Connecting Onchain capital markets with Offchain yield.
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Today we're launching O2O Capital Partners to accelerate onchain finance and move $1T of bank balance sheet risk onto the fastest growing capital base in the world.
Here's how the two sides of that trade line up:
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$40M TVL, up from $7M in May. Congrats to the @3f_xyz team. We took it for a spin with $50 on USCC and it did exactly what it said it would. Loving the UI/UX so far!
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(1/6) Introducing Catapult, our accelerator for founders bringing new yield-bearing RWAs onchain.
You bring the asset, and our team incubates, bootstraps liquidity, market-makes, and drives integrations across onchain markets through our curation arm, while leaders from 20+ top co’s shaping the RWA space mentor you along the way.
How to join ↓
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🔜 OTC Desk is coming to Pareto!
On-demand liquidity mechanism for selected Credit Vaults
→ immediate liquidity for lenders
→ discounted entry into credit positions for new allocators
🧵⬇️
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Great piece Paul. We wrote up how this looks from the discretionary side here:
Agree with this framework, and we sit on the discretionary side of it. Private credit can't be allocated by rules alone. Someone has to underwrite the originator, size the position and decide when not to lend.
That makes Paul's test the right one for us: what happens if the operator is hacked, disappears or acts in bad faith? In a discretionary vault the code can't answer that, so the structure has to. That's how we're building ours:
1. As a Cayman fund under CIMA, so the depositor's claim sits against a regulated vehicle
2. Assets held with a qualified custodian
3. NAV calculated independently and published to an onchain oracle, so nobody has to take our word for it
KYC at the wallet level and defined redemption terms
The part we're most excited about is where the two types meet. A discretionary vault holding offchain credit can still issue a token that works as collateral inside noncustodial markets, including fixed rate ones on Midnight. That's where a lot of the growth in this category comes from.
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Agree with this framework, and we sit on the discretionary side of it. Private credit can't be allocated by rules alone. Someone has to underwrite the originator, size the position and decide when not to lend.
That makes Paul's test the right one for us: what happens if the operator is hacked, disappears or acts in bad faith? In a discretionary vault the code can't answer that, so the structure has to. That's how we're building ours:
1. As a Cayman fund under CIMA, so the depositor's claim sits against a regulated vehicle
2. Assets held with a qualified custodian
3. NAV calculated independently and published to an onchain oracle, so nobody has to take our word for it
KYC at the wallet level and defined redemption terms
The part we're most excited about is where the two types meet. A discretionary vault holding offchain credit can still issue a token that works as collateral inside noncustodial markets, including fixed rate ones on Midnight. That's where a lot of the growth in this category comes from.
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O2O Capital Partners retweeted
Vault Curators & Managers can passively accrue assets and build a meaningful business for this reason
Neobank allocations, foundation treasuries, aggregators, DAT allocators and more will all just funnel into an array of vaults
@O2Ocapital is both asset manager and RWA originator.
Ask not what you can do for O2O, ask what O2O can do for you 🫡
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.
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The cost of immediate liquidity in DeFi priced:
- 2bps on Janus Henderson's JTRSY
- 34bps on New York Life's HYB
- 570bps on Apollo's ACRED
Duration and lockups largely drive the spread. Good primer from @Serotonin, and excited to see how the @FissionXYZ team expands assets!
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Private credit was supposed to blow up earlier this year, if you were listening to the hysterical headlines. Instead, many BDC holders made 15-20% gains, while onchain private credit also thrived with innovation and growth.
Personally, it's one of the most interesting sectors in RWAs and tokenization, with a lot of smart builders, so here's a quick look at the onchain landscape.
Long story short, it's just some sort of lending. But done by funds and other lenders instead of banks. When a business needs capital quickly and can't get it from a bank for whatever reason, it can borrow privately and pay a higher rate. That's essentially where the yield comes from, and in our case, we get it directly onchain, though the risk varies a lot from product to product.
There's around $4.8B (via DefiLlama) in onchain private credit at the moment of writing, with @maplefinance leading (~$1.8B) and @HastraFi next (~$590M).
Big thanks to @Solofunk from @serotonin_hq for The Hitchhiker's Guide to Onchain Credit, where he mapped 160+ teams across the sector, split into a few categories:
Issuance
• @apolloglobal - tokenizing its own private credit funds
• @tarecredit - just raised $13.25M to run the whole loan lifecycle on one ledger
• @creditcoop_xyz - financing backed by payment receivables
• @3janexyz - unsecured credit
• @gaib_ai and @USDai_Official - financing GPUs and AI infrastructure
P2P lending
• @CentuariLabs and @Textileprotocol - fixed-rate lending
Capital allocation
• @obexincubator - Deploying $1B mostly into credit issuers
• @RockawayX - confidential RWA vault on Morpho via @zama
• @SentoraHQ and @kpk_io - curators routing vault deposits into private credit markets
Infrastructure
• @Morpho and @kamino - the main money markets for credit collateral
• @centrifuge and @superstateinc - tokenization, with @ValinorDigital just launching a public BDC fund on Superstate
• @paretocredit, @MidasRWA and @plumenetwork - vaults for institutional credit strategies
Liquidity and risk
• @agra_gg - an orderbook inside Accountable's vault, enabling you to exit instantly
• @multiliquid_xyz and @FissionXYZ - liquidity for liquidations and instant redemptions
It feels like a mini-renaissance and a breath of fresh air, with so much innovation and so many opportunities popping up in this sector. And we're still early (as we always say), but here onchain private credit is less than 1% of the $2T offchain market.
Happy to know a lot of these chads. They're doing amazing work, and I'm glad we're growing this sector together.
Gotta give credit where credit's due.
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Huge. Millions of people about to find out they can borrow against BTC without selling it at a fixed rate. Congrats @morpholabs.
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$14B of tokenized money market funds, zero onchain trades.
Tokenizing is truly just a prerequisite.
The value for the holder comes from what gets built around it:
- a way out between redemption windows
- a lending venue that takes the token as collateral
- a channel that puts it in front of allocators
That's the whole focus at O2O.
$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
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$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
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Good data. A fund token that only redeems with the issuer hasn't gained anything from being a token.
Tokenizing is truly just the prerequisite.
Standing bids so holders can exit between windows, the token accepted as collateral so it can be looped, and Earn programs and neobanks as channels are the work.
That's what we’re focused on at O2O.
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Today, we’re announcing Tare’s $13.25 million seed financing to rewire credit markets. Thank you to Fortune for capturing our story.
fortune.com/2026/09/16/exclu…
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Congrats @tarecredit.
We sit on the demand side of exactly this, curating asset class vaults from originators across private credit.
A hub where that supply shows up with standardized data is something we'd use.
We're at Avalanche Summit this week, come find us!
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BREAKING: Aave to launch specialized RWA lending market on Avalanche
Aave’s new RWA Hub will allow institutions to use tokenized financial assets as collateral to borrow stablecoins without selling their underlying positions.
At the center of the market will be Tether’s USAT, serving as a primary source of dollar liquidity and one of its first major institutional use cases.
Aave V4 has already attracted $20M+ in deposits on Avalanche since launching just two months ago. The RWA Hub now extends that infrastructure into tokenized financial markets, where assets can be financed, borrowed against, and put to work onchain.
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Confidential DeFi at scale, live today.
Zama is the fastest growing confidentiality protocol for onchain finance.
Today, Zama expands confidential access to 16 curated yield vaults across 5 institutional curators and 5 assets: USDC, USDT, AUSD, WBTC, and tGBP, all deployed on @Morpho.
The same trusted curators and strategies that institutional capital already uses, now with confidential entry.
Alongside the vaults, the Zama Confidential Swap Protocol goes live. Swap between confidential assets without exposing intent or size.
Curated by: Armitage by @wintermute_t, @Bitwise, @flowdesk_co, @RockawayX, @SteakhouseFi
Access: @Morpho, @utila_io, @yield_xyz, @zerion
Incentives: @pendle_fi, @merkl_xyz
With support from: @Tether (USDT), @BitGo (WBTC), @tokenGBP (tGBP), @withAUSD (AUSD)
Shield, send, deposit, earn, and swap, all confidentially at: app.zama.org
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Congrats on the launch @zama, the supporting lineups is as stacked as it could be!
Confidentiality is table stakes for some of LPs we talk to. Let's find time!
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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.
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North of $8M in the first day and $21M by day 13, lending AUSD against real credit from @humafinance, @USDai_Official and @HastraFi.
This is the demand we keep pointing at and are building for. Congrats @Bitwise, @Morpho and @withAUSD.
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.
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Turning the dials ahead of public launch 🛞
Subscription/redemption for 3F's RWA leverage vaults just went from weekly → daily for T+1 assets
Get in and out of @Bitwise USCC and @centrifuge JAAA leverage daily
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Going daily on JAAA and USCC pre-launch is a strong start. Congrats to the @3f_xyz team!
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