Crypto’s yield gap with TradFi narrows as staking, RWAs surge

Cryptocurrency-based yield products still lag far behind their traditional finance (TradFi) counterparts, but new blockchain sectors such as liquid staking tokens (LSTs) and real-world assets (RWAs) are steadily closing the gap, according to a new report co-authored by RedStone Oracles, Gauntlet, Stablewatch and the Tokenized Asset Coalition, shared with Cointelegraph.

Only 8% to 11% of cryptocurrencies offer passive yield-generating models, indicating a significant gap compared to 55% to 65% of TradFi assets, roughly a fivefold disparity, the report found. However, stablecoins, RWAs and “blue-chip” yield tokens are rapidly closing decentralized finance’s (DeFi) passive income gap.

Emerging regulations, such as the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act, passed in July, are helping the industry catch up, resulting in a rising demand for both yield-bearing stablecoins and RWAs, the report says.

Crypto yield-bearing assets poised for “exponential growth” in the next months

Crypto yield-bearing assets are poised for “exponential growth” in the coming months and are set to benefit from the gap between DeFi and TradFi, according to the report, which called it “crypto’s greatest opportunity.”

“As the ‘Crypto-as-infrastructure’ thesis gains traction and onchain finance proves its superior capital efficiency, yield-generating crypto assets are positioned for exponential growth,” as institutional capital will seek more “efficiency,” it said.

Yield-generating tokens, such as Solana LSTs, are also gaining traction among institutions, as they can earn a passive yield of approximately 4% on top of their holdings.

Much like Ether, Solana LSTs doubled in supply, from 20 million in January 2024 to about 40 million at the time of writing, with a total of 67% of the Solana token supply now locked in staking smart contracts.

Magazine: Crypto wanted to overthrow banks, now it’s becoming them in stablecoin fight