The role of stablecoins and RWAs in DeFi: HTX Ventures report

The 2024 US presidential election was a pivotal moment for the crypto industry that will shape crypto regulation. These developments will create new opportunities and accelerate decentralized finance’s (DeFi’s) integration with traditional finance. A new HTX Ventures report explores how Real-World Assets (RWA), stablecoins and regulatory developments may reshape the DeFi landscape. The report examines key opportunities and potential growth trajectories that may emerge during this transformative period in the crypto market.

The stablecoin sector is set to show significant growth as regulation standards emerge. A regulatory framework was introduced with a stablecoin bill proposed by the US House Financial Services Committee. It establishes rules for the stablecoin issuance, backing assets and the reserve ratio, reporting regulations and regulatory oversight. This legislation, if passed, will mark the first comprehensive crypto regulation in the US and may support widespread adoption of stablecoins and blockchain-based payments. 

Stablecoins account for over 50% of all blockchain transactions and facilitate seamless cross-border payments. Compliance will position stablecoins for mainstream use, enabling further integration into financial systems and boosting related infrastructure such as  layer-1 blockchains and DeFi applications.

Crypto in traditional finance: A growing collaboration

TradFi has recognized the potential of stablecoins and is increasingly engaging with the industry. Beyond crypto-native stablecoins such as USDt (USDT) and USD Coin (USDC), companies are developing stablecoins tailored for cross-border payments. For instance, Ripple introduced RLUSD, designed specifically for corporate transactions. Meanwhile, Stripe’s $1.1 billion acquisition of Bridge — the largest in the crypto market’s history — highlights the growing role of stablecoins in global payments by integrating fiat and stablecoin solutions for businesses.

RWAs have gained significant attention in recent years, and their onchain value increased by over 60% in 2024 to reach $15 billion. This growth was primarily driven by the collapse of unsustainable onchain yields. Due to their ability to maintain stable yields in bearish and bullish markets, RWAs have become widely adopted by crypto retail users and professionals alike.

The growth of RWAs and improved regulation have accelerated the adoption of tokenization. In addition to crypto-native protocols such as Maker, several TradFi companies have entered the RWA sector with their products. For example, BlackRock launched the tokenized US Treasury fund BUILD in March 2024, allowing eligible investors to earn yields from T-Bills deployed onchain.

As Tether’s annual revenue from T-Bills hits $10B, the potential for a revival of yield-bearing stablecoins has gained attention. These stablecoins are categorized into two types: those backed by T-Bills and those supported by onchain arbitrage strategies, such as delta-neutral hedging or MEV arbitrage.

In 2024, the market experienced significant growth in yield-generating stablecoins. Ethena’s yield-bearing stablecoin USDe has become the third-largest stablecoin with over $5.5 billion market cap.

Collaboration with TradFi on RWAs offers significant opportunities for DeFi protocols. For instance, Ethena recently launched USDtb, a stablecoin primarily backed by shares of BlackRock’s tokenized US Treasury fund, BUIDL. This structure strengthens USDe’s stability during adverse market conditions, including periods of negative funding rates. Recently, Ethena’s Risk Committee approved USDtb as a USDe backing asset, allowing the protocol to close hedging positions and reallocate backing assets to USDtb during market uncertainties.

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