The first quarter of 2025 tells a clear story about the evolution of Defi. While yields in the main loan platforms have been significantly compressed, innovation at market edges demonstrates the maturation and continuous growth of Defi.
Great performance compression
Defi’s yields have decreased abruptly on all main loan platforms:
- The vault. FYI USD Benchmark has fallen below 3.1%, below the performance of the 1 month of the USA.
- SPARK has implemented four decreases in consecutive rate only in 2025. From the year to 12.5%, the rates were reduced to 8.75%, then 6.5%, and now they feel at 4.5%.
- Aave Stablecoin’s yields in Mainnet are around 3% for USDC and USDT, levels that would have been considered disappointing only a few months ago.
This compression indicates a market that falls significantly from the exuberance of the late 2024, with a moderate borrower demand on the main platforms.
The TVL paradox: growth despite the lowest yields
Despite the fall in yields, the main vaults of Stablecoin have experienced extraordinary growth:
- Collectively, the largest vaults in Aave, Sky, Ethena and compands have almost quadrupled in size in the last 12 months, expanding from approximately $ 4 billion to approximately $ 15 billion in supply deposits.
- Despite Spark’s consecutive rates cuts, TVL has grown more than 3 times since the beginning of 2025.
As the yields have fallen from almost 15% to less than 5%, capital has remained sticky. This apparently contradictory behavior reflects the increase in institutional comfort with the protocols defi as legitimate financial infrastructure instead of speculative vehicles.
The emergence of the curators: the new Defi assets administrators
The appearance of healing represents a significant change in defi loans. Protocols such as Morpho and Euler have introduced curators who build, handle and optimize loan vaults.
These curators serve as a new breed of defi asset administrators, evaluate markets, establish risk parameters and optimize capital allocations to offer improved yields. Unlike traditional service providers who simply advise protocols, curators actively administer capital deployment strategies on several loans.
On platforms such as Morpho and Euler, curators handle risk management functions: Select which assets can serve as a guarantee, establishing appropriate value loan relationships, choose Oracle Price Feeds and implement supply limits. Basically, they build specific loan strategies optimized for specific risk reward profiles, sitting between passive lenders and performance sources.
Signatures such as Gauntlet, previously providers of protocols such as AAVE or compound, now directly administer almost $ 750 million in TVL in several protocols. With yield rates ranging from 0 to 15%, this potentially represents millions in annual income with significantly more rise than traditional service agreements. According to a Morfo board, curators have costers cumulatively almost 3 million in income and, according to the revenues of the first quarter, are on their way to making 7.8 mm in 2025.
The most successful curators have maintained greater returns by accepting collaterals of greater performance in more aggressive LTV relations, particularly taking advantage of the pendle LP tokens. This approach requires sophisticated risk management, but offers higher yields in the current compressed environment.
As concrete examples, the yields of the largest USDC vaults in Morpho and Euler have surpassed the vaults.
Protocol stratification: a layer in layers
The compressed environment has created a different market structure:
1. Blue chip infrastructure (AAVE, compound, sky)
- Function similar to traditional monetary market funds
- Offer modest yields (2.4-6.5%) with maximum safety and liquidity
- They have captured most of the TVL growth
2. Infrastructure optimizers and strategy suppliers
- Base layer optimizers: Platforms such as Morpho and Euler provide modular infrastructure that allows greater capital efficiency
- Strategy suppliers: Specialized companies such as MEV Capital, Smokehouse and Gauntlet build on these platforms to offer greater yields of more than 12% in USDC and USDT (at the end of March)
This two -level relationship creates a more dynamic market where strategy suppliers can quickly iterate on performance opportunities without building a central infrastructure. Finally available yields for users depend on both the efficiency of the base protocol and the sophistication of strategies implemented at the top.
This restructured market means that users now navigate a more complex panorama where the relationship between protocols and strategies determines the performance potential. Although blue Chip protocols offer simplicity and safety, the combination of optimizing specialized protocols and strategies provides yields comparable to what existed previously on platforms such as AVE or composed during higher environments.
Chain by chain: where live now
Despite the proliferation of Alternative L2 and L1, Ethereum Mainnet continues to organize many of the best performance opportunities, both inclusive and exclusive token incentives. This persistence of Ethereum’s performance advantage is remarkable in a market where incentive programs have often changed the capital search capital to the newest chains.
Among the mature chains (Ethereum, arbitrum, base, polygon, optimism), yields remain depressed in all areas. Out of Mainnet, most attractive performance opportunities are concentrated in the base, which suggests its emerging role as a secondary performance center.
The newest chains with substantial incentive programs (such as Berachain and Sonic) show high yields, but the sustainability of these rates remains questionable since incentives finally decrease.
The salmonte defi: Fintech on the front, defined at the back
A significant development in this quarter was the introduction of coinbase of bitcoin loans driven by Morpho in its base network. This integration represents the emerging thesis “Defi Mullet”: the Fintech interfaces on the front, the infrastructure defi in the back.
As the Chief of Consumer Products of Coinbase, Max Branzburg, he said: “This is a time when we are planting a flag that Coinbase comes to the chain, and we are bringing millions of users with their billions of dollars.” Integration carries the loan capabilities of Morpho directly to the coinbase user interface, which allows users to borrow up to $ 100,000 in USDC with their Bitcoin holdings.
This approach incorporates the opinion that billions will eventually use Ethereum and Defi protocols without knowing it, as well as use TCP/IP today without conscience. Fintech traditional companies will adopt this strategy more and more, maintaining family interfaces while taking advantage of the defi infrastructure.
Coinbase implementation is particularly remarkable by its complete circle integration into the coinbase ecosystem: users publish the BTC warranty to Mint CBBTC (Bitcoin wrapped in the Bitcoin base at the base) of coinbase) and lend the USDC (the Coinbase Stablecoin Network) in Morphase (a loan platform financed by loan Coinbase).
Looking forward: Catalysts for the loan market
Several factors could remodel the loan landscape until 2025:
- Democratized healing: As the curator models mature, could IA agents in cryptography eventually allow everyone to become their own curator? While it is still early, advances in automation in the chain suggest a future where personalized risk performance optimization becomes more accessible to retail users.
- RWA integration: The continuous evolution of real -world asset integration could introduce new performance sources less correlated with cryptography market cycles.
- Institutional adoption: The institutional comfort of scale with defi infrastructure suggests increasing capital flows that could alter the dynamics of loans.
- Specialized loan niches: The appearance of highly specialized loan markets aimed at the specific needs of users beyond simple performance generation.
The best positioned protocols to prosper will be those that can operate efficiently throughout the risk spectrum, serving both the conservative institutional capital and the most aggressive performance applicants, through increasingly sophisticated risk management and optimization strategies.
