HTX Ventures: Real-World Assets and Stablecoins Will Power DeFi 2.0

The decentralized finance (DeFi) landscape is undergoing a significant transformation, with real-world assets (RWAs) and stablecoins taking center stage, according to a new report by HTX Ventures, the investment arm of the HTX crypto exchange. The report, titled "A New Era for DeFi with Crypto Compliance and New Opportunities in RWA-Fi and Stablecoin Payments," highlights the growing convergence of traditional finance and DeFi, particularly in the wake of recent regulatory shifts.

Stablecoins and RWAs: Bridging the Gap Between Two Financial Worlds

The easing of crypto regulatory policies globally is attracting more institutional investors to the crypto space. This shift is particularly benefiting stablecoins and RWAs, which are increasingly seen as crucial bridges between the traditional finance (TradFi) and decentralized finance (DeFi) worlds.

Stablecoin usage in blockchain transactions has exploded, surging from 3% in 2020 to over 50% by the end of 2024. Their core value proposition lies in facilitating seamless cross-border payments, a market currently valued at approximately $40 trillion for B2B transactions alone. As adoption grows, stablecoins are poised to disrupt this massive market, according to the HTX Ventures report.

The report also highlights the potential of a stablecoin bill being prepared by the U.S. House Financial Services Committee, suggesting that this could be the first comprehensive crypto legislation passed by Congress. This legislation could drive widespread adoption of crypto wallets, stablecoins, and blockchain-based payment channels, with traditional financial giants like PayPal and Stripe already exploring the stablecoin sector.

The Rise of Real-World Assets (RWAs) in DeFi: Stability Meets Innovation

The RWA market, which involves tokenizing real-world assets on the blockchain, experienced positive growth even during the recent bear market, driven by its stable returns. Unlike cryptocurrencies, RWAs are less susceptible to crypto market volatility, making them an attractive component for building a robust DeFi ecosystem. Industry leaders like Binance project that the RWA market could reach a staggering $16 trillion by 2030, prompting companies like BlackRock and Tether to explore tokenized assets. This has further led to a rise in compliance tools, like Securitize, for RWA token issuance.

Opportunities and Challenges: Building the Future of DeFi

The report identifies two primary approaches for DeFi projects looking to capitalize on the growing interest in yield-generating stablecoins:

• Treasury-Backed Stablecoins: This model uses U.S. Treasury bonds as underlying assets, effectively bringing traditional financial assets onto the blockchain. Examples include USDY by Ondo Finance and Treasury-backed Vault products from OpenTrade.
• Volatility-Driven Yield: This approach leverages crypto market volatility and Miner Extractable Value (MEV) to generate returns. Ethena and its USDe stablecoin are cited as a prime example.

Integrating DeFi applications with RWAs presents both opportunities and challenges. RWAs can enhance stability for platforms like Curve's crvUSD, while DeFi's flexibility can boost the utilization rate of tokenized RWAs, as seen with Pendle's new RWA section, which currently boasts a TVL of $150 million.

Looking Ahead: Niche Markets and the "New DeFi" Era

The report suggests that emerging DeFi projects still have significant untapped potential in niche sectors, such as addressing default scenarios in the private credit market within the RWA domain and leveraging RWA public chains to empower institutional finance. Looking ahead, on-chain forex, cross-border payment stacks, and multi-pool stablecoin aggregation platforms are identified as promising development directions in this "New DeFi" era.