Crypto credit markets are beginning to resemble traditional cash-management systems, with deeper liquidity dampening volatility even as demand reaches record levels, according to market maker Flowdesk.
In its 2025 crypto credit review, Flowdesk argues that the era of easy yield is over—and that the shift is structural rather than cyclical. Yields across staking, stablecoin lending, and bitcoin-backed credit have compressed not because demand has weakened, but because liquidity has deepened and arbitrage has become more efficient.
Across onchain money markets, derivatives funding rates, and futures basis trades, participation has increased materially, Flowdesk wrote. That broader participation has reduced volatility and flattened returns, even as overall usage climbed to all-time highs.
Onchain data underscores the trend. Ether staking yields have settled around 2.5%, well below the double-digit returns seen in earlier cycles, despite total value locked approaching $30 billion. Stablecoin lending has followed a similar pattern. Borrow demand for USDC surged to record highs in 2025, but an even larger influx of supply kept rates anchored at lower levels. According to Flowdesk, the balance between strong demand and abundant liquidity muted volatility rather than amplifying it.
Derivatives markets tell a consistent story. Perpetual funding rates rarely moved into euphoric territory even as asset prices pushed to new highs, while futures basis spreads remained compressed as traders increasingly favored delta-neutral strategies over directional bets. The result has been a flatter yield curve across crypto markets, with fewer dislocations available to monetize.
Bitcoin-backed lending highlights the downstream effects. BTC’s liquidity and collateral profile have attracted a growing pool of lenders, including traditional finance firms, transforming what was once a bespoke trade into a more standardized balance-sheet business. As competition intensified, margins narrowed, loan-to-value ratios tightened, and excess returns faded.
Flowdesk concludes that crypto credit is now behaving more like a mature financial system. Returns from ETH staking and USDC lending increasingly cluster in the mid-single-digit range, comparable to money market funds, savings accounts, and short-dated U.S. Treasuries. Deeper liquidity, tighter arbitrage, and broader participation have turned core yield products into financial infrastructure rather than sources of alpha.
With vanilla yield now crowded and efficient, Flowdesk argues the next opportunities will emerge from more complex structures, including bespoke credit arrangements, altcoin-backed lending, and hybrid on- and offchain products—often grouped under the banner of CeDeFi.
Market movement
- Bitcoin (BTC): Bitcoin was little changed as Asian trading began, slipping about 0.3% to around $91,000, while remaining nearly 4% higher over the past week.
- Ether (ETH): Ether fell roughly 0.4% to about $3,150, paring gains after rising more than 6% over the past week.
- Gold: Gold remained under technical selling pressure despite a weaker-than-expected U.S. private payrolls report showing just 41,000 jobs added in December. Spot prices fell 1.26% to roughly $4,436 an ounce, as steady wage growth limited the data’s market impact.
