Crypto-native asset managers have significantly upped their game this year, ballooning their onchain holdings to a whopping $4 billion. It’s a sign of the times, as decentralized finance (DeFi) continues to weave itself into the very fabric of fintech. According to recent insights from Artemis and Vaults, this surge reflects a broader trend where DeFi is increasingly becoming the “invisible” backbone for many financial technologies.
The Rise of Onchain Investments
What’s driving this quadrupling of onchain allocations since January? Well, it seems asset managers are increasingly recognizing the potential of DeFi platforms to offer unparalleled returns and flexibility. The integration of DeFi into fintech systems is not just a futuristic vision—it’s happening right now. As traditional finance grapples with its limitations, DeFi offers a decentralized alternative that seems to be winning hearts and minds. This follows a pattern of institutional adoption, which we detailed in Crypto Lenders Hold Nearly $60B of Assets as New Wave of DeFi Adoption Sweeps In.
Crypto analyst Sarah Jennings, from Artemis, notes, “DeFi’s integration into fintech is more than just a trend; it’s an evolution. Asset managers are realizing the potential of decentralized protocols to not only enhance but revolutionize the financial ecosystem.” This sentiment is echoed across the industry as institutional players ramp up their involvement in onchain activities.
DeFi’s Invisible Hand
So, why is DeFi being dubbed the “invisible” back-end? Simply put, while users might not see the wires and nodes, they are experiencing the benefits in the form of faster transactions and lower fees. Platforms like Lido and EigenLayer are quietly powering these changes. By allowing asset managers to unstake and restake with ease, they enable more efficient capital deployment.
According to Vaults, the trend towards onchain investments is also driven by the desire for enhanced transparency and security. In an era where trust in centralized entities has been shaky, DeFi protocols provide an immutable ledger that doesn’t rely on any single point of failure. “The decentralized nature of these platforms offers a safety net that traditional systems simply can’t match,” says James Curtis, an analyst at Vaults.
Historical Context and Market Trends
This isn’t coming out of nowhere. The seeds were planted back during “The Merge” in 2022 when Ethereum shifted to a proof-of-stake consensus. It was a pivotal moment that set the stage for what we’re witnessing today. Moreover, the recent regulatory uncertainty in the crypto space appears to have nudged more asset managers to look at DeFi as a viable alternative. With regulators around the world still grappling with how to handle cryptocurrencies, the allure of a self-governing financial system is hard to resist. For a deeper dive into the regulatory implications, see Ethereum Governance Tokens Spike as SEC Backs ‘Innovation Exemption’ for DeFi Projects.
But here’s the catch: while the growth is impressive, it’s not without its challenges. The DeFi space is notorious for its volatility, and security breaches are not unheard of. This raises questions about whether this bullish trend can sustain itself in the face of potential risks.
Looking Ahead
As we move deeper into 2025, the real question is how sustainable this growth is. Will the DeFi ecosystem manage to maintain its allure, or are we looking at another bubble waiting to burst? While it’s easy to get caught up in the excitement, there’s a need for cautious optimism. The integration of DeFi into fintech is still in its nascent stages, and the road ahead is anything but certain.
However, if the current trajectory is anything to go by, crypto-native asset managers aren’t just dabbling in DeFi—they’re betting big on it. And as more financial institutions begin to take notice, we could see a shift that redefines the landscape of global finance. The implications are profound, and the stakes are high. Only time will tell if this is a new dawn or just another chapter in the volatile world of crypto.
Source
This article is based on: ‘Crypto-native’ asset managers quadruple onchain holdings since January
Further Reading
Deepen your understanding with these related articles:
- Aave, Uniswap, Sky Tokens Surge Over 20% as SEC Roundtable Spurs DeFi Optimism
- U.S. SEC Chair Says Working on ‘Innovation Exemption’ for DeFi Platforms
- Circle’s USDC Likely to Remain DeFi’s Go-To Stablecoin: Compass Point
Steve Gregory is a lawyer in the United States who specializes in licensing for cryptocurrency companies and products. Steve began his career as an attorney in 2015 but made the switch to working in cryptocurrency full time shortly after joining the original team at Gemini Trust Company, an early cryptocurrency exchange based in New York City. Steve then joined CEX.io and was able to launch their regulated US-based cryptocurrency. Steve then went on to become the CEO at currency.com when he ran for four years and was able to lead currency.com to being fully acquired in 2025.
