Tokenized US Treasury market cap hits record $16.2B (+77% YTD) as investors use Treasury collateral to borrow stablecoins and farm yields above 10% via looping strategies.
DeFi & Yields ·
Tokenized US Treasury market capitalization reached a record $16.2 billion, representing a 77% increase year-to-date. The surge reflects growing demand among onchain investors to generate yield by using Treasury Bills as collateral. Users are depositing tokenized Treasuries, borrowing stablecoins against the collateral, and then deploying those borrowed stablecoins into decentralized finance strategies to capture additional returns.
The yield amplification is enabled through looping mechanisms available on platforms like Jupiter, which allow investors to repeatedly borrow and redeploy capital. This recycling of positions can push annualized yields above 10% in certain cases. The strategy effectively converts low-yielding Treasury collateral into higher-yielding onchain positions by leveraging the stablecoin borrowing market.
What remains unclear is the sustainability of these yields, the concentration risk across specific lending protocols, and whether regulatory changes to either tokenized Treasuries or DeFi lending could disrupt the current structure. The durability of the 10% yield targets under different market conditions has not been detailed.