350 million is just the beginning: What wealth secrets does Arbitrum's RWA ecosystem hold?
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350 million is just the beginning: What wealth secrets does Arbitrum's RWA ecosystem hold?
Overview of RWA on Arbitrum, projects and initiatives driving its development, key assets and providers (including case studies), as well as risk considerations and future outlook.
Navigating Web3 tides with focused insightsAuthor: Castle Labs
Translation: Saoirse, Foresight News
Summary
For many, the ability to integrate real-world assets (RWA) has become a benchmark for measuring whether cryptocurrency has achieved mainstream adoption: only when we can connect the on-chain world with traditional finance can crypto truly establish itself as an attractive mainstream asset class.
What was once a vision is gradually becoming reality—U.S. Treasuries, bonds, and even real estate have been tokenized and brought on-chain.
Driven by both regulatory clarity and technological maturity, RWA is gaining significant momentum.
This article focuses on the Arbitrum ecosystem—a Layer 2 solution that has successfully launched multiple RWA-focused projects, with total value locked (TVL) in RWA assets already exceeding $350 million.
The article will outline RWA on Arbitrum, key projects and initiatives driving its growth, major assets and providers (including case studies), as well as risk considerations and future outlook.
Overview of RWA on Arbitrum
The RWA market is booming. Many early crypto adopters once imagined a future where Wall Street elites use cryptocurrencies. That vision is now materializing—real-world assets are finally being tokenized and widely adopted on-chain.
Source: rwa.xyz
Currently, the total value of RWA exceeds $25 billion, distributed as follows:
Source: rwa.xyz
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Private credit: $15.3 billion (60%)
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U.S. Treasuries: $6.2 billion (26.9%)
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Commodities: $1.8 billion (7.2%)
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Institutional alternative funds: $784 million (3.26%)
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Private equity: $418.7 million (1.71%)
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Non-U.S. government bonds: $306 million (~1.2%)
RWA’s on-chain integration results from multiple converging factors:
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Digital asset regulatory frameworks are maturing
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Technical infrastructure has reached production-grade reliability
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Institutional interest is rapidly increasing
Cryptocurrencies are increasingly accepted and integrated into regulated systems—such as Europe’s MiCA and the recently passed U.S. GENIUS Act—indicating these assets are progressively being legitimized within broader financial ecosystems.
Meanwhile, networks like Bitcoin and Ethereum have operated stably for over a decade, demonstrating robust security, activity, and decentralization.
However, due to their nature, RWAs require higher assurance before going on-chain. Thus, the emergence of L2 solutions is highly attractive to institutional investors, reducing operational costs by several orders of magnitude compared to Ethereum’s mainnet.
Among various Layer 2 networks, Arbitrum stands out as one of the fastest-growing L2s in the RWA space.
Why Arbitrum?
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Mature and reliable technology stack
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Trust-minimized blockspace neutrality
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One of the largest liquidity pools in crypto
Arbitrum boasts a solid technical foundation, focusing on tech-driven development. Innovations like Stylus and Timeboost make it a compelling alternative to Ethereum’s mainnet.
Additionally, Arbitrum’s backend technology powers cross-chain bridges such as Hyperliquidx’s USDC bridge, extending beyond its own ecosystem. This demonstrates Arbitrum's credibility as neutral blockspace. Trust-minimized neutrality means the blockchain operates impartially, treating all participants equally without favoring any user, application, or outcome.
Importance of trust-minimized neutrality:
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Trust: Users and institutions prefer platforms that won’t arbitrarily change rules or favor specific parties.
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Security: Neutral systems are more resistant to manipulation or centralization risks.
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Composability: DeFi thrives when developers know no protocol receives special treatment.
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Institutional confidence: For RWA, neutrality ensures tokenized assets face no hidden risks (e.g., censorship, biased governance).
Lastly, Arbitrum hosts the sixth-largest liquidity pool in the sector, exceeding $1.17 billion, along with one of the most mature stablecoin ecosystems.
RWA combines tangible assets and yield-bearing instruments with blockchain’s programmability and transparency, offering institutional investors and decentralized autonomous organizations (DAOs) new opportunities for diversified investment, stable returns, and improved capital efficiency.
Which proposals drove this progress?
This section briefly reviews the evolution of RWA within Arbitrum, initially propelled by the Arbitrum Foundation and Arbitrum DAO.
Arbitrum DAO’s first major move in RWA began with the Stable Treasury Endowment Proposal (STEP), followed by the RWA Innovation Grants (RWAIG), Treasury Management Proposal, and finally STEP 2.
STEP (April 2024)
The proposal planned to allocate over $85 million (35 million ARB) into tokenized real-world assets such as U.S. Treasuries through institutional issuers.
Though initially a pilot, after thorough analysis, several providers were successfully selected:
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BUIDL by Securitize
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USDY by Ondo Finance
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USTB by Superstate
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USDM by Mountain Protocol
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TBill by OpenEden
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bIB01 by Backed
Selection criteria included:
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No investment restrictions
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Clear organizational structure without siloed departments
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Significant AUM, exposure to multiple ISINs, experienced team
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Use of public or decentralized tools/networks (not proprietary-only)
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Avoidance of companies with additional layers of decentralized governance
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Comprehensive and detailed documentation
Moreover, to ensure inclusivity beyond this list, STEP also allocated 1% of the DAO treasury annually over five years toward tokenized RWAs. The program also provided practical experience in understanding the RWA landscape while balancing ecosystem growth with principal protection. Future iterations may focus on one of these goals.
STEP proved highly successful, generating $600,000 in interest income for Arbitrum DAO in under a year.
Cumulative amounts by month:
What made STEP unique was its clear principles when working with institutional providers:
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Direct evaluation and selection of yield-bearing stable assets, no intermediaries
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Request-for-proposal (RFP) model allowing protocols to submit and be evaluated
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Institutional applicants directly apply via decentralized forums; the program aims to generate sustainable yields for the DAO
RWAIG Grant Program (June 2024)
The Arbitrum Foundation funded a series of innovation grants (RWAIG)—a two-month pilot from June to August 2024—with a budget of 300,000 ARB to support RWA integration, analysis, and research within Arbitrum.
Main objectives:
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Significantly boost RWA activity on Arbitrum to secure competitive advantage and “future-proof platform growth”
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Explore how DAO treasuries can invest in RWA and how on-chain tokenization can launch on Arbitrum
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Broadly integrate RWA assets and tools into existing ecosystem applications like GMX, Aave, and Pendle
The program ultimately funded eight different projects:
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RWA Research: Educate users about the field
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PYOR: RWA analytics dashboard
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Mystic Finance: Lending market enabling users to borrow stablecoins using RWA collateral
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Jia: Tokenize SME accounts receivable
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Truflation: Provide real-time inflation data
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Backed Finance: Create structured products tracking securities
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Infinfty: Develop ERC-6651 RWA tokens tracking full lifecycle including product procurement, performance, ownership, and environmental impact
Treasury Management (December 2024)
At the end of 2024, a treasury management proposal emerged to complement STEP’s early work. It aimed to generate passive yield from ARB tokens on-chain rather than leaving them idle.
Objectives included:
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Asset management: Manage 25 million ARB to generate on-chain yield
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Stablecoin conversion: Streamline ARB-to-stablecoin swaps, minimizing slippage and market impact
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Stablecoin liquidity deployment: Convert 15 million ARB into stablecoins and deploy into low-risk yield strategies to fund DAO expenses or service provider payments
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Diversification and stability: Focus on risk-adjusted returns while ensuring capital safety
The strategy split into two directions:
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Treasury: Reserve 10 million ARB for pure ARB strategies; convert 15 million ARB into stablecoins as the DAO’s “checking account”
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Growth: Allocate 7,500 ETH into decentralized finance (DeFi)
STEP 2 (January 2025)
Inspired by STEP’s initial success, STEP 2 was approved with an additional allocation of 35 million ARB (~$15.7 million).
After reviewing over 50 applications, the STEP committee decided on the following asset allocation:
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WisdomTree WTGXX: 30%
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Spiko USTBL: 35%
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Franklin Templeton FOBXX (BENJI): 35%
The proposal’s significance was also reflected in DAO approval.
STEP 2 passed with overwhelming majority—nearly 89% in favor, 11% abstaining, and only 0.01% opposed.
These initiatives collectively accelerated RWA adoption on Arbitrum, growing its TVL from near zero to over $70 million in less than a year.
So what’s the current state?
What does the RWA landscape on Arbitrum look like today?
The next section uses on-chain data to explore RWA assets, providers, and growth trends on Arbitrum.
Growth of RWA on Arbitrum
With its low-cost, high-throughput architecture and trusted neutrality, Arbitrum is rapidly building an ecosystem of issuers, infrastructure providers, and incentive programs to scale RWA on-chain.
While Arbitrum initially focused on core DeFi components—DEXs, lending protocols, yield aggregators—the idea of bringing off-chain assets on-chain gained traction after early experiments with tokenized U.S. Treasuries on Ethereum in 2022.
Currently, Arbitrum’s RWA market cap is close to $350 million, with over 129 tokenized assets. While impressive, this represents only about 1.39% of total RWA market cap—indicating strong growth potential ahead.
Despite varying forecasts, multiple projections estimate RWA growth as follows:
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$16 trillion by 2030 (10% of global GDP)
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$30 trillion by 2034
In the first scenario, the sector could grow 40-fold over the next five years.
As one of the most mature on-chain RWA networks, Arbitrum stands to gain significant competitive advantages.
Evolution of RWA Growth on Arbitrum
In 2024 alone, Arbitrum’s total value locked (TVL) grew from nearly zero to nearly $85 million by year-end.
This growth can be divided into three phases closely tied to the initiatives mentioned above:
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Early growth phase (Q1 2024): Arbitrum’s RWA TVL surged from near zero to over $5 million, showing initial momentum.
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Accelerated growth phase (Q2 2024): From ~$20 million to ~$70 million in H1 2024, aligning with STEP 1 fund allocations.
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Ongoing expansion phase: With increased DAO treasury funding (STEP 2) and new RWA issuers joining—including Spiko, WisdomTree, and BlackRock—growth continues into 2025.
This evolution is also reflected in the types of supported assets. In 2024, most RWAs were U.S. Treasuries. Over time, the range has expanded to include new categories.
While U.S. Treasuries still dominate (with $197 million), EU bonds follow closely ($150 million). Alternative assets like real estate, equities, and ETFs are also gaining attention.
RWA Assets and Providers
This section dives deeper into these asset categories, highlighting the top ten RWA products by total value, categorized by issuer.
Spiko
Spiko built a platform for issuing and distributing tokenized securities on-chain.
Authorized by France’s Financial Markets Authority (AMF), it launched two money market funds:
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Spiko Euro (EUTBL)
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Spiko USD (USTBL)
Backed by short-term government bond portfolios, these funds offer yields close to central bank risk-free rates. They are among the most widely used products—EUTBL leads with $146 million in value, USTBL ranks fourth with $24.8 million—again proving short-term Treasuries are the most utilized on-chain assets.
Franklin Templeton
Franklin Templeton is a well-known investment management firm listed on the NYSE (BEN).
To bring tokenized mutual funds on-chain, it launched the BENJI mobile app, whose proprietary system supports both tokenized securities and cryptocurrencies.
Each BENJI token represents a share in its Franklin Onchain U.S. Government Money Market Fund (FOBXX). Currently, BENJI is the second-largest RWA product on Arbitrum, valued at over $87 million.
Securitize
Securitize is a platform providing institutional investors access to tokenized securities.
On Arbitrum, it offers BlackRock’s USD Institutional Digital Liquidity Fund BUIDL.
This short-term Treasury tokenization product focuses on delivering dollar-denominated yield on-chain, with total value exceeding $33 million.
Dinari
Dinari enables the creation of tokenized stocks, ETFs, indices, etc.—known as "dShares"—fully backed 1:1 against underlying assets.
Dinari launched several products on Arbitrum:
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WisdomTree Floating Rate Treasury Fund (USFR.d): Offers low-cost exposure to floating-rate U.S. Treasury bonds, with over $15 million in value.
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Tokenized MicroStrategy stock (MSTR.d): Worth $1.8 million.
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Tokenized Tesla stock (TSLA.d): Valued at $450,000.
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Tokenized S&P 500 ETF Trust (SPY.d): An index composed of S&P 500 constituents, valued at approximately $141,000.
These assets highlight the potential of equities and indices, though their share on Arbitrum remains low.
OpenEden
OpenEden provides access to tokenized U.S. securities and similar products. Licensed by the Bermuda Monetary Authority, holding a digital asset license, and rated “investment grade” by Moody’s.
It is currently the leading issuer of tokenized U.S. Treasuries in Europe and Asia. OpenEden launched the TBILL pool, allowing users to invest in short-term U.S. Treasuries.
Deposits in this pool now exceed $5.8 million.
Ondo
Ondo gives investors access to institutional financial products.
On Arbitrum, its USDY product received positive early reception, with current value reaching $5.7 million.
USDY is a yield-bearing stablecoin backed by U.S. Treasuries, offering an annual yield of approximately 4.29%.
Despite Arbitrum’s diverse product and asset offerings, its RWA ecosystem remains in early stages.
Future development depends on:
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Expanding asset types at the chain level to meet broader demand
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Strategic focus on positioning RWA as a core strength of Arbitrum
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Collaboration among Arbitrum Alliance Entities (AAE)
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Institutional push at the business development level
Outlook
The initial providers established in STEP 1 were supplemented during STEP 2 by new entrants, enriching the variety of assets and products available on Arbitrum.
Based on current growth rates of RWA value on Arbitrum, we can project:
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Formation of a billion-dollar RWA ecosystem
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Inclusion of more asset classes (private credit, real estate, yield-bearing stablecoins, etc.)
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Deeper interoperability of these assets across networks
Despite notable progress, Arbitrum still has substantial room to grow if it aims to solidify its position in this niche. Indeed, in terms of RWA value by network, Arbitrum ranks only seventh. With $350 million in RWA TVL, it accounts for just 1.39% of total on-chain RWA market cap—still negligible.
To compete, Arbitrum must explore further opportunities—expanding into private credit products, bonds, precious metals like gold and silver, and equities.
Given Entropy’s deep involvement in treasury management and RWA-related activities on Arbitrum, we asked Matt for his perspective on the future of RWA on Arbitrum. Here’s what he said:
“Today, many RWA issuers primarily focus on reducing operational costs related to issuance and transfer—but there’s still a long way to go in validating this at scale. Nevertheless, the next major breakthrough for RWA on Arbitrum will be enhancing composability. It’s not just about adding more asset classes or new issuers—that’s step one. The real leap is ensuring these assets seamlessly integrate with the efficient on-chain primitives built over the past decade: exchanges, lending protocols, indexing tools, yield optimization pools, and future innovations. The ultimate goal is open, permissionless transferability—allowing RWA to compose freely like native crypto assets. We’re not there yet (and given current regulatory realities, this is an ambitious target), but it’s our north star. Encouragingly, industry giants like Franklin and WisdomTree are now issuing tokens themselves. This is genuine institutional participation—a trend I hope continues to grow. If we can enable RWA-related user activities—like trading and lending—to happen truly on-chain—even if abstracted through permissioned channels based on Arbitrum—that would unlock everything.”
We fully agree with Matt, especially regarding the composability and accessibility of these assets. Currently, their on-chain potential is only beginning to emerge. We look forward to a future where T-bills, bonds, equities, and commodities aren’t just tokenized on-chain but are deeply integrated into existing DeFi primitives.
From a methodology standpoint, it should be noted that in this RWA-focused report, stablecoins were excluded from analysis, as the report’s core purpose is to highlight the range of assets currently available on the Arbitrum platform.
Finally, alongside this analysis, it’s essential to address associated risks and caveats.
Risks and Forward-Looking Considerations
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Decoupling of tokens and ecosystems: Growth in real RWA does not directly translate to increased value for the ARB token.
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Asset concentration risk: Short-term Treasuries still dominate RWA TVL, highlighting the need to diversify into private credit, corporate bonds, real estate, and other asset classes.
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Regulatory uncertainty: While the crypto regulatory environment is improving and moving toward legitimacy, compliance frameworks for tokenized securities remain under development. Institutional issuers demand greater regulatory clarity and cross-jurisdictional coordination.
Expansion of asset issuers and on-chain extension into RWA categories like private credit and real estate could drive Arbitrum’s ecosystem TVL toward $1 billion by year-end.
With full implementation of treasury management and STEP 2 underway, we expect to gain further insights—not only revealing outcomes of these initiatives but also informing future decisions and actions.
Conclusion
Arbitrum’s RWA TVL has grown from near zero to $350 million in just over a year.
The STEP program and a series of DAO-led initiatives played a crucial role in driving early growth. During this process, a diversified set of institutional-grade products launched on Arbitrum—including short-term Treasuries, money market funds, and tokenized equities.
The entry of institutions like Franklin Templeton and WisdomTree further solidifies Arbitrum’s position as a reliable, neutral, and low-cost network in institutional DeFi.
But this journey has only just begun.
Beyond the risks and challenges mentioned, Arbitrum faces strategic opportunities in the coming months.
These include expanding into underrepresented RWA categories such as private credit, real estate, and commodities—and more importantly, enhancing the composability of these new products through deep integration with Arbitrum’s core primitives (decentralized exchanges, lending protocols, yield pools, etc.).
With ongoing momentum from STEP 2 and treasury management initiatives providing both fuel and real-world experience, collaboration among the DAO, alliance entities, and institutional participants will be key to Arbitrum maintaining long-term leadership in the RWA space.
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