After the real-world assets are on-chain, the next step is not to let more people buy them, but to let them play a greater financial role on the chain.
In the past, the core selling point of products such as tokenized government bonds and money market funds was to allow traditional assets to exist on the blockchain in the form of digital tokens. However, as the relevant infrastructure gradually improves, the industry is beginning to explore a further use: using these assets as collateral, connecting them to lending, margin, and liquidity management systems.
On October 13, Citi pointed out in a research report on tokenized collateral that institutional tokenization is moving from pilot programs to actual operations. By combining tokenized assets with regulated on-chain settlement funds, financial institutions are expected to achieve faster asset settlement and allow income-generating assets to enter the collateral management process.
This means that the value of tokenized assets may no longer be limited to the issuance stage, but begin to extend to the capital turnover in financial markets. 
Why is collateral more important than "issuing tokens"?
In traditional finance, when institutions engage in lending, derivatives trading, and margin settlements, they often need to provide eligible collateral assets. Whether an asset can be accepted, how it is valued, and when settlement can be completed all affect the efficiency of capital use.
If an asset has been tokenized but cannot be recognized and accepted by other financial applications, its use remains limited.
However, when assets like tokenized government bonds can enter lending, margin, or liquidity management processes, the same asset can take on additional financial functions beyond holding income. There is also the opportunity to establish closer connections between asset issuance, collateral, settlement, and capital scheduling through smart contracts.
DeFi is facing new competition for collateral
In the past, collateral in the DeFi lending market mainly came from crypto assets like BTC and ETH. These assets are characterized by 24/7 trading, but price fluctuations can also trigger chain liquidation during market downturns.
Tokenized government bonds and other real-world assets provide different options. Their value is linked to traditional financial assets, and some products also have income properties, thereby having the opportunity to attract institutions that need to manage cash, margin, and risk exposure.
However, traditional assets do not automatically become qualified collateral just because they are on-chain. Issuer rules, asset redemption arrangements, custody structures, price oracles, regulatory requirements, and secondary market liquidity all affect their practical scope of use.
The next phase of competition for RWA may not only be about who issues more assets, but also about who can truly integrate these assets into lending, settlement, and capital management processes. When tokenized assets can be held, collateralized, and called upon on-chain, they start to transition from being a digital certificate to being part of financial infrastructure.
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