The tokenized US Treasury market has reached approximately $16.19 billion, yet only 0.7% of these assets are currently used in decentralized lending protocols. Aave V3 dominates this segment with a 64.1% market share on actively deployed tokenized Treasuries. The leading issuers are Circle with USYC ($3.0B), BlackRock with BUIDL ($2.7B) and Ondo with USDY ($2.1B). Analysts highlight that the attractive risk-free yields of these products reduce incentives to deposit them into DeFi protocols, especially given regulatory uncertainty and liquidity fragmentation that create additional barriers to adoption. Aave launched Horizon in August 2025, a dedicated market for compliant real-world asset collateral, attracting between $440 million and $510 million in deposits.
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