According to a new report, crypto asset management firms have significantly increased their holdings on the blockchain since the beginning of 2025, while institutions are increasingly using decentralized finance (DeFi) as the backend for their services.
“A new category of ‘crypto-native’ asset management firms is emerging,” stated a report from analysis platform Artemis and DeFi yield platform Vaults on Wednesday.
“Since January 2025, the on-chain capital base of the industry has grown from about $1 billion to over $4 billion.”
The report noted that asset management firms are “quietly deploying capital into diversified opportunities,” citing that major companies have locked nearly $2 billion in the decentralized lending platform Morpho Protocol.
This year, cryptocurrency has thrived as the Trump administration in the U.S. took steps to relax regulations on the industry, boosting institutional confidence in using cryptocurrencies and DeFi protocols, believing they would not face regulatory scrutiny.
Artemis and Vaults indicated that as the U.S. regulatory environment changes and DeFi protocols continue to refine their products, institutions' views on cryptocurrencies have shifted.
“With the maturation of DeFi infrastructure, institutional sentiment is shifting towards viewing DeFi as a complementary, configurable financial layer, rather than just a disruptive, unregulated space,” the two wrote.
They added that fintech companies, crypto wallets, and exchanges are using DeFi tools “as ‘invisible’ backend infrastructure.”
“By abstracting the complexities of DeFi, these platforms can embed yields directly into the user experience, enhancing user retention, unlocking new revenue streams, and improving capital efficiency.”
The report stated that the three main ways institutions use DeFi are to provide stablecoin yields, cryptocurrency yields, and cryptocurrency lending, which “abstract the complexities of DeFi.”
The report pointed out that centralized platforms offer stablecoin yields in consumer-facing applications, such as the crypto exchange Coinbase providing yields for USDC deposits, while payment giant PayPal also offers similar services for its PayPal USD (PYUSD) stablecoin.
In terms of cryptocurrency lending and yields, the report mentioned that these types of services are referred to as “DeFi Mullet” (frontend is fintech, backend is DeFi), with Coinbase's crypto lending service utilizing Morpho Protocol.
The report from Artemis and Vaults stated that the user experience of DeFi protocols is an increasingly important factor that will drive their adoption and “sustained capital ‘stickiness.’”
“Users weigh factors such as reliability, predictability, and overall user experience (UX),” the report stated. “Platforms that simplify interactions, reduce friction (such as gasless transactions), and build trust through reliability and transparency tend to retain users better in the long run.”
Related: "The Summer of Stablecoins" arrives: Coinbase and Circle see stock prices soar due to stablecoin legislation
Original: “Report: ‘Crypto-native’ asset management firms see on-chain holdings quadruple since January”
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