Christopher Storaker & Olivia Capozzalo
December 18, 2025

gm, Defiers!

Today’s big story:

RWAs Real Test: Isolation or Composability. TradeXYZ perps market manipulation over the weekend exposed the risks of shortcut RWAs, DTCC Canton Networks risks isolation on new rails, while Superstate shone a path for composable RWAs on public network.

In other news:

SoFi Bank launches SoFiUSD
Superstate stocks go live on Kamino
Coinbase unveils tokenization platform
HumaTek is rebuilding trust in humanitarian aid with blockchain [SPONSORED]
How AI agents are reshaping DeFi [SPONSORED]

Read more below! But first, please give our sponsors some love; they make this newsletter possible.

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In our latest article, we explore why privacy is becoming crypto’s next foundational layer, and how it will shape the cycle ahead.

📈 Markets in the Past 24 Hours

TICKER	VALUE	24H
Bitcoin	$85,245	-0.27 %
Ethereum	$2,811.33	0.06 %
BNB	$825.64	-1.14 %
XRP	$1.83	-1.21 %
Solana	$119.64	-1.79 %

Today’s Big Story

RWAs Real Test: Isolation vs. Composability

It’s been an active week for tokenization and RWAs, with a steady stream of announcements reinforcing that crypto rails are no longer optional for financial institutions. Coinbase unveiled an end-to-end tokenization platform aimed at issuers looking to bring assets on-chain. Intuit partnered with Circle to integrate USDC across its payments and accounting stack. SoFi is launching its own native stablecoin, SoFiUSD.

But beneath the surface, all these developments raise a key question: what kind of financial system is actually being built on-chain?

Three stories this week make the following tension explicit: isolation versus composability.

At one extreme are shortcuts that attempt to graft TradFi assets onto DeFi without fully accounting for their structural differences. TradeXYZ’s synthetic perpetuals tied to traditional equities are a clear example. The protocol faced backlash after a whale trade triggered cascading liquidations over the weekend, exposing users to losses.

The core issue wasn’t leverage or poor risk controls. It was a deeper mismatch: DeFi trades 24/7/365, while the underlying reference markets do not. When equity markets are closed, price discovery stalls. Meanwhile, DeFi liquidity, leverage, and liquidation engines continue running uninterrupted. In that environment, thin liquidity and self-referencing pricing make manipulation easier, and losses more acute for users who reasonably expect crypto markets to behave like crypto markets: continuously, transparently, and symmetrically.

Nasdaq and the NYSE are pushing to extend trading hours to nearly 23 hours a day (still five days a week) in an attempt to meet global, always-on demand. But without a fundamental reimagining of how securities are settled, longer hours won’t eliminate market discontinuities and these gaps will persist.

DTCC’s tokenized Treasury pilot on Canton showcased another model. Enabled by a regulatory no-action letter, the project prioritizes privacy, finality, and institutional control; all sensible objectives for systemically important infrastructure that measures its transactions in the quadrillions of dollars. For relatively slow-moving assets like Treasuries and bonds, this approach may deliver meaningful efficiency gains.

But it also reflects a broader pattern: tokenization as a way to re-platform existing workflows, rather than reimagine market structure. Permissioned networks with limited composability reduce immediate risk, but they do so by recreating closed financial silos on-chain. This kind of fragmentation comes with real costs: from liquidity silos to duplicated infrastructure and higher coordination overhead.

Against this backdrop, Superstate’s announcement that it will bring its registered tokenized securities into Solana DeFi as collateral via Kamino stands out, forcing RWAs to operate within open, composable systems.

The model isn’t perfect, as market hours still matter, so oracle design remains non-trivial. The advantage is that DeFi protocols remain open, while assets are permissioned. What’s key is that these assets aren’t derivatives; they're the actual assets. This approach avoids short-term shortcuts and strikes a good balance between compliance and interoperability.

The distinction matters. The long-term value of tokenization won’t come from merely issuing assets on blockchains. It will come from plugging them into open, composable financial systems where liquidity, risk, and settlement interact transparently. Isolation may feel safer in the short term, but it won't reshape markets as we know them.

Let’s get real.

Chris Storaker,
Prodcut and tokenization at The Defiant

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🎬WATCH

Becoming the ‘Institutions Chain’ with Avalanche’s Morgan Krupetsky

In this episode of The Defiant podcast, we speak with Morgan Krupetsky, VP of OnChain Finance at Ava Labs, to break down one of the most significant shifts happening in crypto today: the rapid institutionalization of blockchain and Avalanche’s strategy to lead it.

Morgan walks us through Avalanche’s “real-world adoption first” ethos, explaining how its unique architecture enables enterprises, fintechs, banks, governments, and consumer apps to build purpose-designed blockchains while tapping into a shared liquidity hub.

Top News in the Past 24 Hours

US Online Bank SoFi Launches Native Stablecoin SoFi Technologies unveiled SoFiUSD, a 1:1 cash-backed U.S. dollar stablecoin issued by SoFi Bank.Why it matters: The stablecoin will deploy on “a public, permissionless blockchain” and makes SoFi the first U.S. national bank to release an “open access” stablecoin.
Top Solana Lending Protocol Adds Superstate Tokenized Shares as Collateral Superstate announced that tokenized public equities issued through its Opening Bell platform are now available to non-U.S. users as collateral on Kamino, the largest lending protocol on Solana. Why it matters: The integration reflects broader efforts to make tokenized assets more composable across DeFi.
Coinbase Unveils 'End-to-End' RWA Tokenization Platform Coinbase revealed its new platform, Coinbase Tokenize, to bring traditional assets on-chain. Why it matters: The new product is part of the firm’s broader push beyond crypto trading to become an “everything exchange.”