A recent study found that only 8% to 11% of the $3.2 trillion cryptocurrency market generates yield—a five- to sixfold disparity compared with traditional finance, where 55% to 65% of capital is yield-bearing. Experts say the gap is a major barrier to institutional adoption, noting that institutions require “predictable, auditable yield,” which in crypto remains fragmented and exposed to significant risk.
Closing the Gap: Infrastructure and Usability
A recent Redstone study spotlighted a major structural weakness in the crypto economy: Only 8% to 11% of the $3.2 trillion market generates yield, compared with 55% to 65% of capital in traditional finance (TradFi). This five- to sixfold disparity underscores how deeply interest-bearing products anchor legacy markets, while crypto remains largely appreciation-driven.
Max Sandy, Head of Product at Ramp Network, told Bitcoin.com News the gap is more than a statistical anomaly—it’s a fundamental barrier to institutional adoption.
“Institutions cannot deploy serious capital without predictable, auditable yield,” Sandy explained. “Yield drives mandate design, risk models, and allocation frameworks. In crypto, yield is still fragmented, difficult to underwrite, and heavily dependent on smart contract risk that is not standardized.”
Read more: Crypto’s Trillion-Dollar Yield Gap: Only 10% of Assets Generate Income, Report Finds
The Redstone study findings highlight why large-scale capital allocators remain cautious. Without standardized yield mechanisms, institutions struggle to integrate crypto into existing frameworks that rely on stable, interest-bearing instruments. Sandy argued that closing this gap will require several key upgrades, including building a resilient base-layer infrastructure to reduce systemic risk, greater transparency around how yield is generated and sustained, and improving user experience to make yield products accessible.
“Today it is still too complex for both institutions and retail,” Sandy noted, emphasizing that usability is as critical as infrastructure.
The $1 Trillion Opportunity: LSTs and RWAs
According to the Redstone study, the yield gap also represents crypto’s greatest opportunity for exponential growth. Asked where the first trillion dollars of new yield-generating assets will emerge, Sandy pointed to two immediate sources: liquid staking derivatives (LSTs) and tokenized real-world assets (RWAs).
“The most immediate growth will come from two areas: liquid staking, and tokenized real-world assets [RWA] like Treasuries and short-duration credit,” he said. “LSTs are already deeply integrated into DeFi [decentralized finance], while RWAs mirror the exact instruments institutions allocate to at scale.”
Looking further ahead, Sandy predicted that stablecoin yield will become a baseline expectation for users. “If you hold digital dollars, you will expect them to earn something by default. That is where consumer apps and wallets will play a role.” He added that Ramp Network plans to enable users to earn yield on their USDC balances on Base.
Institutional Priorities Shift to Integrity and Confidentiality
Phil Wirtjes, CEO of Enclave Global, reinforced that institutional priorities are already shifting. “Institutional mandates have demonstrably shifted… from a predominant focus on directional, volatility-driven exposure toward systematic, yield-driven strategies,” such as delta-neutral trading and basis arbitrage, he said.
This pivot is visible in market data, such as the 260% year-to-date growth in tokenized RWAs highlighted in the Redstone report. Wirtjes stressed that the change is not simply about chasing yield; it’s about executing yield strategies with integrity.
“Institutions no longer ask, ‘What can I earn?’ but, ‘How can our strategy scale without information leakage, MEV extraction, conflicts of interest, or custodial risks?’”
To meet these requirements, Wirtjes said institutions are mandating confidential execution to protect strategic intellectual property and demanding deterministic settlement and decentralized custody to ensure trustless and auditable proof. He pointed to the growing adoption of Enclave Global’s Alpha Strats as an example of strategies designed around confidential, MEV-free execution.
The Regulatory Key to Scaling RWAs
Meanwhile, Sandy emphasized that regulatory clarity is essential for scaling tokenized real-world assets.
“The key is legal certainty around ownership and enforceability. Institutions must know that an on-chain token representing Treasuries or credit corresponds to a real, enforceable claim in the off-chain world. Without that, large allocations cannot happen,” he said.
He added that once regulators clarify custody rules, bankruptcy treatment, and issuer obligations, RWAs could scale from billions to hundreds of billions. At that point, the challenge will shift from legal certainty to distribution and user access.
FAQ 💡
- What did the Redstone report reveal? Only 8–11% of crypto assets generate yield versus 55–65% in TradFi.
- Why does this gap matter for institutions? Institutions need predictable, auditable yield to design mandates and allocate capital.
- Where will new yield growth come from? Liquid staking derivatives (LSTs) and tokenized real‑world assets (RWAs) like Treasuries.
- What regulatory change is critical? Legal certainty on ownership, custody, and enforceability of tokenized RWAs.
