A new chapter in finance is taking shape on blockchain networks. Tokenized funds reached $9.0 billion in assets under management in Q1 2026, surging 181.3% year over year as traditional asset managers and crypto-native firms expand into on-chain markets, according to CoinShares and Token Terminal.

The growth underscores a broader shift toward Hybrid Finance, where Wall Street products, blockchain infrastructure, and digital asset markets are beginning to merge into a single financial ecosystem. For institutions, tokenization offers near-instant settlement, fractional access, and programmable compliance features that traditional fund infrastructure cannot easily match.

Tokenized Funds Reach $9 Billion

Tokenized funds are among the fastest-growing segments in Hybrid Finance, according to the report. In Q1, on-chain assets under management reached $9.0 billion, representing a 181.3% increase year over year and a 12.6% rise from Q4 2025.

Growth has been driven largely by demand for low-risk, yield-generating products backed by short-duration US Treasury instruments, which have attracted both institutional treasuries and crypto-native capital seeking stable returns outside traditional banking rails.

The market remains concentrated among major financial institutions and crypto-native issuers, including BlackRock, Franklin Templeton, Circle, and Ondo, with nearly 50% of issuance taking place on Ethereum. BlackRock's BUIDL tokenized fund and Franklin Templeton's FOBXX have become reference points for how quickly established asset managers can migrate regulated products on-chain.

Ethereum Remains the Leading Settlement Layer

Stablecoins continue to form the foundation of Hybrid Finance, acting as on-chain equivalents of fiat currencies used for trading, payments, and collateral. They also serve as the primary settlement rail for tokenized fund subscriptions, redemptions, and secondary trading.

In Q1, the stablecoin market reached $297.6 billion in on-chain market capitalization, up 37.2% year over year. Market leadership remains concentrated among major issuers including Tether, Circle, Sky, Ethena, and Paxos.

Ethereum remains the dominant settlement network, hosting approximately 60% of all stablecoin supply, while other ecosystems including Tron, Solana, Arbitrum, and Base continue to expand their activity.

Hyperliquid Leads On-Chain Revenue Growth

On-chain businesses are emerging as blockchain-native financial companies that generate revenue directly from trading, lending, and collateral activity.

In Q1, leading on-chain businesses generated $587.9 million in revenue, with activity concentrated among trading platforms and stablecoin-related businesses.

Hyperliquid generated more application revenue than any other lending or trading platform tracked in the report. The report highlights Hyperliquid's unique position as both an application and settlement layer, allowing it to capture value from exchange activity and its underlying blockchain infrastructure.

RWA Perpetual Futures Gain Momentum

Perpetual futures remain a major use case for on-chain finance. While broader crypto-native derivatives markets have weakened since late 2025, real-world asset (RWA) perpetual futures have continued to grow.

Trading activity on tradeXYZ, an RWA-focused venue built on Hyperliquid, has increased approximately 20 times since launch, with demand concentrated in commodities such as oil and precious metals, major equity indexes including the S&P 500 and Nasdaq-100, and technology and semiconductor stocks.

Significance

The CoinShares report marks 2026 as the year Hybrid Finance moves from a market narrative to a measurable financial system. Stablecoins, tokenized funds, and revenue-generating on-chain platforms are creating a new bridge between traditional finance and crypto markets. Whether tokenization expands beyond Treasuries into corporate debt, equities, and alternative assets will likely determine how much larger this bridge becomes.