A recent report has highlighted a remarkable surge in the total value locked (TVL) in decentralized finance (DeFi) vaults, indicating an explosive growth of 28 times over the past year. The TVL has skyrocketed from less than $150 million in June 2024 to over $4.4 billion recently, significantly outpacing the broader cryptocurrency market’s bull run.
The report, issued by the staking platform Kiln, reveals that approximately 20% of these vaults—characterized as pre-packaged, professionally managed investment vehicles on DeFi platforms—are primarily composed of tokenized real-world assets (RWAs), including government treasuries and private credit funds. Additionally, there is a notable increase in single-asset vaults, which are gaining popularity among users.
Among the key findings, Kiln noted that some supply vaults for USDC on the Morpho decentralized lending protocol hold “several hundred million dollars,” comparable to what might be seen in a mid-sized money market fund. This growth is accompanied by increased participation from traditional finance (TradFi) entities. For instance, Apollo Global Management, a leading U.S. investment firm managing over $750 million in assets, recently introduced its Apollo Diversified Credit Securitize Fund (ACRED), a tokenized version of its off-chain Diversified Credit Fund (ADCF), launched on the Solana blockchain in May. This innovation allows investors to purchase tokens that represent ownership in a traditional fund, enhancing the speed and ease of transactions by facilitating faster redemptions with reduced paperwork.
Currently, this fund is reportedly yielding around 16% on-chain. Furthermore, since initiating its partnership with Morpho in January 2025, Coinbase has facilitated over $350 million in Bitcoin-backed loans, underscoring the growing integration of blockchain technology into traditional finance.
The rise of DeFi vaults can be attributed to their appeal to more mature investors, offering a sophisticated way to engage with blockchain investment opportunities and earn passive income. This trend mirrors the reception of spot Bitcoin ETFs, which provided traditional investors easier access to cryptocurrency markets. The introduction of ERC-4626, an Ethereum token standard established in May, appears to have catalyzed this surge. The standard outlines a modular framework for creating yield-bearing vaults, setting clearly defined parameters and implementation steps.
Kiln’s researchers speculate that this development may pave the way for regulatory acceptance of DeFi vaults. ERC-4626 contracts allow users to maintain direct custody of their assets, meaning that many traditional intermediary regulations concerning capital charges and asset segregation might only apply at the fiat level, leaving the vaults relatively unencumbered.
Data from blockchain analytics platform Dune indicates a steady deployment of over 50 tokenized vaults each week since the introduction of ERC-4626. Researchers at Delphi Capital have remarked that the DeFi space is ripe for expansion beyond its initial user base, suggesting it has “largely exhausted its early addressable market,” which consisted largely of tech-savvy individuals familiar with self-custodial wallets.
According to Delphi, DeFi now requires its equivalent of an “ETF moment,” similar to when the U.S. Securities and Exchange Commission approved spot Bitcoin ETFs in January 2024. The current statistics from DeFiLlama also suggest that while total DeFi TVL stands at approximately $153 billion—down from over $180 billion in 2022—there remains a robust appetite for digital assets and expansions in stablecoin supply.
The enduring takeaway from this report is the growing perception of DeFi vaults as a vital bridge for traditional finance to engage with the crypto sector. They enable investors to benefit from yields without directly holding cryptocurrencies. Acting like decentralized asset managers, these vaults offer significant advantages such as permissionless access, liquidity, and non-custodial management, allowing investors to freely enter and exit as they choose.
Experts predict that capturing just 1-2% of the global money-market and cash-sweep assets could propel vault TVL beyond the half-trillion-dollar threshold by 2030. With standardized vault designs emerging through ERC-4626, a supportive regulatory environment, and a growing list of TradFi success stories, the on-chain future of finance appears increasingly promising.
