Crypto asset managers are shifting $4B+ onchain to leverage DeFi’s yield opportunities and transparency. Traditional finance’s ‘invisible back-end’ integration allows funds to automate strategies like ETH staking or liquidity provision while reducing custodian risks. This trend accelerates as institutions seek alternatives to low-yield treasuries amid inflation.
DeFi’s composability enables complex strategies—for example, using MakerDAO’s DAI in Aave pools while hedging with GMX perpetuals. Asset managers report 12-18% APY from such setups, outperforming offchain products. The surge also reflects confidence in auditing tools like Chainalysis for compliance.
Risks include smart contract exploits and regulatory uncertainty. Managers mitigate these through insurance protocols like Nexus Mutual and by favoring blue-chip DeFi projects. This movement signals maturation toward institutional-grade infrastructure, though scalability limits remain for large portfolios.
