DAO Allocations Poised to Drive Tokenized US Treasury Market to $3 Billion by Year-End

The tokenized US Treasury market is gearing up for significant growth. Analyst Tom Wan from 21.co predicts that this segment could reach $3 billion by the end of 2024.

This growth is fueled by a strategic shift towards real-world asset (RWA) tokenization within the decentralized finance (DeFi) ecosystem.

Arbitrum and MakerDAO Lead the Charge in Tokenized Treasury Allocations

According to Wan, decentralized autonomous organizations (DAOs) and DeFi projects seeking diversification and stability in their treasuries will largely drive this anticipated surge. By integrating tokenized US Treasuries, these entities aim to access risk-free yields while staying within the blockchain ecosystem.

“With the maturity of tokenized US Treasuries, over 15 products on [Ethereum Virtual Machine] EVM chains, and close to $2 billion [assets under management] AUM, DAO is starting to include yield-bearing products like BUIDL, USTB, USDY, and USDM in its treasury. We would definitely see this trend continue in the long run,” he wrote on his X (Twitter).

Recent moves by prominent DAOs to allocate substantial funds into tokenized treasuries exemplify this trend. In June, the Arbitrum STEP Committee recommended diversifying 35 million ARB tokens ($27 million) from the Arbitrum DAO Treasury into six selected tokenized treasury products. These products include Ondo Finance‘s USDY, BlackRock’s BUIDL, Superstate‘s USTB, Mountain USDM, OpenEden’s TBILL, and Backed Finances bIB01.

Additionally, MakerDAO proposed the Spark Tokenization Grand Prix competition last week, set to commence on August 12, 2024. The competition aims to onboard up to $1 billion of tokenized assets, focusing on short-term US Treasury Bills and similar products.

Total Market Value of Tokenized US Treasury Products. Source: Dune/21co

This year, the tokenized US treasury market has experienced unprecedented growth. 21.co‘s data reveals an increase from $592.63 million to $1.78 billion year-to-date in the tokenized treasury market value. This 200% growth showcases the market’s potential as DeFi projects and DAOs increasingly turn to tokenized US Treasuries.