DeFi Yield Explained

The institutional adoption of tokenized real-world assets and on-chain yield generation is accelerating as asset managers transition from simple staking to complex, multi-protocol lending vaults. Kraken’s recent launch of a DeFi earn product, supported by VEDA CEO Sun Raghupathi, demonstrates this shift by abstracting chain complexities and offering organic yields through diversified protocol exposure. Unlike traditional asset management, these on-chain vaults utilize "curators"—specialized risk managers who allocate capital across battle-tested protocols like Aave and Morpho to optimize liquidity and return profiles. While Ethereum remains the primary venue for institutional activity due to its liquidity and security, the industry is increasingly exploring specialized, privacy-preserving chains to address institutional needs for data confidentiality. This evolution signals a move toward a future where general-purpose vaults package diverse on-chain yield sources into single, accessible products for mainstream users.