Decentralized lending protocols are experiencing a remarkable surge in total value locked (TVL), now exceeding $127 billion, marking over a 72% increase year-to-date. This significant growth aligns with a broader trend of institutional adoption of stablecoins and tokenized assets, according to fresh insights from Binance Research.
These decentralized finance (DeFi) lending protocols operate through smart contracts that facilitate lending and borrowing among investors without the need for traditional financial intermediaries, such as banks. The increase in total value locked has risen from $53 billion at the beginning of 2025 to the current figures observed on September 3.
Notably, prominent DeFi platforms like Maple Finance and Euler have contributed significantly to this upswing, boasting staggering growth rates of 586% and 1,466%, respectively. The underlying factors driving this expansion include the accelerating integration of stablecoins and tokenized real-world assets (RWAs) into the mainstream financial landscape.
“In light of the accelerating adoption of stablecoins and tokenized assets, DeFi lending protocols are increasingly positioned to facilitate institutional participation,” a spokesperson from Binance Research stated in a recent report shared with Cointelegraph. As RWAs gain traction, the expectations for new on-chain financial products to emerge are high, aiming to create more efficient, transparent, and accessible capital markets.
The spokesperson also emphasized that DeFi lending protocols offer a programmable and interoperable framework, making them particularly suitable for fostering greater involvement from institutional players. This evolving relationship between decentralized finance and traditional infrastructure is projected to enhance liquidity within DeFi and the broader cryptocurrency ecosystem.
Binance Research highlighted the significant role that specialized institutional-grade products like Aave Labs’ Horizon play in capturing institutional participation. Horizon, an institutional lending market, allows users to leverage tokenized RWAs as collateral for stablecoin loans, ultimately aiming to unlock new liquidity avenues and convert RWAs into productive assets within the DeFi sector.
Institutional interest in tokenized financial products is notable, particularly in sectors like private credit and US Treasury bonds. Data from RWA.xyz indicates that tokenized private credit comprises $15.9 billion out of a total of $27.8 billion in RWAs on-chain, with US Treasurys valued at approximately $7.4 billion.
Despite the advantages, the practice of using US Treasurys as collateral for leveraged crypto trading introduces new risks across different markets. A June report from Moody’s rated service warned of potential cascading effects for DeFi protocols stemming from these risk transmission pathways.
As institutions increasingly embrace DeFi ecosystems, the landscape of decentralized lending continues to evolve, signaling a transformative shift in how financial assets are managed and utilized in an interconnected economy.
