For years, DeFi was where crypto-native investors went to earn yield - fast-moving, high-risk, and often incentivized by token emissions. But as the market matures, so do its participants. By mid-2025, 71% of institutional investors already have some exposure to digital assets. Their priorities differ: they increasingly look for stability, sustainability, and predictable returns.

This is where tokenized real-world assets (RWAs) come in. Products like tokenized Treasuries, private credit, and money market funds provide yield streams linked to real economic activity.

This is the infrastructure layer IXS is building. As a regulated Exchange Settlement Layer, IXS connects institutional-grade RWA instruments to on-chain capital, supporting issuance, secondary trading, and settlement within a licensed framework under the DARE Act.

Quick Take: DeFi Yield and RWA-backed Yield

DeFi yield and RWA-backed yield now serve distinct investor profiles and understanding the difference helps investors align strategies with their risk tolerance.

Quick Take:

• DeFi Yields: Often volatile, driven by token incentives and market cycles. Suitable for risk-tolerant, active crypto users.
• RWA Yields: Generally more stable, regulated, and tied to real-world repayment flows. Preferred by institutions seeking sustainable, risk-adjusted and compliance first returns.
• With increasing institutional participation in crypto assets and the next wave of compliance-first stablecoin capital, the market for real-world asset yield is likely to expand to meet institutional demand.

DeFi Yield: The Upside and the Tradeoffs

DeFi yield has always been about speed, scale, and experimentation. Platforms like Aave, Compound, and Curve unlocked novel ways to generate returns from liquidity provisioning and lending.

The strengths:

• Access and automation: Anyone with a wallet could plug in, no bank needed.
• Attractive upside: 10–25%+ APYs were common in early phases.
• Innovation flywheel: DeFi protocols competed to offer new incentives and mechanisms.

But these benefits came with limitations:

• Inconsistent yields: DeFi yields are correlated with crypto markets. They can rise fast, but fall just as quickly.
• Limited sustainable sources: A large chunk of DeFi yield came from emissions, not real-world activity.
• Unregulated Environment: The majority of DeFi protocols operate in a regulatory gray area, often lacking robust investor protection mechanisms.‍
• Smart contract risk: Bugs, exploits, and rug pulls remain non-negligible. Chainalysis reported $2.2 billion stolen from crypto platforms in 2024, with DeFi platforms being the primary targets (see charts below).

In short, DeFi yield represents a high-risk, high-reward profile. That makes it relevant for short-term, risk-tolerant investors, but less aligned with institutional mandates.

Why RWA-Backed Yields Are Gaining Institutional Ground

Tokenized RWAs, such as Treasuries, private credit, and money market funds, offer yield streams rooted in contractual cash flows and supported by institutional infrastructure. These are loans to real businesses, government debt instruments, and regulated fixed-income strategies, now represented on-chain.

What makes them attractive for institutional investors?

• Familiarity breeds comfort: U.S. treasuries, money market funds, private credit, etc. are established financial instruments, so investors know how they work. 
• More stable, predictable income: Many RWA tokens sustainably deliver 4–10% in real yield, based on contractual cash flows such as borrower repayments or bond coupon payments.
• Reduced volatility: RWA-backed yields are tied to real-world economic activity, making them more stable and less exposed to market-driven volatility.
• Investor protection: Most tokenized RWA instruments, such as Treasuries and MMFs are issued within regulated frameworks. This means they must be issued through licensed venues like IXS, with investor protection measurements in place.

For examples:

• IXS’s BlackRock HYCB Vault offers on-chain access to a BlackRock ETF, combining high-yield exposure with blockchain-native efficiency, offering a return of up to 8.5% APY. It operates on IXS and OpenTrade’s regulated infrastructure.
• InvestaX MMF Earn gives stablecoin holders access to liquid assets like treasuries and Fidelity’s U.S. money market funds, generating ~5% APY while maintaining daily liquidity. It operates on InvestaX and OpenTrade’s regulated infrastructure.
• TradeFlow Tokenized Trade Finance Bond enables investors to earn yield from insured short-term commodity finance transactions - an instrument traditionally reserved for trade finance specialists, offering a return of up to 8.5% APY. It operates on InvestaX and Obligate’s regulated infrastructure. 

In short, tokenized real-world yields address institutional requirements for familiarity, predictability, sustainability, and compliance alignment.

The Institutional Use Case Is Real And Growing

Today’s tokenized RWA market is a growing ecosystem. We now see growing participation from buyers, increasing liquidity, and products structured for institutional scale.

As IXS CEO Julian noted in our RWA panel: “Navigating Regulations for Stablecoin-Powered Fixed Income Products,” the appetite isn’t just from crypto-native funds. It’s from asset managers, family offices, and treasury managers with $20M, $50M, even $5B under management seeking real returns, not token-based speculation. Platforms like IXS and OpenTrade are now meeting this demand with regulated, tokenized structures that resemble traditional securities but operate with the agility of DeFi.

The Tailwind: Stablecoins and Regulation

The current $250B stablecoin market, with the potential to grow to trillions of dollar, represents a massive opportunity for the tokenized yield market. 

With regulatory clarity improving, especially with the U.S. GENIUS Act, we’re likely to see trillions in stablecoins enter the market and seek institutional grade yields. Tokenized RWAs offer the most direct path to deploy stablecoins into familiar, fixed-income strategies. 

Platforms like IXS, operating under frameworks such as the DARE Act, are positioned to serve this demand by offering compliant issuance and settlement infrastructure.

Final Notes

With institutional participation in digital assets expanding and the next wave of compliance-first stablecoin capital on the horizon, the real-world asset yield market is expected to grow steadily to meet this demand.

For crypto-native users, RWAs offer new ways to park capital during downcycles or earn yield off-chain. For traditional investors, RWA tokenization is a way to access yield without the volatility, complexity, or trust issues of DeFi protocols.

IXS works across both segments, providing issuance, custody, and settlement under the DARE Act. Its tokenized fixed-income products and institutional custody stack allow allocators to access real-world yield within a licensed and audit-ready framework.

Looking to offer institutional yield products on compliant infrastructure? Contact the IXS team to get started.