DeFi Shifts Gears as Institutional Players and Real-World Assets Fuel New Growth
Decentralized finance (DeFi) is entering a new phase, evolving from a playground for speculative trading into an emerging layer of global financial infrastructure, according to a new report from blockchain analytics firm Artemis and yield-aggregator Vaults.fyi.
Unlike previous growth cycles, driven largely by hype and unsustainable yields, this new momentum in DeFi stems from institutional adoption and deeper integration into financial services behind the scenes.
DeFi Lending Nears $60 Billion in TVL
Lending protocols such as Aave, Euler, Spark, and Morpho now collectively hold over $50 billion in total value locked (TVL), inching toward $60 billion. That figure marks a 60% increase in the past year and reflects growing confidence in DeFi’s maturing risk management and infrastructure.
“These platforms are no longer just yield-chasing tools—they’re morphing into modular systems where institutions feel comfortable deploying capital,” the report explained.
The “DeFi Mullet” Gains Traction
A key development highlighted in the report is the rise of the so-called “DeFi mullet.” This term refers to financial apps that offer a traditional, user-friendly front-end while integrating DeFi infrastructure in the background.
For example, Coinbase enables customers to borrow against bitcoin holdings using Morpho’s DeFi lending protocol, facilitating more than $300 million in loans so far.
Bitget Wallet offers users 5% yields on stablecoins like USDC and USDT through Aave without requiring direct interaction with DeFi interfaces. Even PayPal is dipping its toes into yield offerings, providing about 3.7% returns on its PYUSD stablecoin for PayPal and Venmo users—though without relying on DeFi protocols directly.
The report suggests that fintech giants such as Robinhood and Revolut could soon follow suit, embedding DeFi to deliver services like stablecoin-backed credit lines or asset-based loans, unlocking new streams of revenue.
Tokenized Real-World Assets Enter the Spotlight
DeFi protocols are increasingly experimenting with tokenized real-world assets (RWAs), including U.S. Treasuries and credit products, which can serve as collateral, yield sources, or building blocks for complex financial strategies.
There’s also rising interest in tokenized investment strategies. Pendle, a protocol that allows users to separate yield from the principal value of crypto assets, has grown to over $4 billion in TVL, driven largely by demand for tokenized stablecoin yield products.
New yield-bearing tokens like Ethena’s sUSDe have also emerged, offering returns above 8% through strategies like cash-and-carry arbitrage while shielding users from complicated trading mechanics.
On-Chain Asset Managers Expand Their Reach
Another notable shift is the growth of crypto-native asset managers such as Gauntlet, Re7, and Steakhouse Financial. These firms deploy sophisticated strategies to allocate funds across DeFi protocols, participate in governance, manage risks, and seek yield opportunities in tokenized assets and lending markets.
Since January, assets under management by these crypto-native managers have quadrupled—from $1 billion to more than $4 billion, the report noted.
In sum, DeFi appears to be transitioning from a speculative sector into a robust and institutional-grade financial layer, fueled by real-world assets, professional asset managers, and innovative backend integrations that make complex crypto products accessible to everyday users.
