Stability is not the opposite of innovation; rather, it is a prerequisite for innovation to persist in the long term.

Article by Henry Zhang, Founder and CEO of DigiFT.

Article source: ME News

2025 looks like the "year of resurgence" for digital assets. Prices are rebounding, and institutional discussions are restarting. People are no longer just asking "Can digital finance survive?", but starting to discuss: What will it ultimately become?

The most crucial change isn't actually on the price curve. It arises after mainstream capital begins to seriously participate, as the digital asset market encounters several hard constraints: security, liquidity, and governance. If these three things are done well, adoption will be self-reinforcing and continuously accumulate; if they are done poorly, every "new product" will be treated as a "new risk."

This is why tokenized real-world assets (RWAs) went from "worthy of attention" to "structurally significant" in 2025. While DeFi was pushing its own boundaries, traditional investors were consciously returning to yield, balance sheet resilience, and capital discipline. The convergence of these two trends in the same year naturally revealed the answer.

What will truly teach DeFi in 2025?

DeFi will not mature in 2025 because everything went smoothly; it will become more "mature" because some methods that worked in the past are starting to fail.

Safety remains the top priority.

The market is repeatedly reminded that profits are only meaningful when the system is sufficiently secure. According to Chainalysis, as of the first half of 2025, crypto service platforms had suffered losses exceeding $2.17 billion , a large portion of which stemmed from a major exchange hack.

If you are an institution or accredited investor focused on on-chain assets, this is irrelevant to whether you participate in "DeFi yield strategies." Security incidents are rarely confined to a single protocol or chain. They affect overall confidence, lengthen approval cycles, tighten the standards of risk committees, and impact the entire digital asset system—including tokenized products whose underlying assets are real-world assets.

From our perspective as a regulated RWA platform, the conclusion is quite simple: professional investors don't differentiate between "technical losses" and "financial losses" in a very subtle way. The result is the same: a loss is a loss. Every major event raises the bar for risk control, custody, transparency, and operational discipline. This is healthy for the industry, but it also represents a real constraint on growth.

The core track remains intact, but the revenue layer is being tested.

The underlying infrastructure of DeFi remains stable: spot trading and lending markets continue to operate. The pressure mainly lies in the higher-level yield structure—many yields rely on incentives, leverage, and an implicit premise: that liquidity is always sufficient.

When the market is stable, these structures appear very stable. Once the market tightens, you can quickly discern whether what truly supports them is cash flow or incentives.

The Stream Finance incident is repeatedly brought up because it puts this point on the table: the mechanism can function normally, but when liquidity assumptions are tested and the system must stand firm "without the same support," the differences become apparent.

The conclusion here is not that "the returns are bad." Rather, the market is becoming more sophisticated in distinguishing which returns are self-sustaining and which only hold true in favorable conditions.

Institutional participation is increasing, but they are becoming more selective.

There was no shortage of institutional interest in 2025, but large-scale, wide-coverage allocations did not materialize as many had expected.

As Sygnum Bank points out, improved infrastructure alone does not automatically bring in capital inflows. Institutions prefer to allocate to structures they can clearly see: how assets are managed, how liquidity operates, and how risks are controlled; rather than jumping in simply because a protocol is "composable" or "technically elegant."

This is important. It shows that institutions are not waiting for DeFi to develop faster, but rather for a structure that they can "write into their investment memos".

The regulations are clearer

By the end of 2025, the regulation of stablecoins and digital assets continued to advance in multiple jurisdictions. TRM Labs ' year-end review also noted that various regions were accelerating the improvement of their frameworks, including stablecoin rules and policies related to regulated institutions.

The practical impact is that the barriers to entry are clearer. Regulated custody, compliant distribution, and well-defined settlement rules are increasingly becoming the core of scalability. This increases credibility, but it also narrows the scope of models that can "grow rapidly."

In summary, 2025 did not provide DeFi with a single "breakthrough moment." Instead, it offered more useful insights: what can withstand pressure, what cannot, and what institutions truly need before scaling up.

Where does RWA stand?

The reason why tokenized RWA is increasingly appearing in the "middle layer" of the market is very pragmatic: it is one of the few components that can meet the needs of both sides at the same time.

On-chain markets excel at making assets easier to transfer and use: programmable, composable, and with faster settlement. However, institutional investors typically don't start with these features. They first ask fundamental questions: What do I actually own? What are my rights? Who is responsible for servicing, disclosure, and redemption? What happens if problems arise?

This is precisely where a well-structured RWA comes into play. Successful tokenization is not just about "putting assets on the blockchain," but about bringing real rights onto the digital track, accompanied by clearer operating rules, tighter disclosure and reconciliation processes, and lower-friction issuance, transfer, and service procedures.

This is why we repeatedly emphasize "stability." Stable returns don't begin with the returns themselves, but rather with whether the structure remains predictable when the environment tightens: thinning liquidity, incentive exits, risk committee intervention, and counterparty selection. These are the moments that institutions truly value.

Tokenized RWA is not simply "moving" traditional financial returns to DeFi. It's more like bringing mature cash flow, clear legal rights, and service discipline into the digital system, allowing capital to participate with greater efficiency and certainty. Its value lies not only in the "real-world asset" but also in its more predictable behavior.

Looking ahead to 2026

I don't think the core of 2026 is finding the next profit opportunity. I'm more concerned with what kind of infrastructure the digital asset market will choose to build. If you look at the relatively serious 2026 outlooks from institutions like 16z and Grayscale , the main theme is actually quite consistent: stablecoins as infrastructure, market structure, tokenization, institutional-grade distribution—rather than the next round of speculative narratives.

These reports point to very clear needs: DeFi requires credible collateral, reliable liquidity under stress, and “cash-like” infrastructure that won’t fall apart when incentives wane or trust falters.

I think 2026 will likely see a more focused validation of a few things:

Designs that can withstand exits are more favored . These include clear legal rights, direct cash flow mechanisms, conservative liquidity assumptions, and disclosures that don't require "trust." The market isn't averse to innovative assets; it's averse to structures that only hold true when everything goes smoothly.

Stablecoins are becoming regulated infrastructure . They are increasingly resembling financial infrastructure rather than just "tools of the crypto world." Specifically, many regulatory frameworks are treating them as payment products: issuance and licensing requirements are becoming clearer, the quality of reserve assets and custody rules are becoming more explicit, whether they support redemption at par (and the redemption mechanism), information disclosure requirements, and who can distribute or hold them are all being defined.

• Liquidity should be judged by performance, not labels . 2026 will more clearly distinguish between "issued on-chain" and "tradable under stress." Our research also shows that secondary market liquidity remains fragile, especially for tokenized stocks, where insufficient depth can easily lead to on-chain price deviations, which are more pronounced during non-trading hours. These issues ultimately depend on market design: trading rules, market-making mechanisms, collateral usage, redemption and arbitrage paths, and not just "whether it's a token."

• Operational reliability becomes the real watershed . The closer tokenization gets to a real investment portfolio, the less the bottleneck lies in the smart contracts themselves, and more in the "daily" processes of service, reconciliation, disclosure, and redemption. Institutions will not choose the most elegant protocol, but rather a system that can operate stably end-to-end.

Distribution, interoperability, and usability are the keys to success . Issuance is not difficult; the real challenge lies in usability, fundraising, and exitability. If tokenized assets cannot be smoothly used, funded, or exited across multiple platforms, they will remain in the "pilot phase" indefinitely.

If I had to sum it up in one sentence, it would be this: stability is not the opposite of innovation; rather, it is a prerequisite for the long-term existence of innovation.

About the author

Henry Zhang has over two decades of senior management experience in global financial institutions and fintech innovation. Prior to founding DigiFT, Henry held key management positions at several international financial institutions, including Vice President of China at Citibank and Standard Chartered Bank, and CEO of Greater China at East West Bank. Throughout his banking career, he led and spearheaded numerous industry-first projects in China's fintech sector, including the world's first cross-border centralized funds management system and China's first bilingual (Chinese and English) online banking platform.

In 2022, Henry founded DigiFT in Singapore, dedicated to building a next-generation platform for the tokenization, trading, and distribution of institutional-grade real-world assets (RWAs). Under his leadership, DigiFT became the world's first on-chain exchange licensed by the Monetary Authority of Singapore (MAS), and its Hong Kong entity has also been approved by the Hong Kong Securities and Futures Commission (SFC) to conduct Type 1 and Type 4 regulated activities. Currently, DigiFT works closely with regulators, financial institutions, and the Web3 ecosystem to continuously drive the development of compliant, institutional-grade tokenized finance.

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