$16 billion idle: tokenized funds from asset representation to financial function activation

According to Woofun AI, the total hedging volume (TVL) of tokenized US Treasury bond funds has climbed to around $16 billion, with issuers covering a number of well-known companies in the field of traditional asset management. Although the issuance process of assets on the chain is relatively mature, currently the vast majority of tokenized funds are only held, occasionally transferred, or finally redeemed, and are in a serious state of idle at the economic level.

This state of affairs shows that simply digitizing assets has not unlocked their true financial potential; the greater opportunity lies in transforming traditional assets into collateral, margin, or structured portfolio components in blockchain systems to activate their deep functionality.

Logically, the industry is undergoing a critical shift from reliance on redemption liquidity to upgrading mortgage lending functions. Take a tokenized bond fund worth $100 million as an example. If investors need cash, the traditional method is to redeem the fund and wait for the underlying asset to complete the settlement process. Although this is faster than an offline operation, the essence is to abandon the original position to obtain liquidity. Another approach is to deposit this token into the lending market as collateral to borrow stablecoins. At this point, the credit risk and yield are still borne by the investor, and the required cash can be obtained without selling the assets.

This transformation changed the function of an asset rather than the asset itself, making tokenization a financial infrastructure characteristic rather than just an efficient distribution channel. Financial mechanisms that activate the intrinsic value of assets in traditional markets are expected to be programmable through tokenization, but lending agreements cannot regard all tokenized assets as homogenized alternatives.

According to data compiled by Woofun AI, assets such as Ethereum can be quickly sold in the deep market when the price hits the clearing threshold, while the bonds behind tokenized credit portfolios only operate during traditional market trading hours, the net asset value (NAV) is updated regularly rather than in real time, and redemption takes several days. DeFi liquidations only take a few minutes, and there is a huge gap between traditional credit business's multi-day settlement cycle, and simply adding tokens to assets cannot bridge this gap.

In order to solve the technical challenges of mismatch between clearing and liquidity, mWin, launched in August 2026, became a reference case. The original design was to meet the blockchain financial system's need for secure operation of tokenized assets. Midas is responsible for issuing this token. Wellington Management formulates the credit strategy, and Northern Trust (NTRS.US) holds assets. The strategy is directly issued on the blockchain. The investment scope includes investment-grade CloS and other asset-backed credit products. The current yield is about 6.9%. mWin supports daily T+1 cycles of minting and redemption, and funds come from multiple competitive liquidity channels rather than relying on secondary market depth. Sentora then built a Morpho marketplace, enabling mWin to support PayPal (PYPL.US) PYUSD loans and set parameters based on historical NAV data, past market pressure events, liquidity conditions, and redemption mechanisms.

This design ensures a reasonable loan to asset value ratio, making it possible to complete the mandatory sale before the collateral value falls below the debt amount, thereby bridging the differences between traditional asset non-real-time transactions and rapid DeFi clearing, and proves the key role of the design mechanism around the token itself in secure application programmability.

In the future, the standard for measuring the degree of tokenization will shift from the value of uploaded assets to more practical indicators, such as the amount of loans supported by collateral, the amount of liquidity raised in stablecoins, the ability to transfer across platforms, and the efficiency of settlements without breaking away from infrastructure. Figure PRIME's growth on the Morpho platform has surpassed $200 million this year; Aave launched the Horizon platform in August 2025, designed specifically for institutions to use tokenized assets as collateral to borrow stablecoins. Currently, the TVL has exceeded $250 million. More and more Morpho markets are being built around tokenized credit products, and tokenized stocks are gradually being integrated into this infrastructure. Financial assets are undergoing an evolutionary path from simple characterization to distribution functions to practical value, and their true value will depend on the product form that the market creates after the asset is put into use, not just the amount of existing assets.