Crypto has expanded at an unprecedented pace, yet liquidity—the essential lifeblood for market growth and a primary indicator of market health—remains a critical challenge. Assets scale when they ship with three properties: Liquidity – deep, resilient, and composable. Yield – competitive, durable, and risk-aware. Distribution – embedded inside products users already touch. Liquidity – deep, resilient, and composable. Yield – competitive, durable, and risk-aware. Distribution – embedded inside products users already touch. Digital assets begin to scale once they become productive inside DeFi. This playbook aims to lays out how to engineer that productivity—and facilitate issuance to adoption. ⛓️Scaling Liquidity Is Scaling Integrations ⛓️Scaling Liquidity Is Scaling Integrations Tokenization creates supply. DeFi integrations create demand. An asset that can be collateralized, looped, yield-split, LP’d, and routed into vaults becomes living capital. DeFi transforms static assets into programmable balance sheets. Lending markets are the primary power engine because they convert assets into leverage-bearing collateral: After sUSDe and PT-USDe both became usable as high-LTV collateral on Aave, USDe’s circulating supply expanded by ~$3.7B in ~20 days. leverage-bearing collateral The strategy flows: Deposit sUSDe on Aave → borrow USDC (up to ~93% LTV) → swap to sUSDe → loop. Use PT-USDe on Aave → obtain fixed-rate exposure or leverage yield up to ~10x. Deposit sUSDe on Aave → borrow USDC (up to ~93% LTV) → swap to sUSDe → loop. Use PT-USDe on Aave → obtain fixed-rate exposure or leverage yield up to ~10x. These integrations convert USDe from a stablecoin into a leveraged yield primitive. On top of this foundation: Pendle splits assets into PT (principal) and YT (yield), enabling fixed-rate yield and yield speculation. DEXs such as Uniswap and Curve provide liquidity and price discovery. Automated strategists (e.g., Veda, vault curators) route capital across pools to maximize utilization. Pendle splits assets into PT (principal) and YT (yield), enabling fixed-rate yield and yield speculation. DEXs such as Uniswap and Curve provide liquidity and price discovery. Automated strategists (e.g., Veda, vault curators) route capital across pools to maximize utilization. Together, these primitives form the core DeFi integration stack: Lending → collateralize / borrow / loop DEX → swap / LP / incentives Yield → auto-compounding strategies Perpetuals → leverage Payments → settlement Bridges → transferability Wallets → custody + UX Ondo’s USDY illustrates this pattern. As a frontier RWA issuer, Ondo deliberately engineered USDY into core DeFi primitives—lending markets, LP venues, and vaults across major L1s and L2s, driving ~$1.4B AUM and ~22k holders. The more deeply an asset is integrated into these primitives, the more distribution, users, and growth it naturally inherits. 💸Using DeFi-Native Primitives to Engineer Yield 💸Using DeFi-Native Primitives to Engineer Yield DeFi yield can be assembled by: looping collateral in lending markets, deploying into LP positions, splitting principal and yield (Pendle-style), routing into automated vaults. A typical yield ladder reference: Therefore, this gives rise to a new category: vault curation as onchain asset management. An emerging flywheel is forming: risk managers act as onchain asset managers, curated vaults become the primary distribution channel through which stablecoins achieve scale, liquidity, and institutional-grade risk posture. Case Study: PYUSD on Solana PYUSD circulating supply: ~$10B PYUSD in Sentora-curated Kamino vaults: ~$4B (~40%) PYUSD circulating supply: ~$10B PYUSD in Sentora-curated Kamino vaults: ~$4B (~40%) Sentora operates as a curator: Designs portfolio allocations across money markets and collateral strategies. Sets risk parameters, caps, and exposure limits. Rebalances based on utilization and rate dynamics. Designs portfolio allocations across money markets and collateral strategies. Sets risk parameters, caps, and exposure limits. Rebalances based on utilization and rate dynamics. Users deposit PYUSD. Sentora deploys PYUSD across the Solana DeFi ecosystem. Result: Liquidity bootstrapped into lending markets. Competitive yield (reported ~13.26% avg 90d). Risk abstracted away from end users. Liquidity bootstrapped into lending markets. Competitive yield (reported ~13.26% avg 90d). Risk abstracted away from end users. Curators here act as risk guardians, packaging yield with explicit risk management, benchmarking APY against peg-asset, yield leaderboards, and institutional allocation tables. Risk mitigation like Proof of Reserves, real-time dashboards, and codified emergency procedures are no longer “nice to have.” The next wave of DeFi AUM will not flow to the highest APY. It will flow to the vaults that make risk legible. For product marketers, this means positioning risk transparency—collateral rules, oracle design, caps, pool structure, and crisis communication—as structural advantages that gain trust. 📲From Tokenized Treasury to One-Click Earn 📲From Tokenized Treasury to One-Click Earn Liquidity without distribution does not scale. Distribution without yield does not retain. The competition is shifting to existing user surfaces: Wallets, Exchanges, Neobanks, Custodians, Fintech apps, etc. Users do not want protocols. They want products: One-click earn, auto-compounding, principal protection and simple UX. The stack is converging toward: Consumer app on top, DeFi infrastructure underneath. Coinbase has integrated Morpho for collateralized USDC loans within Coinbase App, with nearly $2B in deposits. Kraken DeFi Earn embeds curated vault strategies inside mobile app UI, partnered with Veda Labs. Coinbase has integrated Morpho for collateralized USDC loans within Coinbase App, with nearly $2B in deposits. Kraken DeFi Earn embeds curated vault strategies inside mobile app UI, partnered with Veda Labs. Huma Finance demonstrates how real-world payment flows can be tokenized into scalable onchain yield sources, processing $10B in volume to offer 12-18% APY on $154M TVL while attracting over 93K depositors. Looking ahead, as regulation and tokenization infrastructure mature, more quality traditional assets (aka yield source) —equities, ETFs, onchain IPOs—will move onchain, expect curated structured products: Tokenized S&P 500s, REITs, commodities baskets Hybrid yield vaults (Treasuries + private credit + commodities） Bank/Brokerage-specified stablecoin vault Tokenized S&P 500s, REITs, commodities baskets Hybrid yield vaults (Treasuries + private credit + commodities） Bank/Brokerage-specified stablecoin vault Managed by reputable risk curators and natively embedded in consumer-facing apps, this shift could drive the tokenized asset market to $10–16T by 2030. When that happens, DeFi yield stops being “crypto yield.” It becomes a legitimate alternative yield source for global finance. 🌊 Conclusion 🌊 Conclusion Scaling digital assets is no longer about speculation. It is about engineering institutional productive, risk-aware, and widely distributed balance-sheet primitives. Assets scale when they can be borrowed against, routed through strategies, and embedded into user workflows. I continue to believe that crypto is at an inflection point: the full stack for global hybrid finance is forming, onchain.
