Corporation), BlackRock, Goldman Sachs, Citadel Securities.

Canton’s ambition is to target the DTCC’s staggering $3.7 quadrillion in annual settlement volume processed in 2024. This figure is not a typo.

DTCC Partnership (December 2025)

The collaboration with DTCC is paramount. This is not merely a pilot; it’s a core commitment to building the foundational infrastructure for US securities settlement. With an SEC No-Action Letter approval, this partnership enables the native tokenization of select US Treasuries held by DTCC on Canton, with a controlled production MVP (Minimum Viable Product) slated for launch in H1 2026.

Key Details:

• DTCC co-chairs the Canton Foundation alongside Euroclear, signaling leadership in governance, not just participation.
• Initial focus on government treasuries, chosen for their minimal credit risk, high liquidity, and clear regulatory standing.
• Potential expansion to corporate bonds, equities, and structured products post-MVP phase.

Initially, there was skepticism regarding permissioned blockchains. However, the DTCC partnership fundamentally alters this perception. Its significance stems not from technical superiority, but from its alignment with the infrastructure traditional finance will genuinely adopt.

Temple Digital Platform Launch (January 8, 2026): Canton’s institutional value proposition was further clarified with the launch of Temple Digital Group’s private trading platform on January 8, 2026.

Canton provides a central limit order book with sub-second matching speeds, operating on a non-custodial architecture. Currently supporting cryptocurrency and stablecoin trading, it plans to introduce support for tokenized stocks and commodities in 2026.

Ecosystem Partners:

• Franklin Templeton, managing an $828 million money market fund.
• JPMorgan Chase, facilitating payment vs. delivery settlements via JPMCoin.

Canton’s Privacy Architecture: Canton’s privacy features are implemented at the smart contract level using Daml (Digital Asset Modeling Language):

• Contracts explicitly define which participants can view specific data.
• Regulators have access to a complete audit trail.
• Counterparties can view transaction details.
• Competitors and the public cannot see any transaction information.
• State updates propagate atomically across the network.

For institutions accustomed to confidential trading via Bloomberg terminals and dark pools, Canton’s architecture offers blockchain efficiency without exposing proprietary trading strategies. This design is particularly rational, as Wall Street would never expose its proprietary trading activities on a transparent public ledger. Canton’s over 300 participating institutions demonstrate its appeal within the institutional sphere. However, many reported transaction volumes may still be simulated pilot activities rather than actual production traffic. A current limitation is development speed: the H1 2026 MVP delivery reflects multi-quarter planning cycles, whereas DeFi protocols often launch new products within weeks.

Polymesh: A Securities Blockchain Built for Compliance

Polymesh distinguishes itself through protocol-level compliance rather than relying on complex smart contracts. Designed specifically for regulated securities, Polymesh validates compliance at the consensus layer, eliminating the need for custom code.

Core Features:

• Protocol-Level Identity Verification: Identity is verified through approved Customer Due Diligence (CDD) providers.
• Embedded Transfer Rules: Non-compliant transactions are directly rejected at the consensus stage.
• Atomic Payment vs. Delivery (DvP): Transactions achieve finality within 6 seconds.

Production-Grade Integrations:

• Republic (August 2025): Supporting private securities issuances.
• AlphaPoint: Powering over 150 trading venues across 35 countries.
• Targeted Areas: Regulated funds, real estate, corporate equity, and more.

Advantages: Eliminates the need for custom smart contract audits; the protocol automatically adapts to regulatory changes; and non-compliant transfers are inherently impossible.

Challenges and Future Outlook: Polymesh currently operates as a standalone chain, which isolates it from broader DeFi liquidity. To address this, an Ethereum Bridge is planned for Q2 2026. Whether this will be delivered on schedule remains to be seen. Frankly, the potential of this “compliance-native” architecture was initially underestimated. For security token issuers grappling with the complexities of ERC-1400, Polymesh’s approach—embedding compliance directly into the protocol rather than relying on smart contracts—is genuinely more appealing.

How These Protocols Are Segmenting the Market

These five protocols are not in direct competition; rather, they address distinct challenges within the evolving RWA landscape:

Privacy Solutions:

• Canton: Leverages Daml smart contracts, focusing on Wall Street’s counterparty relationships.
• Rayls: Employs Zero-Knowledge Proofs (ZKPs) to provide bank-grade mathematical privacy protection.
• Polymesh: Offers protocol-level identity verification, serving as a comprehensive compliance solution.

Scaling Strategies:

• Ondo: Manages $1.93 billion across three chains, prioritizing liquidity speed over depth.
• Centrifuge: Concentrates on the $1.3-1.45 billion institutional credit market, emphasizing depth over velocity.

Target Markets:

• Banks/CBDC: Rayls
• Retail/DeFi: Ondo
• Asset Managers: Centrifuge
• Wall Street: Canton
• Security Tokens: Polymesh

This market segmentation is more critical than commonly perceived. Institutions are not merely selecting the “best blockchain”; they are choosing infrastructure that precisely addresses their specific compliance, operational, and competitive requirements.

Unresolved Questions

Despite the rapid progress, several critical issues remain:

• Cross-Chain Liquidity Fragmentation: The cost of fragmented liquidity across chains is substantial, estimated at $1.3-1.5 billion annually. This leads to 1-3% price differentials for identical assets on different blockchains due to high bridging costs. If unaddressed, this annual cost could exceed $75 billion by 2030, posing a significant threat to efficiency gains from tokenization.
• Privacy vs. Transparency Paradox: Institutions demand transactional confidentiality, while regulators require audibility. In multi-party scenarios (issuers, investors, rating agencies, regulators, auditors), each stakeholder requires varying levels of visibility. A perfect solution balancing these demands is yet to emerge.
• Regulatory Fragmentation: The EU’s MiCA regulation applies across 27 nations, while the US requires time-consuming, case-by-case “No-Action Letters.” Cross-border capital flows face significant challenges due to conflicting jurisdictional requirements.
• Oracle Risk: Tokenized assets inherently rely on off-chain data. A compromise of data providers could lead to on-chain asset performance reflecting an inaccurate reality. While Chronicle’s asset proof framework offers a partial solution, the underlying risk persists.

The Path to Trillions: Key Catalysts for 2026

Several pivotal events in 2026 are set to act as significant catalysts for the RWA market:

2026 Catalysts to Watch:

• Ondo’s Solana Launch (Q1 2026): This will test whether retail-scale distribution can generate sustainable liquidity. Success will be measured by surpassing 100,000 unique holders, demonstrating genuine demand.
• Canton’s DTCC MVP (H1 2026): This initiative will validate the feasibility of blockchain in US Treasury settlement. A successful outcome could trigger the migration of trillions of dollars in capital flows to on-chain infrastructure.
• Passage of the US CLARITY Act: Providing a clear regulatory framework, this act would enable institutional investors currently on the sidelines to deploy significant capital.
• Centrifuge’s Grove Deployment: The $1 billion allocation is scheduled for completion within 2026. This will be a crucial test of institutional credit tokenization with actual capital. Smooth execution without credit events will significantly bolster confidence among asset managers.

Market Predictions:

• 2030 Target: Tokenized asset scale projected to reach $2-4 trillion.
• Growth Requirement: This implies a 50-100x increase from the current $19.7 billion.
• Underlying Assumptions: Regulatory stability, robust cross-chain interoperability, and the absence of major institutional failures.

Industry Growth Forecasts:

• Private Credit: Expected to grow from its current $2-6 billion to $150-200 billion, representing the highest growth rate due to its smaller base.
• Tokenized Government Treasuries: Potential to exceed $5 trillion if a significant portion of money market funds migrate on-chain.
• Real Estate: Projected to reach $3-4 trillion, contingent on the adoption of blockchain-compatible title registration systems.

Hundred Billion Dollar Milestone:

• Estimated Achievement: 2027-2028.
• Projected Distribution: Institutional Credit: $30-40 billion; Government Treasuries: $30-40 billion; Tokenized Equities: $20-30 billion; Real Estate/Commodities: $10-20 billion.

Achieving this milestone requires a five-fold increase from current levels. While aggressive, this target is not unattainable given the institutional momentum observed in Q4 2025 and the anticipated regulatory clarity.

Why These 5 Protocols Are Crucial

The institutional RWA landscape in early 2026 reveals an unexpected trend: there is no single winner because there is no single market. This, frankly, is precisely how foundational infrastructure should evolve.

Each protocol addresses a distinct institutional problem:

• Rayls: Focuses on banking privacy.
• Ondo: Specializes in tokenized equities distribution.
• Centrifuge: Facilitates on-chain deployment for asset managers.
• Canton: Drives Wall Street infrastructure migration.
• Polymesh: Simplifies securities compliance.

The market’s growth from $8.5 billion at the start of 2024 to $19.7 billion demonstrates that demand now significantly outpaces mere speculation.

Core Needs of Institutional Players:

• Treasurers: Prioritize yield and operational efficiency.
• Asset Managers: Seek reduced distribution costs and expanded investor bases.
• Banks: Demand compliant infrastructure that meets stringent regulatory requirements.

The Next 18 Months Are Critical

The coming 18 months will be defined by execution, not just blueprints:

• Ondo’s Solana Launch: Will test the scalability of retail market expansion.
• Canton’s DTCC MVP: A crucial test for institutional-grade settlement capabilities.
• Centrifuge’s Grove Deployment: Will validate credit tokenization with real capital.
• Rayls’ $1 Billion AmFi Target: A key indicator for the adoption of privacy-focused infrastructure.

Execution over architecture, and results over roadmaps – these are the defining metrics of the moment.

Traditional finance is embarking on a long-term migration to on-chain systems. These five protocols are providing the essential infrastructure required by institutional capital: privacy layers, compliance frameworks, and robust settlement mechanisms. Their success will determine the future trajectory of tokenization – whether it serves as an efficiency enhancement for existing structures or as a transformative system that fundamentally replaces traditional financial intermediaries.

The infrastructure choices made by institutions in 2026 will profoundly define the industry landscape for the next decade.

2026 Key Milestones

• Q1: Ondo’s Solana Launch (98+ equities live).
• H1: Canton’s DTCC MVP (Treasury tokenization underpinned by Wall Street infrastructure).
• Ongoing: Centrifuge’s $1 billion Grove deployment; Rayls’ AmFi ecosystem build-out.

Trillions in assets are on the horizon. NFA.