Structurally, this large discrepancy in 'DeFi vs. TradFi overall utilisation' lies in the intrinsic difference in the composition of yield-generating assets. The majority of crypto-native yield sources today are high-volatility, risk-propagating instruments, whereas TradFi’s yield primitives are typically risk-adjusted, duration-based & capital-structured (think fixed income, money markets, structured notes etc.) In crypto, yield stems predominantly from LP-ing, perps funding or gov. emissions → all inherently reflexive + volatility-driven. That said, over time we can expect the % of stable yield-generating assets in crypto to rise meaningfully, driven by two reinforcing secular trends: 1️⃣ The institutionalisation of RWA-Fi The onboarding of large accredited funds and asset managers into tokenised treasuries, private credit + on-chain debt infra which bring a new class of low-volatility, yield-bearing instruments into DeFi. These assets introduce structured passive yield that behaves much like TradFi fixed income. As liquidity deepens, these RWA primitives create a stable collateral base that supports larger-scale on-chain productivity without amplifying systemic volatility. 2️⃣ The maturation of blue-chip crypto asset classes Core assets such as $BTC derivatives and $ETH $SOL liquid staking tokens (LSTs) now represent the majority of DeFi’s utilisable depth. ⇒ As these ecosystems scale in market capitalisation and utility, their volatility naturally compresses. The resulting decline in Sharpe dispersion leads to a more stable risk-return profile, encouraging allocators to treat these as semi-risk-free base assets. Over time, this shift supports the emergence of more risk-adjusted yield strategies and structured vault products: mirroring how corporate treasuries evolved into yield-bearing, institutionally investable classes in TradFi. In combination, these structural evolutions point toward a recomposition of DeFi yield architecture → from reflexive, speculative emissions toward durable, cash flow–anchored yield. The convergence of RWA-Fi + maturing LST ecosystems effectively bridges the crypto risk curve with TradFi-style capital efficiency unlocks new portfolio design space for allocators who can blend high-volatility DeFi yield with low-volatility tokenised yield streams. The outcome we’re inching towards is a progressive flattening of the DeFi risk curve, where long-term yields become more predictable, benchmarked & finally institutionally acceptable. This lays the foundation for the next cycle of sustainable on-chain capital markets. Highly recommend a read on this insightful report by @redstone_defi 👇

@redstone_defi h/t @RWA_xyz @Dune @DefiLlama for data references.