Crypto’s been dreaming big on yield possibilities for years. There’s staking on giants, stablecoins that generate interest, DeFi lending protocols, and even tokenized Treasuries.
The pipeline for turning digital coins into actual income is wide open, and juicy.
Compare apples to apples
But experts say right now, just about 8% to 11% of all crypto assets are cashing in on these yield streams.
On the other hand, regular old traditional finance, aka TradFi, is rocking 55% to 65% of assets generating returns, according to RedStone’s latest research report. What’s going on? It’s not that crypto’s yield game is broken.
The problem is the total mess around disclosure and transparency. RedStone counts something like $300 billion to $400 billion of yield-earning crypto in a $3.55 trillion market.
That’s roughly the 10% figure, but it’s probably an overestimate since the same tokens get counted twice when staked coins get redeployed within DeFi protocols.
It’s like counting your paycheck and your tax refund as separate incomes. Spoiler, they’re not.
The regular finance world has a century’s head start with well-oiled machines for risk ratings, disclosure rules, and stress tests.
That lets hedge funds and pension giants compare apples to apples. Crypto has the juicy apples but no reliable recipe for comparison.
Transparency
Enter the GENIUS Act, a regulatory accomplishment that cleared the grey haze around payment stablecoins.
This clarity sent yield-bearing stablecoins soaring 300% year-over-year. The law deals with reserve transparency and compliance instead of vague “Is crypto legal?” questions. That’s progress.
But institutions want to stack crypto yield products against traditional instruments, comparing risk-adjusted returns like a calculator on steroids. Without juicy details on asset quality, credit exposure, or counterparty risk, investors stay cautious.
RedStone’s bottom line? The barrier to massive institutional crypto adoption boils down to one word, transparency.
Coordination from issuers, platforms, and auditors
Crypto’s on-chain transparency is ironically a double-edged sword. Everything’s visible, but without a standard framework, all that data is heaps of scattered puzzle pieces.
The future? Likely not new yield products, because crypto already offers a tasty buffet from staked blue-chip coins to yield-bearing stablecoins and tokenized government bonds.
The missing ingredient is standardized risk measurement, clear disclosures, third-party audits, and honest accounting for rehypothecation and double-counting.
On-chain data is there for the taking. It just needs coordination from issuers, platforms, and auditors to build trust frameworks that money managers actually believe in.
Until that happens, most crypto investors are just sitting on dead money, watching others get the yield party started.
Cryptocurrency and Web3 expert, founder of Kriptoworld
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With years of experience covering the blockchain space, András delivers insightful reporting on DeFi, tokenization, altcoins, and crypto regulations shaping the digital economy.
