Tokenized funds have evolved beyond a novelty, with tokenized US Treasury funds alone holding roughly $16 billion in distributed value. Traditional asset managers now routinely issue these products, leading some industry participants to suggest that issuance is largely a solved problem. However, the broader challenge lies in what happens to these assets after they exist onchain, as many currently remain economically idle.
In a traditional setup, an investor holding a tokenized fund needs to redeem the position to access cash, awaiting underlying settlement just like in conventional finance. The alternative is to deposit the token into a lending market as collateral to borrow stablecoins. This allows the investor to retain credit exposure and yield while securing liquidity without selling the underlying asset.
Using tokenized assets as collateral involves distinct structural hurdles. Decentralized finance liquidates positions in minutes, whereas traditional credit assets like bonds trade during limited hours, strike Net Asset Values periodically, and may take days to settle. Consequently, assets built for distribution must meet different standards to safely function as collateral.
Projects have begun addressing these integration challenges. For example, mWIN, launched in August 2026, was issued natively onchain with underlying credit strategies managed by Wellington Management and assets held by Northern Trust. Sentora curates a Morpho market where mWIN acts as collateral for loans denominated in PayPal's PYUSD, with parameters set based on historical NAV, liquidity, and redemption mechanics.
Broader market adoption is shifting toward financial utility. Figure PRIME surpassed $200 million in growth on Morpho, and Aave launched Horizon to enable institutions to borrow stablecoins against tokenized assets, accumulating a total value locked exceeding $250 million. Additional Morpho markets and tokenized equities continue to enter the same infrastructure, pointing toward a future where the value of tokenization is measured by asset usability rather than sheer issuance volume.
