Original IOSG Ventures IOSG Ventures June 03, 2025 18:37 Guangdong
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Author: Sam @IOSG
TL;DR:
Let’s take the Stablecoin Act as an introduction, introduce the recent public attention and discussion on RWA, and then start talking about RWA on Ethereum.
Data analysis (zksync can be a highlight)
What impact will the emergence of Etherealize have on Ethereum?
Ethereum's stablecoin issuance and DeFi have always had a strong moat. Combined with the new US policy, can traditional finance and DeFi be organically linked through RWA? As the most trusted and decentralized blockchain, we continue to be optimistic about Ethereum.
Bill Catalysis and Market Attention
In the context of the rapid evolution of traditional finance and the regulatory environment, the recent passage of the (GENIUS Act) has rekindled the market's interest in RWA. In addition to stablecoins and major legislative progress, the RWA field has quietly reached a number of important milestones: continued strong growth and a series of eye-catching breakthroughs - such as Kraken's launch of tokenized stocks and ETFs, Robinhood's proposal to the US Securities and Exchange Commission (SEC) to give token assets the same status as traditional assets, and Centrifuge's issuance of a decentralized JTRSY fund of $400 million on Solana.
At a time when market interest is at an all-time high and wider adoption of traditional finance is just around the corner, it is important to take a closer look at the current RWA landscape, especially the position of leading platforms such as Ethereum. Ethereum-based RWA has shown an astonishing month-on-month growth rate, often maintaining high double-digit growth; the growth rate in 2025 is even faster than the single-digit months in 2024. Another key factor driving this momentum is "Etherealize" as a catalyst for regulatory development and the Ethereum Foundation's listing of RWA as a strategic priority. At this critical juncture, this article will take a deep look at the development of RWA on Ethereum and its Layer-2 network.
RWA Ecosystem Map, IOSG
Data Analysis: Ethereum RWA Growth Panorama
The data clearly shows that the value of Ethereum's RWA has entered a clear growth cycle. Looking at the total value of Ethereum's non-stablecoin RWA, its long-term trajectory is striking - it has remained in the $1-2 billion range for many years until it entered a rapid growth phase in April 2024. This growth momentum continues to accelerate in 2025. The core driving force comes from BlackRock's BUIDL fund, which currently has a size of $2.7 billion. As shown by the orange trend line, BUIDL has shown parabolic growth since March 2025, strongly promoting the overall expansion of the Ethereum RWA ecosystem.
RWA.xyz, IOSG
By asset class (excluding stablecoins), the market value of real world assets (RWA) on Ethereum is highly concentrated in two main categories: treasury projects (75.9%) and commodities (mainly gold, 20.3%), with other categories accounting for a small proportion. In contrast, in the RWA market value composition of the entire crypto market, private credit accounts for the largest proportion (57.4%), followed by treasury projects (30.9%).
RWA.xyz, IOSG
RWA.xyz, IOSG
Further focusing on the top Ethereum RWA assets, the pie chart clearly reveals the dominance of BUIDL. Looking back a year ago, it can be seen that the scale of BUIDL was comparable to that of PAXG, XAUT and other products, but now it has significantly surpassed them. Although the composition of the top ten projects is basically stable, the growth rate of treasury products is significantly ahead of gold products, and the market share continues to expand.
RWA.xyz, IOSG
RWA.xyz, IOSG
From the perspective of protocols, the current leaders are mainly stablecoin issuers. The top four protocols are Tether, Circle, MakerDAO (Dai stablecoin system) and Ethena. It is worth noting that the total value of the securitization protocol Securitize has significantly surpassed some stablecoin projects such as FDUSD and USDC, ranking first. Other securities protocols that have made it into the top ten include Ondo and Superstate.
RWA.xyz, IOSG
Focusing on the monthly data from the beginning of 2024 to date, the growth wave began in April 2024, with an astonishing increase of 26.6% in that month, contributing a quarter of the total increase in Ethereum RWA in a single month. This momentum continued for the next three months. Although it slowed down slightly from August to December 2024, the network still maintained an increase of about US$200 million per month (a month-on-month growth rate of about 5%, an annualized rate of over 60%).
In January 2025, the growth rate exploded again, soaring 33.2% month-on-month. After a brief correction in February, Ethereum maintained double-digit growth for four consecutive months, with the month-on-month growth rates in April and May both exceeding 20%.
RWA.xyz, IOSG
BUDDL
As BUIDL quickly rises to become the largest project in the Ethereum RWA ecosystem, careful analysis of its growth path is crucial. The month-on-month growth chart reveals that as of March 2025, the indicator remained relatively stable, and then exploded in March 2025. However, the latest data from May shows that the ultra-high growth trend has slowed down slightly, but there is still an increase of US$210 million, a month-on-month increase of 8.38%. The development in the next few months is a key observation window - it is necessary to track whether its growth rate continues to slow down or continues to explode.
RWA.xyz, IOSG
BUIDL's explosive growth stems from multiple factors. Growth mainly comes from institutional demand, and product competitiveness is the key driver of success: including 24/7 operation, faster settlement speed than traditional finance, and high returns under a compliant framework. It is worth noting that DeFi integration is achieving synergies and unlocking more utility, such as Ethena Labs' USDtb product, 90% of its reserves are backed by BUIDL. At the same time, BUIDL's awareness as a high-quality collateral continues to increase, and sBUIDL launched by Securitize further unlocks DeFi integration scenarios.
BUIDL's asset distribution is highly concentrated: about 93% is concentrated in the Ethereum mainnet, which is difficult for other ecosystems to reach. At the same time, with the continuous expansion of asset management scale, BUIDL's monthly dividends have continuously set new highs. In March 2025, the dividend reached 4.17 million US dollars, and by May it had soared to 7.9 million US dollars.
BUIDL distribution, screenshot from RWA.xyz
Stablecoins
Given that the (GENIUS Act) will have a structural impact on the regulatory framework for stablecoins, it is of great forward-looking significance to systematically examine the development trajectory of the Ethereum stablecoin market. Since 2024, the total market value of this sector has continued to show a steady upward trend. Although the growth rate is slightly slower than other RWA segments, it still maintains a resilient monthly growth rhythm.
RWA.xyz, IOSG
Among small projects (less than $500 million), most projects experienced continuous contraction at the beginning of 2024. However, near the end of 2024, the market value of most projects continued to rise, and the market value of GHO, M, and USDO continued to grow. At the same time, a number of new stablecoin projects with a market value of over 50M emerged, and Ethereum stablecoin ecosystem projects became more diverse. Small-cap projects continued to prosper since 2025.
In 2024, there are only FDUSD and FRAX in the medium-sized projects (US$500 million to US$5 billion); BUSD dropped sharply from US$1 billion in January 2024 to less than US$500 million in March due to the termination of its issuance. However, in 2025, both USD0 and PYUSD broke through the US$500 million threshold, and medium-sized stablecoins became more diversified.
The top stablecoins (>$5 billion) continue to be dominated by USDT and USDC: USDT remained stable at a market value of $40 billion for most of 2024, jumped to $70 billion in early December, and then gradually stabilized until its market value declined recently; USDC grew steadily from $22 billion in January 2024 to $38 billion in May 2025. In early 2025, USDS and USDe both exceeded $5 billion, but USDT and USDC are still far ahead in market share.
RWA.xyz, IOSG
USDT and USDC occupy an absolute dominant position and directly affect the entire stablecoin ecosystem.
The growth in November 2024 is particularly noteworthy: USDT surged 30.16% month-on-month, and USDC achieved a 16.31% increase. After this surge, there were still months of growth, and USDC grew more steadily in subsequent months, with monthly growth of more than 5%. According to the issuer: Tether attributed this to "the influx of collateral assets from exchanges and institutional trading desks in response to the expected surge in trading volume"; Circle emphasized that "USDC circulation increased by 78% year-on-year... In addition to user demand, it also stems from the reconstruction of market confidence and the improvement of the standard system driven by emerging stablecoin regulatory rules."
However, the market momentum has changed significantly recently - USDT on the Ethereum chain has stagnated in the past four months, and USDC fell for the first time in May 2025 after many months of growth. This phenomenon may indicate that the market is shifting to a new cycle stage.
RWA.xyz, IOSG
L2 Ecosystem
In the broader RWA ecosystem, Ethereum maintains its absolute dominance with a market share of 59.23% (excluding stablecoins), but it still faces key challenges.
Screenshot from RWA.xyz
It is worth noting that zkSync jumped to the second place with the sole drive of the Tradable project, while Stellar ranked third with its complete reliance on Franklin Templeton BENJI Fund (with a scale of $455.9 million). Although the RWA book data of the two public chains are impressive, their structural defects cannot be ignored: lack of asset diversity and reliance on a single project.
BENJI’s Composition, screenshot from RWA.xyz
Just like the ecological characteristics shown by zkSync and Stellar, most L2 networks are currently facing the challenge of insufficient ecological diversity - their RWA market value is highly dependent on 1-2 core projects. For example, Arbitrum: of the total market value of US$256 million, BENJI contributed US$111.9 million (43.7%), and Spiko accounted for US$93.5 million (36.5%). The two together monopolized more than 80% of the market value; Polygon also showed a similar distribution pattern, with the core market value concentrated in the two major projects of Spiko and Mercado Bitcoin.
Spiko’s Composition, screenshot from RWA.xyz
Expanding the vision to the entire L2 ecosystem, the RWA value and market share of each network show significant differentiation (see the table below). Except for zkSync, only Polygon and Arbitrum have formed a substantial scale effect, and the rest of L2 is still in the early stages of development. The success of Polygon and Arbitrum is highly dependent on a single driving force, Spiko, which contributes about one-third of the total RWA value in both networks.
RWA.xyz, IOSG
Looking at the evolution of the overall RWA market value of the Layer-2 network, its growth cycle is not completely synchronized with Layer-1: growth did not start synchronously in mid-2024. zkSync's access to the Tradable project brought a $2 billion market value increase. But even if this effect is excluded, the L2 growth trend is still established-since September 2024, the L2 network has continued to maintain a double-digit month-on-month increase. In contrast, in the previous stage, RWA expansion has always been sporadic and weak. In summary, the end of 2024 marks a turning point in the development of RWA in the L2 ecosystem: it has entered a strong growth cycle.
RWA.xyz, IOSG
Etherealize: Ethereum RWA New Engine
As a key force in promoting the adoption of Ethereum RWA, Etherealize was born out of a deep insight into the bottleneck of the industry: when breakthroughs at the protocol layer fail to be effectively transformed into physical applications, institutional participation often stagnates. To this end, Etherealize systematically bridges the gap between technological breakthroughs and actual implementation by developing customized tools, building a strategic cooperation network, and deeply participating in policy making.
At present, Etherealize mainly promotes the popularization and application of Ethereum RWA through market education and content dissemination, as well as data panel tools. On the one hand, the team has written and published many in-depth articles about Etherealize itself and the Ethereum ecosystem, and participated in interviews with many well-known podcasts and traditional financial and crypto media, and has a great influence through dialogues with industry opinion leaders; on the other hand, Etherealize actively communicates with regulatory agencies, and has successfully held many seminars and symposiums on digital asset compliance and regulatory issues, and continues to propose constructive solutions on how to standardize the RWA process.
Recently, Etherealize founder Vivek Raman was invited to attend the House Financial Services Committee's hearing on "American Innovation and the Future of Digital Assets", continuing to expand Ethrealize's important role in regulatory exchanges.
At present, Etherealize has only launched a data dashboard on the product side for market education and promotion, but the team explained in the roadmap that it will develop SDKs for institutions, etc., and is recruiting founding engineers. It is worth continuing to pay attention to Etherealize's progress in promoting RWA products.
In the next roadmap, the focus of the second quarter of 2025 is to release an institutional-level SDK, which integrates custody interfaces, compliance processes, and gas optimization modules to help banks and asset management institutions build a secure and auditable issuance process, significantly reducing the threshold for traditional financial institutions to participate in Ethereum RWA.
On this basis, a Noir-based enterprise wallet pilot project will be launched in the third quarter to ensure that privacy protection reaches enterprise-level levels and meet the confidentiality requirements of RWA transactions through the "default privacy" mechanism.
In the fourth quarter, the team will focus on the international market: the team plans to establish cooperation with Singapore Digital Port and Switzerland Crypto Valley Association to localize product functions and compliance docking according to the regulatory environment and market demand in Asia Pacific and Europe.
At the same time, in order to reduce friction between different Layer-2 networks, the team will take the lead in promoting Rollup standardization and building a unified cross-chain interface to achieve the free flow of assets, and then integrate RWA under the Ethereum ecosystem to enhance interoperability.
Finally, in order to bridge the gap between traditional financial institutions and blockchain technology, the team will continue to adhere to the 24×7 support model, providing end-to-end professional services from legal document preparation to smart contract deployment.
Ethereum RWA Strategic Moat
First-mover advantage
The decision-making process of traditional financial institutions is different from DeFi: regulatory review, pilot verification and proof of concept (PoC) will greatly extend the deployment cycle. In the early stages of the project, institutions mostly adopted a cautious strategy and started expansion only after the pilot results were verified. Although Ethereum's top project BUIDL occupies a dominant position, it still took nearly a year of accumulation before it ushered in explosive growth. Ethereum's core advantage lies in its ecological first-mover position - long before the rise of the RWA wave, it had completed experimental cooperation with many top financial institutions.
Ecological accumulation
In addition to institutional cooperation, the maturity of the RWA ecosystem requires long-term sedimentation. Ethereum maintains its leadership:
Breadth: Covering diversified asset issuers and protocol structures
In-depth: The market value of multiple projects has exceeded one billion US dollars, forming a scale effect
The integration of traditional finance and DeFi continues to deepen. Most RWA projects prioritize the deployment of the Ethereum mainnet, directly using the mature decentralized lending, market making and derivatives protocols of the Ethereum ecosystem to improve capital efficiency. Recent cases include Ethena using BUIDL as 90% of the reserve assets of the USDtb stablecoin. The policy of (GENIUS Act) forcing stablecoin reserves to tilt towards US Treasuries is promoting the integration of US Treasuries, on-chain treasury products and stablecoin protocols. At the same time, mainstream DeFi protocols have incorporated BUIDL into the core collateral system.
Ethereum maintains an advantage in RWA liquidity: the number of active addresses, token types, and liquidity depth are all leading. Although there is uncertainty in the collaboration mechanism of the Layer2 ecosystem, it is still the core path for expansion.
Safety
Security is the cornerstone of the RWA ecosystem, and the maturity of smart contract technology is key. As the logic of the RWA project becomes more complex, the requirements for smart contracts are also higher. In May 2025, the Cetus protocol on the Sui chain was hacked (loss of $223 million), exposing the fatal risks of oracle manipulation and contract vulnerabilities. Although the on-chain freeze recovered $162 million, this type of passive emergency mechanism highlights the limitations of risk control. In contrast, Ethereum's core advantages lie in its more decentralized architecture, reliable operating record, and prosperous developer ecosystem.
Technological evolution
The Ethereum technology roadmap will accelerate the development of RWA. First, improve L1 performance to make up for the core gap with high-performance public chains. Second, promote L2 interoperability and focus on the application layer to open up the connection channel between traditional finance and on-chain RWA.
At the same time, Ethereum's privacy roadmap strengthens security standards and privacy protection mechanisms (such as integrating privacy tools into mainstream wallets, simplifying anti-censorship transaction processes, etc.), provides protection for RWA transactions, and builds an asset confidentiality system that meets institutional requirements.
Genius Act: A double-edged sword of regulation
The new stablecoin regulatory system not only strengthens centralized control, but also injects regulatory certainty into the market. Currently, Section 4(6) of the Act does not explicitly allow stablecoin issuers to pay interest to holders. Although the market may give rise to alternative solutions, this issue remains uncertain. At the same time, the Genius Act requires that stablecoin reserves must be highly liquid and safe assets such as US dollars or US Treasury bonds at a 1:1 ratio.
USDC stablecoin reserves are almost entirely allocated to U.S. Treasuries, which complies with the new regulations. However, other major issuers must completely restructure their reserve structure, otherwise they may be forced to exit the U.S. market. This move will directly affect specific designs such as algorithmic stablecoins and Delta Neutral stablecoins.
By anchoring collateral to U.S. sovereign credit, regulators gain greater ability to intervene (and drive demand for Treasury bonds), but loopholes in the legislation could give rise to new systemic risks—as the Commodity Futures Modernization Act (CFMA) of 2000 showed.
On the positive side, the clear compliance boundaries of the bill may accelerate institutional entry: the regulatory certainty long sought by banks and asset management institutions has been met. More large companies and institutions will be licensed to issue stablecoins. For example, several major US banks are discussing a joint crypto stablecoin, or Meta is reconsidering the possibility of launching a new stablecoin project.
Ethereum’s resilience: a diverse ecosystem
The resilience of the Ethereum stablecoin ecosystem stems from its diversity. Since the beginning of 2025, the market value of multiple stablecoin issuers has increased significantly, and many new stablecoin projects have emerged, including a rich design dimension: multiple collateral structures, income strategies and governance models. (GENIUS Act) enforces the 1:1 reserve requirement for national debt, which puts compliance pressure on most projects, forcing them to choose: either adjust the reserve structure or temporarily withdraw from the US market.
The resilience of the Ethereum ecosystem distinguishes it from the public chains dominated by a few stablecoin/RWA projects - this reduces the risk of homogenization after the projects are generally regulated. The diversified structure forms a natural risk isolation mechanism: even if some stablecoins adjust their strategies due to compliance requirements, there will still be projects that continue to promote innovation and maintain a decentralized core, and will not completely become part of the U.S. debt system. However, subsequent development will also depend on the strategic positioning of the Ethereum Foundation and Etheralize.
Conclusion
Ethereum's RWA ecosystem has experienced explosive growth in the past few months. Among them, BUIDL is the strongest driving force behind the development of RWA in recent times, and a large number of treasury bond projects have also shown strong growth momentum. Behind the expansion of scale, treasury bond projects have increasingly shown a trend of integration with Ethereum's existing DeFi and RWA ecosystems, such as BUIDL as collateral for lending or stablecoin projects.
Ethereum still has a significant advantage in the RWA field. Whether it is the first-mover advantage, security, deep ecological accumulation, grand technical roadmap updates, or the strong leadership of BUIDL, the diversification of Layer2, and the deep empowerment of Etherealize, these factors together build Ethereum’s core barriers in the wave of traditional financial chain-up.
With the promotion of the Genius Act, the credit of the US dollar is being integrated into the on-chain world at an accelerated pace. This not only brings in a larger amount of capital, creates more revenue and growth opportunities, but also poses a challenge: it makes the underlying support of the Ethereum financial system more inclined to fiat currency (US dollars), thereby introducing fiat currency credit risks and making the on-chain settlement system an extension of the US dollar hegemony; the on-chain world is no longer an independent parallel financial system. Against the backdrop of this explosive growth, there are also hidden concerns, the core of which lies in Ethereum's exploration of its own positioning - whether it supports deep binding with the US dollar system.
appendix
[1] https://reports.weforum.org/docs/WEF_Asset_Tokenization_in_Financial_Markets_2025.pdf
Chance
Classified by asset type, Ethereum; overall; other chains (if the volume is large enough)
[2] https://x.com/tokenterminal/status/1775814359236653304
[3] https://home.treasury.gov/system/files/221/TBACCharge2Q22025.pdf
[4] https://reports.artemisanalytics.com/stablecoins/artemis-stablecoin-payments-from-the-ground-up-2025.pdf