Risk-Off Capital Shifts Toward Tokenized Assets as DeFi Pulls Back
Decrypt
by Akash GirimathFebruary 20, 2026
AI-Generated Deep Dive Summary
Crypto markets are experiencing a notable shift as capital moves from decentralized finance (DeFi) to tokenized real-world assets. Over the past month, DeFi's total value locked (TVL) dropped by 25% to $94.8 billion, with major protocols like Aave and Lido reporting significant declines. Meanwhile, tokenized assets saw steady growth, rising 8.7% to $24.8 billion despite a broader market downturn. Experts suggest this isn't a sign of investors leaving crypto but rather a maturing market where capital is reallocating to lower-risk opportunities.
DeFi's decline has been driven by compressed yields and market-wide contractions, with nearly every major protocol posting double-digit losses in TVL. However, tokenized real-world assets (RWAs) are showing resilience across sectors like U.S. Treasury debt, commodities, and private credit, growing 10%, 20%, and 15% respectively. These assets offer stable returns, such as 4% on-chain yields with minimal risk, attracting investors seeking safer alternatives to DeFi's riskier options.
The rotation into RWAs reflects a broader shift in crypto markets toward more structured and regulated instruments, as highlighted by experts like Rico van der Veen of Programmable Credit Protocol. Unlike DeFi, which relies on token emissions for returns, RWAs provide enforceable rights and cash flows tied to real-world assets, making them appealing during market uncertainty. Despite strong fundamentals, RWA tokens have faced challenges due to the broader market downturn, with prices lagging behind their underlying value.
This shift underscores a maturing crypto ecosystem where investors are diversifying into less volatile opportunities. While DeFi's TVL has dropped, the growth of RWAs suggests sustained demand within crypto rather than a retreat from it. Experts predict that as market sentiment improves and adoption grows, these assets could see significant revaluation.
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Originally published on Decrypt on 2/20/2026