“The latest data shows crypto lending firms controlling around $60 billion in assets, fueled by a new wave of DeFi enthusiasm.”

DeFi Evolves Beyond Hype as Institutions and Tokenized Assets Lead New Growth

Decentralized finance (DeFi) is maturing into a genuine piece of financial infrastructure, leaving behind its earlier image as a speculative playground, according to a fresh report from blockchain analytics firm Artemis and yield aggregator Vaults.fyi.

While previous DeFi booms were fueled by lofty yields and short-term speculation, the latest surge is driven by institutional players and growing adoption of real-world assets (RWAs).

DeFi Lending Approaches $60 Billion

Lending platforms like Aave, Euler, Spark, and Morpho have propelled DeFi’s total value locked (TVL) to over $50 billion, now edging closer to $60 billion. This marks a 60% increase over the past year, a sign of growing trust in the sector’s resilience and refined risk management.

“These platforms are transitioning from mere yield generators into modular financial infrastructure where institutional investors are comfortable operating,” the report explained.

The Rise of the “DeFi Mullet”

One standout trend the report describes is the so-called “DeFi mullet,” where apps present familiar, user-friendly front-ends while running DeFi protocols under the hood.

For instance, Coinbase enables users to borrow against their bitcoin holdings using DeFi lending protocol Morpho, already driving over $300 million in loans.

Bitget Wallet offers yields of around 5% on USDC and USDT through integrations with Aave, sparing users from the complexities of direct DeFi interaction. Even PayPal has entered the yield space, offering roughly 3.7% returns on its PYUSD stablecoin—though not yet integrated with DeFi protocols.

The report suggests that fintech giants like Robinhood and Revolut could be next to embed DeFi functionality, potentially offering services like stablecoin-based credit lines or tokenized collateral lending as new revenue streams.

Real-World Assets Enter the DeFi Fold

DeFi protocols are increasingly experimenting with tokenizing real-world assets such as U.S. Treasuries and private credit funds, aiming to use them as collateral, yield sources, and building blocks for innovative financial products.

Tokenizing investment strategies is also on the rise. Pendle, a protocol that lets users split the yield from the principal of crypto assets, has reached over $4 billion in TVL, much of it linked to tokenized stablecoin yields.

New products like Ethena’s sUSDe token have emerged, promising yields above 8% from strategies like cash-and-carry trades, all while shielding users from operational complexities.

Crypto-Native Asset Managers Take Charge

Another major shift is the rise of crypto-native asset managers such as Gauntlet, Re7, and Steakhouse Financial. These firms allocate capital across DeFi ecosystems, deploying sophisticated risk strategies and participating in governance decisions—essentially bringing traditional asset management expertise on-chain.

Since the beginning of this year, the value of assets managed by these crypto-native firms has quadrupled, rising from $1 billion to more than $4 billion, the report noted.

Altogether, the data suggests that DeFi is evolving into a crucial layer of the modern financial system, driven by real-world asset integration, institutional engagement, and new products that make decentralized services more accessible to everyday users.