More than $10bn has been deposited into crypto vaults, up from $4bn at the start of last year, as digital asset owners seek higher returns by lending stablecoins through decentralised platforms. These vaults, which use smart contracts and are managed by 'curators' who set investment strategies and fees, offer returns between 3% and 20%, attracting attention from US and European regulators concerned about risks. Unlike traditional intermediaries, vaults operate without intermediaries, exposing investors to automatic liquidation and smart contract vulnerabilities.
Industry experts warn that despite transparency in code, most investors do not understand the underlying risks, liquidity ratios, or collateral mechanics. The rise echoes past collapses like Voyager, Celsius, and Genesis in 2022, where risky lending and withdrawal pressures led to failure. Proponents argue vaults represent the evolution of crypto utility as traditional assets become tokenised, with fintechs, treasury firms, and hedge funds as primary users.
However, risks include hacking — $972m stolen from DeFi platforms in H1 2026 — coding errors, and illiquid collateral, as seen when the USR token’s hard-coded $1 value masked its actual collapse after a Resolv protocol hack. Regulators are scrutinizing whether this growing segment requires closer supervision due to its systemic risk potential.
Source: Financial Times Companies · Summarized by HeadlinesBriefing