Crypto asset managers have significantly grown their holdings on blockchains since the start of the year, while institutions are increasingly using decentralized finance as a back-end to their services, according to a new report.
“A new class of ‘crypto-native’ asset managers is emerging,” the analytics platform Artemis and DeFi yield platform Vaults said in a report on Wednesday.
“Since January 2025, this sector has grown its onchain capital base from roughly $1 billion to over $4 billion.”
The report said asset managers are “quietly deploying capital across a diverse range of opportunities,” giving the example of major firms having locked in nearly $2 billion in the decentralized lending and borrowing platform Morpho Protocol.
Crypto has boomed this year as the Trump administration in the US has moved to deregulate the sector, giving confidence to institutions that they can use crypto and DeFi protocols without facing regulatory scrutiny.
DeFi the “invisible” back-end for institutions
Artemis and Vaults said that institutions’ views on crypto have changed alongside the regulatory shift in the US and as DeFi protocols evolve their offerings.
“As DeFi infrastructure matures, institutional sentiment is moving towards seeing DeFi as a complementary, configurable financial layer not merely a disruptive, ungoverned space,” the pair wrote.
They added financial tech firms, crypto wallets and exchanges are using DeFi tools “as ‘invisible’ back-end infrastructure.”
“By abstracting DeFi’s complexity, these platforms can embed yield directly into their user experience, enhancing retention, opening new monetization avenues, and improving capital efficiency.”
Stablecoins, borrowing, yield: The big three
The report said the three main ways institutions use DeFi are by offering stablecoin yield, crypto yield and crypto borrowing, which “abstract away DeFi complexity.”
It noted that centralized platforms are offering stablecoin yields in consumer-facing apps, noting that crypto exchange Coinbase offers a yield on USDC (USDC) deposits, while payments giant PayPal does the same for its PayPal USD (PYUSD) stablecoin.
Related: Bitcoin 2025 builders predict DeFi will unseat traditional finance
On the crypto borrowing and yield side, the report said these types of offerings are “described as the ‘DeFi Mullet’ (fintech front, DeFi back),” such as with Coinbase’s crypto loan service that uses the Morpho Protocol.
User experience is a factor in DeFi
Artemis and Vaults’ report said that a DeFi protocol’s user experience is a growing factor that will drive their adoption and “ongoing capital ‘stickiness.’”
“Users weigh factors such as reliability, predictability, and the overall user experience (UX),” the report said. “Platforms that simplify interactions, reduce friction (like gasless transactions), and build trust through reliability and transparency tend to retain users better over time.
Magazine: Bitcoin’s invisible tug-of-war between suits and cypherpunks
