Author: Henry Kim, Ryan Yoon Source: Tiger Research Translation: Shan Oppa, Golden Finance

The voice in the field of decentralized financial lending is gradually shifting from project agreement parties to professional traders who hold risk control decision-making power. When entering the industry, there is essentially only one choice: borrow the research and judgment capabilities of others, export the research and judgment capabilities to the outside world, or build and control the research and judgment capabilities yourself.

Core points

1. The field of decentralized finance is giving rise to a new role in asset management, and the era in which protocols and community governance fully dominated the industry has come to an end.

2. The track is still in its early stages, but capital flow and channel resources have rapidly gathered towards the head risk trading team, and its past practical performance is becoming the core reference standard for institutions to enter the market.

3. There are three major entry paths in the industry: channel distribution (the trading team provides back-end support), asset supply (offline assets are uploaded to the chain), and independent operation (the self-built team becomes the risk trader).

4. The entry path directly determines the subject’s voice, required core capabilities and potential risks.

5. The core decision in the industry is not whether to enter decentralized finance, but how to divide powers and responsibilities: which risk control decision-making rights are entrusted to external parties, and which core authority is reserved for self-control.

1. Risk trader: professional on-chain asset management service provider

Traditional finance has long realized the separation of powers and responsibilities for decision-making and judgment and transaction execution. Now that the encryption market is becoming increasingly mature, various subdivided functions have also formed exclusive professional operating entities.

Traditional division of financial functions

• Asset manager: The core decision-making center of fund operations, formulates the overall investment strategy, and issues specific execution instructions to the asset custodian.

• Asset custodian: Responsible for the storage and custody of assets, completing investment operations in strict accordance with the instructions of the manager and supervising asset safety throughout the process.

• Channel distributors: sell fund products to investors and complete market fundraising and fund collection.

The encryption industry has evolved a corresponding functional system. In the early days, decentralized finance relied entirely on smart contracts to operate, but market practice has proven that code alone cannot fully prevent and control various potential risks on the chain. In order to ensure the smooth implementation of the on-chain lending business, a group of professional practitioners specializing in complex risk assessment and overall deployment have emerged, namely risk traders. They have officially taken over the function of asset managers within the on-chain ecosystem.

2. In the early days of DeFi, there was no professional segmentation of risk control roles

The first-generation decentralized lending protocols such as Aave and Compound deeply bind the underlying lending facilities and risk control standards into an integrated architecture. Although there were practitioners related to risk trading at that time, the assets of the entire network were unified into a single fund pool, and practitioners could only act as the overall risk control administrator of the protocol and fine-tune the overall risk control parameters. Once highly volatile assets pour into the capital pool, a single pool structure can easily lead to risk transmission, and losses from a single low-quality asset will quickly spread to the entire ecosystem. The industry urgently needs dedicated personnel to manage such chain risks.

Until the advent of Morpho, the industry landscape was completely reshaped. The project separates the mortgage asset types and loan periods into independent trading markets, replaces the traditional single capital pool with a multi-treasury modular architecture, completely reconstructs the asset operation model, and completely transforms the functions of risk traders. Practitioners are no longer limited to passive risk control within a fixed agreement framework. External professional teams can independently formulate risk control rules and independently build and operate exclusive lending vaults. With the complete separation of the underlying infrastructure and risk research and judgment authority, risk traders have officially transformed from overall risk control managers of the agreement into professional asset operators in the crypto market, independently operating multiple groups of fund treasury businesses.

3. Current status of industry leaders

As of May 2026, the global risk trading track has approximately US$7 billion in assets under management, and the top three teams in the industry capture 70% of the market share. The track will officially enter its explosive period in 2025. Now funds have rapidly gathered in strong teams, and capital highly favors operating entities with mature practical performance.

The three leading teams have different entry paths:

1. Steakhouse: A prudent risk control trading institution that takes the lead in promoting the compliance of high-quality real-world assets such as U.S. bonds on the chain for mortgage. As the exclusive back-end risk control partner of Coinbase's lending business, it has top traffic channels. As of February 2026, its assets under management reached US$1.53 billion, ranking first in the industry. It also leads the definition of real-life asset access standards that can be included as compliant collateral in the DeFi ecosystem.

2. Sentora: Built based on artificial intelligence risk control models and institutional-level data systems, it is deeply connected to the Kraken exchange as a back-end service provider, stabilizing institutional capital diversion channels, ranking second with a managed assets of US$1.34 billion, and focusing on opening up the capital flow link between exchanges and institutional customers.

3. Gauntlet: A well-established on-chain quantitative risk control modeling agency that focuses on simulating various market risk control parameters. In October 2025, it undertook a large-amount capital inflow business of US$775 million. It only took 10 days to complete the annualized return abnormality repair. Its extremely strong large-amount capital risk control and crisis management capabilities have been recognized by the industry. The current assets under management are US$1.29 billion, which is recognized in the industry as a benchmark for risk control and stability of large-amount capital inflows.

At this stage, the competition on the track has long been separated from the competition of pure asset scale, and the core focus of competition has changed to the three core barriers of collateral access standards, fund distribution channels, and emergency response capabilities for sudden risks.

4. Traditional asset management model VS DeFi risk trading system

As Morpho completes the modular split of the market, different types of mortgage assets require independent professional teams to independently research, judge and control. Professional risk control teams such as Steakhouse have joined the trend and become exclusive risk traders for DeFi. The decentralized financial operation model has gradually benchmarked against traditional mature asset management processes.

It can be clearly seen from top to bottom that the current DeFi underlying architecture has completely replicated the traditional financial full-process division of labor system:

1. Top-level fund raising and distribution: Institutional investors are the core source of funds, and massive funds flow into the on-chain ecosystem through mainstream centralized exchanges and comprehensive service platforms, corresponding to the functions of traditional financial securities firms and fund distribution channels.

2. Mid-level strategy formulation and risk management and control: DeFi risk traders coordinate and plan the capital operation model, benchmark against traditional asset management portfolio fund managers and risk control committees, formulate asset access thresholds, position limits, and build an overall capital operation strategy.

3. Underlying product construction and asset custody: Relying on the capital treasury carrier, trading strategies are transformed into on-chain financial products that can be invested externally; the lowest-level lending agreement is responsible for asset storage and on-chain settlement execution, and undertakes traditional financial asset custody and transaction clearing infrastructure functions.

From fund raising, strategic operations to asset custody and liquidation, the entire operation process has been fully aligned with the mature traditional financial system. For traditional financial institutions, on-chain lending is no longer an unfamiliar emerging track, but a standardized market with clear logic and complete systems, and the entry threshold for institutions has been significantly lowered.

5. Benchmarking Traditional Asset Management: Distribution of Track Opportunities

After the completion of the separation of traditional asset management functions, on-chain lending has officially opened the door to various institutions, but the entry barriers at different levels of the track are significantly different:

• Channel distribution layer: Directly facing the end-user market, leading encryption institutions have completed market monopoly, and traditional financial institutions face extremely low cost performance in direct competition.

• Strategic management: The core competition is financial professional research and judgment capabilities and professional talent reserves. Asset risk assessment, management and control, and product packaging are all the core main businesses of traditional asset management. There is no need to self-research complex underlying technology systems, and relying on mature modular infrastructure to implement your own risk control system, you can quickly build a stable and profitable business model, which is the best entry track.

• Asset custody and underlying facilities layer: Focusing on the research and development of blockchain technology, it is a technology-intensive field that requires extremely high development capabilities for the underlying public chain. It is extremely difficult for traditional financial institutions to build their own systems to enter the industry.

Compared with other tracks that rely on traffic resources and underlying technology, the strategic management and risk control layer has the lowest entry threshold. Traditional financial institutions can quickly seize the dominant position in the industry simply by relying on their mature risk control systems accumulated over many years.

At present, there are three mainstream models for institutions to enter DeFi. No matter which path is chosen, the core competitiveness of the track is always the professional risk control research and judgment capabilities of the risk trading team.

5.1 Channel distribution model: leveraging a professional team to do the backend

With a mature external risk trading team as back-end service, we can quickly seize market share. It is suitable for exchanges and financial technology platforms that have massive user traffic but lack risk control and operation capabilities on their own chains. Under this model, the investment strategy is fully outsourced, but the brand reputation risks and business rights and responsibilities risks brought by the cooperative team are still borne by itself. Centralized exchanges that control terminal traffic and are unwilling to independently delve into the lending and risk control business on complex chains generally adopt this model: connect authoritative and compliance external risk control teams as the business backend and launch online lending financial services. The platform is responsible for completing the drainage of large amounts of funds relying on its own traffic. Collateral review and full-process risk management and control are all handled by the cooperative risk control and trading team.

5.2 Asset supply model: Offline high-quality assets are compliant and uploaded to the blockchain

Asset management institutions that hold real-world assets and credit-type high-quality underlying assets directly transport existing assets to the on-chain market. Taking Apollo as an example, while institutions complete the supply of assets on the chain, they also deploy lending protocol management tokens and are deeply involved in formulating industry collateral access rules that adapt to their own assets. The core difficulty of this model is to complete asset standardization and compliance sorting and build a complete supporting regulatory adaptation system. Large private equity institutions and offline physical asset holding institutions can directly connect their own high-quality assets to on-chain financial channels. Apollo has broken through the pure asset supply level, increased its holdings of leading lending protocol governance tokens, deeply participated in the formulation of industry rules, and promoted its own offline assets to become official and compliant mortgage assets with higher market recognition and stronger risk control priority on the chain. However, asset suppliers cannot arbitrarily include any assets into the collateral category. The market requires a professional third party to objectively verify the true safety of the assets and confirm that the assets can be quickly and fully realized in the on-chain liquidation scenario. This link is inseparable from the rigorous qualification review and credit endorsement of the risk trading team. In the final analysis, the long-term implementation of the asset supply model still relies on the professional risk control verification strength of the asset management institution.

5.3 Independent operation model: self-built team becomes the risk control operator (representative organization: Bitwise)

Asset management institutions independently develop investment strategies and independently build and operate exclusive on-chain capital treasury. Bitwise took the lead in defining the on-chain capital treasury as a version 2.0 exchange-traded fund, officially entering the market in depth. This model has the highest independent say in fee pricing and collateral access standards, but all risks and losses arising from business operations are fully borne by the institution. It is suitable for large asset management institutions that have established their own professional risk control teams. This is the model in which traditional asset management institutions break away from relying on external platforms and directly transform into independent risk traders. Bitwise relies on its own mature asset portfolio construction system and risk control system to independently design and fully control the on-chain treasury operation model, and obtain stable management income directly on the chain.

6. The industry landscape on the eve of the entry of huge amounts of traditional funds

From the perspective of industry development trends, as the on-chain lending ecosystem continues to improve and mature, traditional large-scale asset management institutions have the strongest advantages to enter the industry. After the DeFi ecosystem completed the split of modular functions, the core market needs have changed: the industry is no longer in short supply of smart contract development technical talents, but is extremely hungry for professional financial capabilities such as collateral due diligence review and risk limit delineation that have been accumulated in traditional finance for many years. Traditional asset management institutions have accumulated practical risk control experience for decades and can seamlessly adapt and migrate to on-chain financial scenarios.

However, the overall DeFi market size at this stage is still unable to accommodate the direct large-scale entry of the world's top giant asset management institutions: the total scale of the global traditional asset management industry is as high as 147 trillion U.S. dollars, and the asset management scale of BlackRock alone reaches 14 trillion U.S. dollars. On the other hand, the total volume of the encrypted DeFi track is only 80 billion U.S. dollars, of which the size of the risk trading subdivision track is only 7 billion U.S. dollars, which is less than one-thousandth of BlackRock's management scale.

The huge size gap just proves that the track has huge room for growth in the future. Institutional funds have always adhered to the principle of giving priority to risk control and only entered mature markets with complete risk control systems. Once the risk management team builds a safe and stable on-chain capital circulation system and the supporting industry regulatory framework is implemented, the industry will usher in qualitative changes. The tiny diversion of funds from the RMB 147 trillion traditional asset management market will quickly trigger the explosive growth of the RMB 80 billion DeFi market.

Many industry dividends only exist in the early development stages of the track. At present, there are only a handful of high-quality head risk trading teams in the world. Institutions entering the market on a large scale urgently need to improve mature industry operating rules. The team that takes the lead in building the industry's underlying operating system will firmly control the formulation of industry rules. Although institutions entering the market at a later stage can enjoy a more complete market environment with more standardized risk control, they can only participate in market competition by following established industry rules and miss out on the core voice and first-mover advantage of early layout.