Everything in DeFi is turning into a vault, and most users will never know it. The reason is UX. DeFi is still way too complex for a normal user. Even for power users, you don't want to deploy manually into 15 different Morpho pools. Pack that into a vault that rebalances (or not) on the backend and you get exposure without the manual work. Now look at the 5% yield toggle in a fintech app. On the front end it's a savings product. On the back end it's a vault deploying into lending pools. The user has no idea. Institutions want the same thing with their own branding on top, white label, without ever touching a public pool. Same with RWAs. You can tokenize a yield-bearing asset, but until it sits in a lending protocol, has a pool on an AMM and ideally ends up in something like Pendle, it's dead in defi terms. Nobody uses it. Wrapping it in a vault is how it gets utility. And it gets harder from here. On-chain liquidity is thin outside BTC, ETH and SOL. The strategies that actually make money run off-chain, on exchanges and OTC desks. The vault becomes a mutual fund with a tokenized receipt of the NAV. You cannot verify the strategy by reading the contract anymore. Anyone can promise 20% on stablecoins. The question is what happens to your balance sheet on a black swan event, and whether your depositors can see it coming. Nobody cared about this in the early days. Institutions coming from TradFi will care, and they will not deposit without risk frameworks and transparency tooling in place. That is the most underbuilt piece in vaults right now.

$14bn+ of tokenized money market funds, 86% of the class, updated prices at least weekly through August and recorded no onchain trades at all. Publishing a price is what makes a secondary market possible, but these products mostly redeem with the issuer rather than trading. Tokenization serves a different purpose for each asset class. Our RWA report sets out what each one is for. eu1.hubs.ly/H0ygdHL0

Here in beautiful rainy Chicago the next couple days. What is the crypto scene like? Looking to talk RWA vaults and looping while in town

The Bitwise Premium RWA Vault—PAPY—has passed $20 million in deposits on @Morpho, less than two weeks after launch. The vault earns yield by lending @withAUSD against RWA collateral from @humafinance, @USDai_Official, and @HastraFi. Thanks to everyone putting TradFi credit onto DeFi rails with us.

Vaults emerged as DeFi’s preferred vehicle of capital formation, ripping from $3B at the start of 2025 to $18B to date largely on the back of @Morpho with strong additions from @veda_labs , @ConcreteXYZ, @upshift_fi, @mellowprotocol, @lagoon_finance, and @EmberProtocol. The next step-change in vault TVL growth is the evolution of onchain balance sheets and a transition towards holistic portfolio management. Most RWA vaults today offer single-name leveraged exposure, which is great to deliver a singular product to market enabling other allocators to craft their own portfolios with it. A layer above that, groups like @Bitwise are offering professionally-managed portfolio-style vaults holding various RWAs, which is ultimately where @O2Ocapital sees the majority of onchain asset management moving as vaults grow to $100B these next 2 years and RWAs account for half of that. The vault landscape will look very much like ETFs. Single-name assets are 1) delivered by issuers, 2) enhanced by DeFi curators, and 3) aggregated by onchain portfolio managers. Step 3 is the de facto distribution layer akin to being included in an index or an ETF (which is everyone's goal!). The key: RWAs need to be delivered in a DeFi-composable manner to be included in that portfolio manager universe - that's where you see the real differentiation between a simple tokenized asset and a product with an ecosystem around it. This will be more pertinent than ever as issuers vie to capture the anticipated $1T+ stablecoin flows post-GENIUS Act January 2027. Deeper dive on this coming next week 💯

THE BLOCK: Tether and Fasanara Capital have launched a private credit fund backed by $400 million in co-investment from the two firms. The fund aims to raise up to $3 billion from institutional investors to finance lending to businesses and consumers through fintech platforms.

Centrifuge-issued assets have a combined onchain market cap of $1.6 billion, led by JTRSY ($851.5 million) and JAAA ($715.0 million), with most of the value on Ethereum, Avalanche, and Solana The number of asset holders grew 22.8% over the past 30 days to 1.1K

The 2 questions that decide every allocation, per @yield_network: 1. Where does the yield come from? 2. What is the downside? That's the bar we're building O2O to clear: USD, senior-secured private credit, with legal structure and reporting designed for exactly this diligence.