🚀 Bridging the Gap: The Yield Generation Potential of Cryptocurrency
📉 A recent Redstone report reveals significant differences in yield generation between cryptocurrency and traditional finance (TradFi). Despite the cryptocurrency market's capitalization reaching $3.2 trillion, only 8% to 11% of assets, or about $300 billion to $400 billion, generate yield. In contrast, 55% to 65% of capital in TradFi is allocated to yield-generating instruments.
📊 The report emphasizes that this ratio in TradFi is more than 100 times higher than that of cryptocurrency, highlighting the entrenched nature of interest products in traditional markets. This gap indicates that the crypto space still primarily relies on asset appreciation rather than yield generation. However, the report also points out that while the yield infrastructure in crypto lags behind TradFi by 5 to 6 times, it presents significant opportunities for growth.
This gap represents the biggest opportunity in cryptocurrency. With the rise of the argument that 'crypto is infrastructure' and on-chain finance demonstrating higher capital efficiency, yield-generating assets are poised for exponential growth. Institutional capital follows efficiency,
the report notes.
📈 Due to the high volatility of blue-chip tokens, institutional interest in yield-generating crypto assets has traditionally been low, often rendering on-chain yields (4% to 8%) irrelevant to institutional risk appetite. However, as institutions begin to recognize crypto as viable financial infrastructure, this perspective is changing.
📊 For example, ETH liquid staking tokens (LSTs) saw significant growth from 6 million to 16 million between 2023 and November 2025, with a nominal value increase of $34 billion. During the same period, SOL LSTs doubled, with a market cap increase of $10 billion. Meanwhile, Bitcoin yield products are becoming a new frontier in this field.
🌉 The report also emphasizes the role of yield-generating real-world assets (RWAs) as a bridge between TradFi and on-chain finance. Institutions are increasingly recognizing the efficiency gains brought by tokenization and are accelerating related efforts. However, some TradFi investors remain cautious about investing in crypto-native blue chips, often due to a lack of authorization to invest in assets beyond Bitcoin.
🔍 In summary, although current yield generation in the crypto space is far below that of traditional finance, its underdeveloped yield infrastructure presents substantial growth opportunities. With increased institutional adoption and improvements in on-chain financial efficiency, yield-generating assets in crypto are expected to experience exponential growth.
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