The Limits of Finance, the Gateway Value of Global Markets
TechFlow Selected TechFlow Selected
The Limits of Finance, the Gateway Value of Global Markets
On-chain asset management vaults and channels.
Navigating Web3 tides with focused insightsBy: Zuo Ye
No matter how many lies are woven, the truth will still illuminate the contours of light.
Asset management giants are showing growing interest in on-chain Vaults—DeFi’s dream of mainstream adoption appears to be materializing.
It is the best of times: BlackRock has purchased $UNI tokens; Apollo has pledged to buy over $100 million worth of $Morpho tokens; Wall Street is collectively bullish on DeFi’s future.
It is the worst of times: BlackRock, Blackstone, and Blue Owl face concentrated redemption waves; Aave’s founder warns that Wall Street is treating RWAs as liquidity exit channels.
Crisis always brings rare bargain-basement pricing. Faced with future asset price inflation, emerging players are captivated—heedless of the iceberg ahead.
Whether called DeFi/RWA/Vault, on-chain finance must swallow the sugar coating—and fire the bullet back. Only those skilled at dismantling an old world can possibly build a new Eden.
We can even concretize this sweet apple—as the risk-free rate.
The Dream of a Risk-Free Rate
Stablecoins backed by on-chain assets could establish a risk-free rate market—granting DeFi real bargaining power against traditional asset managers.
Let us begin with a question to anchor our discussion: Why does DeFi still lack a risk-free rate?
Or, reframed as a linear narrative: How did U.S. Treasuries become DeFi’s benchmark rate?
Caption: Stablecoin Chronology
Source: @zuoyeweb3
Starting from DeFi Summer in 2020, repeated failures forged resilience:
- Launched in 2018, DAI—backed by crypto assets—lacked scale; $USDS ultimately became a U.S. Treasury receipt.
- Launched in 2021, $UST—a Ponzi-based stablecoin—collapsed during the 2022 bank run; its narrative of algorithmic-stablecoin revival was abandoned.
- In 2022, post-The Merge stETH faced PoS faith crises; Pendle ultimately abandoned LSTs to embrace USDe.
- In 2023–2024, CDP-backed stablecoins issued by DeFi giants like Aave and Curve failed to gain cross-protocol recognition.
- In 2025, markets briefly believed Ethena’s $USDe was different—reviving on-chain glory—yet yield-bearing stablecoins ultimately bifurcated into deposit and yield-generation activities, failing to challenge USDT/USDC’s dominance in their respective domains.
The facts are clear: It isn’t USDT that siphoned users’ profits—it’s that DeFi chose USDT/USDC’s network effects.
Trading $300 billion in Treasury yields for the entire market’s trading infrastructure is no raw deal for DeFi—or crypto broadly.
But what is the cost?
The cost lies not in yield-bearing stablecoin challengers’ accusations that Tether “steals” profits—or in Coinbase and Donald Trump Jr.’s claims that banks selfishly ban yield-bearing accounts.
Rather, DeFi’s bitter pill is that the U.S. Treasury—functioning as the de facto risk-free rate—is transmitted onto-chain via stablecoins, yet Treasuries are U.S. government assets whose behavior pays no heed to on-chain sentiment.
This is also why tokenomics collapsed fundamentally: UNI depends on a16z; a16z depends on dollar-denominated financing; dollars are incarnations of U.S. Treasuries—making UNI merely a fourth-order derivative of Treasuries. So why not just buy Treasuries directly—cutting out the middleman entirely?
U.S. Treasuries are DeFi’s de facto benchmark—but DeFi can only passively absorb them, unable to interact bidirectionally. This asymmetry is the root of all joy and suffering.
Caption: Annualized Yield Comparison: On-Chain Stablecoins vs. U.S. Treasuries
Source: @BarkerMoneyX
Efforts to save DeFi have never ceased—even as tokenomics collapsed and DAO governance architectures crumbled, DeFi’s overall direction remains clear:
- Fixed-rate lending/borrowing, universally accepted risk-tiering systems, and uncollateralized credit—these will define the next market phase, housing some form of mass-market product;
- The expansion eras of public blockchains, exchanges, and DeFi protocols have ended. New application forms coalesce around Vaults—though Vaults aren’t confirmed as the final mass-market format, they mark the starting point of this new phase.
Note: Blockchains and exchanges are no longer central value-capture points—not that they’re doomed to zero, but their asset-price inflation cycles have ended, leaving only linear, steady growth ahead.
This extends naturally to the UNI–Treasuries relationship: Aave and Morpho operate closer to asset management itself—their businesses offer little narrative runway, yet remain indispensable to the industry.
The true star products will be Vaults built atop public blockchains and DeFi protocols—used widely by the public, diversified across RWAs, and capable of triggering asset-price inflation mechanisms.
To reach mass audiences, Curators ally with exchanges: Morpho entered Coinbase via Stakehouse; Aave expanded its retail user base through MetaMask and other “U-cards.”
For RWA-backed assets, Curators partner with custodians like Galaxy, constantly shifting between crypto and real-world assets—for example, Grove purchasing Galaxy’s CLO bonds.
Yet one critical element remains missing: a Vault capable of triggering price-inflation mechanisms. Even before this wave of institutional asset management going on-chain, BlackRock’s BUILD token launched, and Circle’s USYC began supporting yield—neither replicated its own success.
A Vault lacking its own native token is immaterial. Asset-price inflation is a mechanism: stocks, real estate, bonds, tulips, GPUs, Mac Minis—all exhibit cyclical price fluctuations. Today’s Vaults offer only opaque yield black boxes—failing to resolve two core questions:
- Where exactly does high yield originate?
- How exactly is high risk managed?
Toward a New Financial System
Channel formats are evolving—Vaults are not the endpoint.
Crypto evolves at breakneck speed. Until recently, we dared not imagine global finance truly migrating on-chain—but today, it’s an undeniable present-tense reality.
Celebration is premature: RWAs serve only as funding sources; Vaults remain dull deposit games; Curators have yet to demonstrate brand strength; white-label Vaults like Veda closely resemble SaaS offerings—while operators (Curators) earn only management fees.
There’s simply no imagination for price inflation here. If the traditional $2 trillion asset management industry endures cyclical stress, how could Vaults withstand it?
Caption: Capital Flows and Value Distribution
Source: @zuoyeweb3
Asset management going on-chain isn’t driven by fleeting sentiment—in a sense, it parallels banking’s IOE transition: We cannot revert to paper ledgers. Even Spark now unifies margin adjustments across CEXs and DEXs—DeFi is TradFi’s next evolutionary step.
Whether Vaults—after absorbing sufficient capital—will catalyze a true risk-free rate is the biggest博弈 point of this cycle.
During prior DeFi Summers, TVL was decisive: capital volume mapped directly to token wealth multipliers—fueling mining campaigns, “airdrop farming,” bot studios, and Binance Alpha. The core logic remained: “Projects need more capital to sustain token appreciation.”
But Vaults introduce a novel paradox: massive deposit demand exists—yet no native token benefits. Even as Morpho captures greater market share from Aave, its token fails to surge.
Extending this pattern: Hyperliquid versus Binance; Lighter versus Hyperliquid—their market sizes and token valuations show massive inversions. This is DeFi’s unprecedented paradigm shift.
On one hand, legacy infrastructure continues draining value: post-listing effects faded, so $BNB should have declined—but CEXs still host far more users than the entire on-chain + DeFi ecosystem combined. A deeply ironic reality: Exchanges hold the retail investors; DeFi protocols like Aave and Morpho have become exclusive domains for elite professionals.
Against this backdrop, Vault & Curator risks stem from code and structure:
- Curve’s immutable contracts contain programming flaws; the xUSD team self-authorized minting.
- Aave shattered the surface harmony between DAOs and dev teams; Re7 severely damaged on-chain asset management credibility.
So where do Vault & Curator high yields come from?
I know it’s not regulatory arbitrage, HLP fees, or token incentives—yet many remain fixated on these three, believing traditional finance’s compliance framework built “too-big-to-fail” credibility.
They completely ignore tokenomics’ collapse—even as Vault deposits keep rising, Sky has deeply integrated into Morpho’s architecture, and Aave V4’s future lies in parallel institutionalization and modularization.
And this article consistently emphasizes: Vault capital volumes haven’t triggered any price-inflation mechanism—that’s the structural impasse.
Vault yields fundamentally derive from global market transaction efficiency. If CEXs don’t offer certain Vaults, users allocate capital on-chain instead—personified Curators are perfectly suited to navigate diverse stakeholders.
Even TradFi’s global markets—like U.S. equities—face lengthy account openings, trading hours, and procedural constraints. Surely we wouldn’t claim 24/7 equity trading or DTCC’s on-chain migration exist solely for arbitrage?
Finally: What mechanism could trigger asset price inflation—transforming Vault-deposited capital into mythical market-cap legends?
Put differently: What’s missing between Vault and asset-price inflation?
Channels. Interconnected funding conduits. Curator personification hinders DeFi’s Lego-like programmability.
Currently, CEXs serve as placeholders—the fastest nexus for capital interweaving.
Referencing Perp DEX evolution: capturing CEX derivatives market share, competing for RWA funding—all vying for CEX turf.
CEXs possess only存量 users; they themselves struggle to acquire new ones—let alone help Vaults scale to hundreds of millions. Vaults begin with white-label “car assembly”; eventually, they must build their own “super factories.”
I suspect the channel will take the form of a Broker product.
Under advanced societal division of labor, monolithic Super Apps like exchanges—handling on/off-ramps, trading, custody, and settlement—will gradually specialize. Binance’s ADGM regulatory framework in Abu Dhabi already splits operations into three distinct pillars.
This fundamentally improves professional capital handling while leveraging blockchain’s unified ledger—and requires Vaults & Curators to mediate coordination.
Drawing inspiration from Neobrokers like Robinhood and Trade Republic—which attract young, retail users to professional trading, then layer on asset management and wealth products—the stablecoin-fronted, Curator-managed Vault model proves more efficient.
In short: Binance monopolizes capital flows—empowering $BNB most strongly; next, Brokers handle capital interaction; certain asset forms—or even pure business flows—can generate outsized profits, since Robinhood is, after all, merely a glorified high-margin market maker.
Conclusion
Compared to code and trading, regulation and tokens appear surprisingly stable.
Private credit and RWA loops have stalled; the rushed issuance of Circular No. 402 feels prophetic. DeFi isn’t incapable of serving as a liquidity exit channel—it simply lacks the asset-price inflation mechanism.
Asset Management ≈ Aave/Morpho: Their historical mission will gradually conclude—like public blockchains, they’ll persist long-term, but growth will be purely scale-driven, with token prices stabilizing;
Vault & Curator ≈ Star Portfolio Managers: Rapidly acquiring users and monopolizing markets, early signs of consolidation are visible—but sustained value capture remains highly uncertain;
Channel ≈ CEX (temporary): Ironically, this holds the greatest innovation potential—enhancing capital freedom will inevitably command the highest rewards.
High-efficiency global markets are already running on public blockchains devoid of traditional tokens. That is the defining challenge of the next era—and everyone must answer it.
Join TechFlow official community to stay tuned
Telegram:https://t.me/TechFlowDaily
X (Twitter):https://x.com/TechFlowPost
X (Twitter) EN:https://x.com/BlockFlow_News
@zuoyeweb3
