Author: Zuo Ye
No matter how many lies are woven, the truth will still illuminate the outline of light.
Asset management giants are showing increasing interest in on-chain Vaults, and the mainstreaming of the DeFi dream seems to be becoming a reality.
This is the best of times. BlackRock buys $UNI tokens, Apollo commits to buying hundreds of millions of dollars worth of $Morpho tokens, and Wall Street is collectively bullish on the future of DeFi.
This is the worst of times. BlackRock, Blackstone, and Blue Owl face concentrated redemption waves, and the founder of Aave warns that Wall Street is using RWA as a liquidity exit channel.
Crises always contain rare bargain prices. Faced with future asset price inflation, emerging forces are eager to act, completely disregarding the iceberg ahead.
No matter what you call it—DeFi/RWA/Vault—on-chain finance must eat the sugar coating and fire the cannonball back. Only by being good at breaking an old world can we possibly build a new Eden.
This sweet apple can even be made concrete—the risk-free rate.
The Dream of a Risk-Free Rate
Establishing a risk-free rate market based on on-chain assets and stablecoins is essential to have bargaining power against traditional asset management giants.
Let's start with a question to anchor our discussion: Why has DeFi not yet achieved a risk-free rate?
Or, reframe it as the linear narrative of how "U.S. Treasuries" became the benchmark rate for DeFi.
Image Caption: Stablecoin Chronicle
Image Source: @zuoyeweb3
Starting from the DeFi Summer of 2020, repeated failures have forged resilience:
- Starting in 2018, DAI based on crypto assets lacked scale, and $USDS ultimately became a U.S. Treasury certificate.
- Starting in 2021, the ponzi-based $UST did not survive the 2022 bank run; the story of rebuilding algorithmic stablecoin glory was abandoned.
- In 2022, stETH and other LSTs faced a PoS faith crisis post-Merge; Pendle ultimately abandoned LSTs and embraced USDe.
- In 2023/24, CDP stablecoins issued by DeFi giants like Aave/Curve were not recognized by other protocols.
- In 2025, the market once believed Ethena's $USDe was different, reviving on-chain glory, but yield-bearing stablecoins ultimately split into deposit and yield activities, failing to challenge the dominance of USDT/USDC in their respective fields.
The facts are clear: It's not that USDT swallowed user profits, but that DeFi chose the scale effect of USDT/USDC.
Trading the Treasury profits generated from $300 billion for the entire market's trading foundation is not a bad deal for DeFi and the crypto market.
But at what cost?
The cost is not the evil of Tether taking profits, as claimed by yield-bearing stablecoin challengers, or the selfishness of banks prohibiting interest-bearing accounts, as accused by Coinbase and Donald Trump Jr.
The bitter pill DeFi has swallowed is that the U.S. Treasury rate is transmitted on-chain via stablecoins, but U.S. Treasuries are assets of the U.S. government, which acts without regard for on-chain sentiments.
This is also the fundamental reason for the bankruptcy of tokenomics. UNI relies on A16Z, A16Z relies on USD financing, the USD is an incarnation of U.S. Treasuries—so UNI is just the fourth derivative reliant on U.S. Treasuries. Why not just buy Treasuries directly, with no middlemen taking a cut?
U.S. Treasuries are the de facto benchmark for DeFi, but DeFi can only passively endure, unable to interact with them bidirectionally. This is the root of all happiness or pain.
Image Caption: Comparison of On-Chain Stablecoin Yield APY and U.S. Treasury Yields
Image Source: @BarkerMoneyX
The salvation of DeFi never stops. Although tokenomics are bankrupt and DAO governance structures have collapsed, the overall direction of DeFi remains clear:
- Fixed-rate investment and financing, a recognized risk grading system, unsecured credit lending –> the main axis of the next stage,蕴含着某种形式的全民化产品 (implying some form of mass-market product);
- The expansion period for public chains, exchanges, and DeFi protocols is over. New application forms are evolving into Vaults. It's not yet certain that Vaults are the form of the mass-market product, but this is the starting point of the new stage.
Note here: Public chains and exchanges are no longer the center of value capture, but this does not mean their time is zero. Their period of asset price inflation has ended; only linear, steady growth remains.
This can also connect to the progressive relationship between UNI and U.S. Treasuries. Aave/Morpho are closer to asset management itself; their businesses don't have much narrative space but are indispensable for the industry.
The real star product will definitely be a Vault used by the masses, built on top of public chains and DeFi protocols, based on RWA-diversified assets, and triggering an asset price inflation mechanism.
For mass usage, Curators choose to ally with exchanges. Morpho entered Coinbase via Stakehouse; Aave expanded its C-end users through Metamask and other U-cards.
Based on RWA assets, Curators partner with custodians like Galaxy to constantly maneuver between crypto assets and real-world assets, such as Grove purchasing Galaxy's CLO bonds.
But what's missing is the Vault that triggers the price inflation mechanism. Even before this wave of large-scale asset management moving on-chain, BlackRock's BUILD token was already listed, and Circle's USYC also supports yield, but neither could replicate their own success.
It's not important that Vaults lack their own tokens. Asset price inflation is a mechanism. U.S. stocks, real estate, bonds, tulips, graphics cards, and Mac Minis all have their own price cycles. Current Vaults are just interest-bearing black boxes but have始终 failed to solve two problems:
- Where does the high yield actually come from?
- How is high risk actually handled?
Towards a New Financial System
The form of the channel is evolving; Vaults are not the endpoint.
The crypto industry evolves extremely fast. Before this year, we never dared to imagine that the global financial system would truly move on-chain, but today it is an undeniable ongoing process.
It's not yet time for a victory banquet. RWA can only serve as a funding source; Vaults are still boring deposit games. Various Curators haven't demonstrated brand效应 (brand effect). Veda-like white-label Vaults are highly similar to SaaS, and the operators (Curators) only earn management fees.
This has no imagination for price inflation. If traditional asset management, with its $2 trillion scale, endures cyclical煎熬 (hardships), it's hard to imagine Vaults being able to withstand it.
Image Caption: Fund Flows and Value Distribution
Image Source: @zuoyeweb3
Asset management moving on-chain is not driven by短暂情绪 (short-term sentiment). In a sense, it's like the banking industry's IOE—we can't go back to the paper era. Even Spark has begun unifying margin calculations for CEX/DEX positions; DeFi is becoming the next step for TradFi.
Whether Vaults, after absorbing sufficient funds, will trigger the establishment of a risk-free rate is the biggest博弈点 (point of contention) of this cycle.
During the previous DeFi Summer, TVL was the decisive metric. The amount of capital mapped to the get-rich-quick coefficient of tokens, creating mining that延续至 (continued into) airdrop farming, studios, and Binance Alpha. The core logic was "projects need more capital to support token growth."
But with Vaults, for the first time, there is a great demand for deposits but an inability to support their own tokens. Even if Morpho captures more market share from Aave, it cannot trigger a token surge.
Extending this, Hyperliquid compared to Binance, Lighter compared to Hyperliquid—their market size and token prices show a huge inversion. This is a great change unprecedented in DeFi.
On one hand, old infrastructure continues to吸血 (suck blood). For example, after the listing effect disappeared, $BNB should have declined, but CEXs still have a much larger user base than the entire on-chain + DeFi ecosystem. A very ironic fact: exchanges have retail users; DeFi protocols like Aave and Morpho have completely become the domain of a few professionals.
Against this background, the high risk of Vaults & Curators comes from code and structure:
- Curve's immutable contract programming language could have problems; the xUSD team self-issued tokens.
- Aave ended the superficial harmony between the DAO and the development team; Re7 severely damaged the credibility of on-chain asset management.
Against this background, where does the high yield of Vaults & Curators come from?
I know it's not regulatory arbitrage, HLP fees, or token incentives, but many still cling to these three, believing that traditional finance's compliance creates too-big-to-fail credibility.
They completely forget that tokenomics are already bankrupt, while Vault deposits have been growing. Sky is already deeply integrated into the Morpho system, and the future of Aave V4 is also institutionalization and modularization.
Moreover, this article has consistently emphasized that the capital scale of Vaults has not triggered some price inflation mechanism. This is the structural dilemma of Vaults.
The yield of Vaults essentially comes from the trading efficiency of global markets. If CEXs don't offer a certain Vault, then move on-chain to configure it. Personified Curators happen to be suitable for dealing with all sorts of people.
TradFi's global markets, even like U.S. stocks, face lengthy account opening, trading times, and process limitations. Can we really say that the gradual move towards 24/7 trading for U.S. stocks and DTCC going on-chain is also for arbitrage?
The final question: What mechanism can actually trigger asset price inflation, allowing the capital沉淀 (sedimented) in Vaults to create a price-to-dream ratio legend?
In other words, what is missing between Vaults and asset price inflation?
Channels are missing. Channels for funds to couple with each other. The personification of Curators hinders the programmability of DeFi Legos.
Currently, CEXs serve as a placeholder—still the quickest place for funds to intertwine.
Referring to the evolution of Perp DEXs, they are capturing market share from CEX futures. RWA funding sources are also抢夺 (snatching) market share from CEXs.
CEXs only have存量 (existing stock); they can't even solve their own user acquisition problems, let alone help Vaults expand to hundreds of millions of users. Vaults started by white-labeling, but in the future, they must build their own超级工厂 (gigafactories).
I speculate the channel will be some form of Broker product.
Under a high degree of social division of labor, Super Apps like exchanges that integrate deposit/withdrawal, trading, custody, and清算 (clearing) will gradually separate their businesses. Binance's compliance framework in Abu Dhabi's ADGM is already divided into three parts.
This will fundamentally facilitate the professionalism of fund handling while utilizing blockchain's unified ledger system, and it will require the coordination of Vaults & Curators.
Referencing Neobrokers like Robinhood/Trade Republic, they attract younger, retail-oriented users to participate in professional trading, then build asset management, wealth management, and other business forms. The model of stablecoins at the front end and Curator-managed Vaults is more efficient.
In summary, Binance monopolizes the capital flow, and BNB gets the strongest赋能 (empowerment). Next, Brokers handle fund interaction. Some asset form, or even纯粹的业务流 (pure business flow), could be extremely profitable. After all, Robinhood is just a fancy front for profitable market makers.
Conclusion
Compared to code and trading, regulation and tokens appear more stable.
Private credit and RWA cycles have halted. The rush to issue Document No. 402 feels prophetic. DeFi can serve as a liquidity exit channel, but it lacks the mechanism for asset price inflation.
Asset Management ≈ Aave/Morpho. They will slowly, like public chains, complete their historical task. They will exist long-term but only with scale growth and stable token prices.
Vaults & Curators ≈ Star fund managers. They are rapidly acquiring customers and monopolizing markets. Giantization already shows preliminary signs. Whether they can continuously capture value is highly doubtful.
Channels ≈ CEX (temporary). Ironically, they have the most room for innovation. Facilitating the freedom of funds will always receive the highest reward.
A highly efficient global market is operating on a traditional token-less public chain. This is the proposition of the next era, and everyone must provide an answer.
