Onchain Asset Management. A guide

Asset management is the allocation of capital on behalf of a client, to generate returns within a given risk profile. In the legacy model, that involves fund managers deploying capital into equities, bonds, real estate, and other asset classes, aiming to beat inflation or a predefined benchmark, manage risk, and meet client objectives.

But legacy infrastructure is struggling to meet the demands of a digital-first investor base:

• Fees: Mutual funds still charge 60-100 bps average management fees, which dramatically reduces long-term returns, particularly relative to performance.
• Access: Alternative strategies and private funds usually involve $250k+ minimums, pricing out most retail investors.
• Speed & Transparency: T+2 day settlement delays remain prevalent in equities, and fund NAVs are reported daily or weekly, rather than in real time.
• Operational Risk: Manual processes leave room for human error, fraud, and inefficient use of capital.

Blockchain-based asset management offers an alternative; programmable, trust-minimised systems where capital can be deployed and rebalanced by smart contracts with instant settlement and public auditability. 

Now, it’s one thing to say blockchain is a superior set of rails for finance, and on paper, it’s virtually a no-brainer. Instant settlement, global reach, programmable contracts, radical transparency; compared to the three-day paper shuffle of traditional systems. It’s like trading in a Blackberry for an iPhone, same general purpose, but quicker and capable of doing things you didn’t even know you needed. But improved rails alone don’t equate to a functional financial system. To actually implement asset management onchain, you need the containers and cargo; assets to invest in, markets to trade on, ways to generate yield, and infrastructure to manage risk.

It was the same set of tools which began to come together during the fabled ‘DeFi Summer’ of 2020. Within months, Uniswap had proven at scale that onchain trading and liquidity provision were possible, Aave and Compound turned borrowing and lending into button clicks, and Yearn Finance automated yield farming across these emerging markets. These were more than speculative playgrounds, they were the first functional building blocks of an onchain financial stack. 

Layer in the growth of onchain assets, and the system begins to look increasingly attractive for supporting serious capital allocation. Stablecoins, in particular, have acted as the primary bridge between traditional capital and onchain markets. As reliable, dollar-pegged assets that move instantly across the globe, their role extends far beyond payments. They have become the denominator for performance measurement, the base currency for most DeFi strategies, and the deep liquidity source that allows managers to deploy and rebalance at scale. From ~$10 billion in mid-2020 to over $263 billion today, stablecoins have transformed onchain finance from an experiment into a viable venue for institutional-grade asset management.

So today, liquidity is deeper, risk controls are more sophisticated, and new primitives like tokenised treasuries, onchain derivatives, and permissioned credit pools mean managers can run strategies that resemble, and often outperform, their Traditional Finance counterparts. In other words, the rails are finally paved, signposted, and safe enough to drive a serious amount of capital over. Asset management isn’t just possible onchain anymore; in many cases, it’s becoming the more competitive option.

Read about Keyrock Asset Management strategies here.

Definition: Onchain Asset Management is the management of digital assets, crypto-native or tokenised Real-World Assets (RWAs), through a third-party using blockchain-based infrastructure, where investment mandates are executed via smart contracts and recorded on a public ledger.

For the purpose of this report, we have clearly defined our onchain asset management strategy universe as follows:

• Automated Onchain Yield Strategies: Strategies such as automated yield aggregation, where capital is deployed into multiple DeFi protocols according to predefined logic. These vaults rebalance periodically or continuously to maximise returns from lending, liquidity provision, or farming incentives, without active human discretion. Examples include Yearn, Morpho, Beefy, and Veda. You can read more about Automated Onchain Yield Strategies here.
• Discretionary Onchain Strategies: Actively managed positions across DeFi protocols, with portfolio allocation and risk management decisions made by managers in real time. These strategies may rotate between yield opportunities, hedge exposures, or capture inefficiencies, often using proprietary research and execution. Examples include Re7 and MEV Capital. Read more about Discretionary Onchain Strategies here.
• Onchain Structured Product Strategies: Onchain vehicles that package derivatives and yield strategies into defined payoff profiles, such as covered calls, cash-secured puts, basis trades, or volatility capture. These products allow investors to express directional or volatility views with automated settlement and transparent terms. Examples include Aevo and Pendle. Read more about Onchain Structured Product Strategies here.
• Credit Strategies in Onchain Asset Management: Lending-based strategies that involve underwriting, structuring, or tranching credit risk onchain. This includes complex lending products, unsecured credit pools, and permissioned institutional lending, often with tokenised loan instruments and programmatic repayment flows. Examples include Maple and Gondi. Read more about Credit Strategies in Onchain Asset Management here.

What sets all of the above strategies apart from their traditional finance counterparts, and is essentially inherent in onchain asset management, is that transparency is embedded. This spans across portfolio holdings, transactions, and even performance, all of which are verifiable onchain. Smart contracts are able to replace the vast majority of intermediaries, lowering costs and mitigating, or shifting, risk. 

To focus our analysis on meaningful operators, we apply the following criteria inclusion filters:

• Third-party capital: Must manage or facilitate the management of external deposits.
• Beyond vanilla lending: Strategies must go beyond simple deposit and borrow mechanics.
• Digital Asset-denominated: Primary accounting in stablecoins or volatile digital assets.
• Minimum scale: At least $10 million in AUM or facilitated AUM.
• Onchain operation: Strategies are executed via smart contracts on public blockchains.

In the following sections, we will quantify capital concentration and examine how strategies and asset exposures are evolving in real time to form the statistical foundation for our growth forecasts.

In finance, capital always votes with its feet, and in asset management specifically, it chases liquidity, low costs, and alpha. These three forces are the levers that decide whether onchain managers can compete with, and ultimately outperform, their traditional counterparts. This being said, capital flows is clearly the most important signal for revealing adoption and trust, with the extent to which we see sustained inflows into vaults, protocols, and tokenised products demonstrating investors belief levels in the infrastructure and the risk-return profile. 

Fees dictate whether products can win on net returns, and once comfortable with infrastructure and risk-return profile, this is a real consideration for capital allocators. In Traditional Finance, management fees have already compressed to as low as 3-5 bps for passive ETFs, while many active funds still sit near 100 bps. We believe, as we will lay out in the following sub-sections, that onchain managers have an opportunity to leapfrog this curve, using automation to deliver competitive gross returns at structurally lower cost. Net performance is the ultimate retention mechanism, given that even the most efficient, well-capitalised manager will bleed assets if they can’t deliver excess returns over time.

Each lever reinforces the others. Lower fees improve net performance, which drives flows. Scale from flows can, in turn support more competitive pricing and enable access to differentiated strategies. But the inverse also holds true. Underperformance triggers redemptions, which push up unit costs, further eroding competitiveness. This is why flows, fees, and performance form the core of our comparative analysis. Together they reveal where onchain asset management is gaining real ground, where structural advantages exist, and where traditional incumbents still hold the edge.

Capital Flows

Capital flows are the most immediate barometer of conviction in asset management, whether traditional or onchain, and they also happen to be one of the most impressive charts for onchain asset management. In the onchain segment, the story of the past year has been one of acceleration. As of today, total onchain AUM across the strategies we track has reached ~$35 billion, a phenomenal increase from the start of 2025 when it stood at ~$16 billion. This of course will have been aided by market sentiment shifts throughout this period, but nevertheless, the growth is compelling. 

Perhaps more important than the absolute figures is the breadth of this AUM growth across strategies. Every major strategy category has expanded, with some recording triple-digit YTD gains. Automated onchain yield strategies are up 93.6% YTD, structured products have grown 95.5%, onchain credit has surged 147.6%, and discretionary onchain strategies have grown an extraordinary 738.1%, albeit from a much smaller starting base.

What stands out in 2025 though is how capital deployment has become both more diversified and more strategically coordinated. In prior cycles, inflows tended to cluster around a single ‘hot’ category, for example yield farming in DeFi Summer 2020, NFT funds in 2021, or tokenised treasuries in 2023. This year, multiple categories have drawn meaningful capital simultaneously, suggesting a broader structural shift rather than a single fad. What’s evident from this is that the benefits of onchain asset management apply across the board, in all strategy types, no matter how you manage the assets, or the risk profile you target. Onchain, the ‘asset management product’ itself has been upgraded. The expansion of discretionary onchain strategies in particular reflects renewed confidence in discretionary managers who can rotate capital across protocols, hedge risk dynamically, and capture idiosyncratic yield. 

Automated onchain yield strategies have almost doubled in size YTD, reaching multi-billion dollar scale as allocators increasingly favour low-touch, programmatic yield generation. Protocols like Yearn, Beefy, Veda, and aggregation layers such as Morpho and Sommelier have benefited from a shift toward ‘set-and-forget’ vaults that rebalance automatically. Much of the recent growth has been catalysed by deep integrations with major lending markets and DEXs, allowing vaults to access stable, high-quality yield sources without manual intervention. DAO treasuries have begun allocating to these passive vaults as a treasury management tool, exemplified by MakerDAO’s Spark Protocol moving $50 million into Maple’s syrupUSDC vault via a Morpho integration, effectively linking passive aggregation with onchain credit. 

As mentioned, discretionary onchain strategies have been the fastest growing strategy sector YTD, driven by a shift in institutional sentiment and their ability to bridge this institutional capital into onchain strategies. Managers like Re7 Labs and MEV Capital have attracted inflows by demonstrating the ability to actively rotate between opportunities in real time, hedge exposures, and capture basis and funding spreads that are inaccessible to static vaults. The surge in active mandates reflects a broader allocator belief that discretionary managers can navigate a fragmented yield environment more effectively than code-only strategies. 

For structured products, we’re seeing growth powered by Pendle in particular, having become a key venue for fixed and variable yield splits. The launch of Ethena’s USDtb Treasury-backed stablecoin added a new layer of yield stability and attracted more risk-averse capital. Aevo has also been a key player here, with its covered call and cash-secured put vaults with built-in liquidity bootstrapping, giving allocators confidence in both entry and exit. This combination of higher-quality underlying assets and improved secondary market liquidity has made Structured Products far more accessible to capital allocators than in prior cycles. 

Onchain credit’s growth can be primarily accredited to Maple and Clearpool. Maple’s syrupUSDC vault has been the breakout product of 2025, growing from launch to over $2.4 billion AUM in less than a year. Its appeal lies in its permissionlessness, as well as its ability to pair competitive yield with instant withdrawal liquidity via Uniswap and Balancer pools, solving one of the historic bottlenecks of onchain credit. Clearpool has also expanded its whitelisted borrower base, onboarding new institutional credit counterparties, while NFT-backed credit platforms like Gondi have carved out niche but fast-growing segments, diversifying the category’s borrower profiles and collateral types.

Fees and Performance 

Measuring whether onchain asset management can truly compete with, and outperform, its traditional finance counterparts requires more than anecdotes about yield opportunities or cost efficiency. In this section, we aggregate the fees and performance analysis conducted in the above strategy section, to make a complete comparison. 

As aforementioned, to produce this analysis we identified the top three vaults by AUM for each protocol in our dataset, then calculated the weighted-average APY at the strategy level. This ensures that each figure reflects the products actually attracting the most capital, rather than niche or experimental vaults. The strategy pairings with their traditional finance equivalents are consistent with earlier references in the report.

The data shows that gross yields are generally higher onchain than in traditional finance, particularly in automated passive strategies and structured products. Discretionary strategies, meanwhile, deliver performance broadly in line with traditional hedge funds, demonstrating that onchain managers can compete with established players despite operating at smaller scale. The main area where onchain lags is credit, where traditional private credit funds deliver stronger gross and net performance, reflecting their maturity, underwriting depth, and scale.

Fees are a key differentiator here. Onchain passive strategies face the steepest fee drag, averaging 1.50% compared to just 0.08% for traditional equivalents, nearly a 20x gap. Even so, higher lending rates and programmatic reinvestment allow these vaults to maintain a net yield advantage of ~186 bps. Discretionary and credit strategies onchain benefit from leaner fee structures than their traditional peers. Hedge funds and private credit funds both carry layers of management and administrative costs, whereas onchain equivalents automate origination, servicing, and monitoring through smart contracts. Structured products are the exception, where onchain vaults charge significantly higher fees than option-income ETFs, which erodes their gross outperformance and leaves them slightly behind net of fees.

For allocators, the main takeaway is that onchain strategies remain competitive on a net basis across most categories, despite smaller scale and additional infrastructure risks. Automated yield vaults illustrate both the challenge and opportunity of fees, with current levels acting as a drag but likely to compress over time. Discretionary vaults show how composability and speed enable performance comparable to some of the world’s largest hedge funds. Credit strategies highlight the importance of underwriting maturity but also the structural edge of transparency and real-time settlement. Structured products, finally, demonstrate the trade-off between innovation and efficiency: they provide unique flexibility and composability, but at a higher cost.

Onchain asset management strategies can deliver net returns that rival or exceed traditional finance, while layering in unique advantages such as transparency, liquidity, and composability. The spread is tightening, but allocators seeking differentiated exposures will increasingly view onchain as a credible complement, so long as they’re able to get comfortable with some of the inherent risks and uncertainties. 

After a year of rapid expansion, onchain asset management enters the second half of 2025 from a position of strength. The acceleration in capital inflows over the past eight months has set a high base, with total AUM across the strategies we track more than doubling year-to-date. This forecast explores where that momentum could carry the market under three scenarios, namely bull, base, and bear, reflecting different combinations of macro conditions, digital asset market performance, and onchain-specific catalysts.

“Onchain vaults are seeing inflows of capital far faster than traditional digital asset funds. At the moment, onchain asset management is mainly yield-focused, but its liquidity, composability, and ease of transferability create a clear differentiation compared to offchain equivalents.” – Juan David Mendieta Villegas, CSO at Keyrock

Across all strategies in aggregate, the bull case projects AUM reaching $85.1 billion by the end of 2026, assuming YTD growth rates persist, supported by favourable macro conditions, sustained crypto market strength, and continued institutional adoption of onchain yield strategies. 

The base case sees a more moderate path to $64 billion. This case assumes a constant Compound Annual Growth Rate (CAGR) from 2022 onwards, which provides a more realistic scenario in a future where the recent exponential growth cools slightly. This CAGR rate is 56.4%. 

The bear case, at $41.6 billion, models a more challenging environment where market volatility, yield compression, or regulatory delays slow capital deployment. This sees the growth rate slow dramatically, although not into negative territory. This is a result of the majority of capital in onchain asset management being USD-denominated, so in dollar-terms it’s unlikely we’ll see AUM declines unless capital is fully withdrawn, even in bear markets. Even under the bear scenario, the market retains positive momentum.

Automated onchain yield strategies remain the largest segment across all scenarios, reflecting its role as the default entry point for both retail and institutional capital seeking onchain exposure. In the bull case, it climbs to $40.6 billion by EOY 2026, supported by deepening liquidity on decentralised exchanges, the continued rise of liquid staking derivatives, and integration into traditional portfolio strategies. Even in the bear case, automated onchain yield strategies still reach $27.3 billion, underscoring its resilience to market slowdowns.

Juan David notes that the early dominance of yield-focused products mirrors traditional money market funds but with a critical difference in that tokenisation allows them to integrate directly into other protocols, magnifying inflows. This reflects why even under the bear scenario, automated strategies remain resilient.

“Alpha strategies have not yet seen major growth in onchain asset management, but they are the predominant force in hedge funds. Bringing pure alpha onchain, alongside onchain fund-of-funds models, represents one of the most exciting frontiers for the next two years.” – Juan David Mendieta Villegas, CSO at Keyrock

Discretionary onchain strategies benefits most from a sustained risk-on environment, growing to $12.4 billion in the bull case as more sophisticated strategies attract capital from institutions and high-net-worth individuals looking for yield diversification. In the base case, discretionary onchain strategies end at $7.7 billion, and in the bear case at $4.8 billion, reflecting its greater sensitivity to volatility and drawdowns compared to more passive approaches.

Structured products emerge as a high-growth category, reaching $17.2 billion in the bull case as onchain options, vault strategies, and principal-protected products mature and win adoption from both crypto-native and Traditional Finance allocators. Base and bear cases see the segment at $14.5 billion and $9.8 billion respectively, with growth driven by innovations in risk-adjusted yield generation and tokenised note issuance.

Keyrock sees structured products as a bridge between passive yield and alpha-seeking strategies, particularly as tokenised fund-of-funds concepts gain traction. These could enable allocators to rotate seamlessly across onchain strategies, a capability not possible in traditional finance wrappers.

Onchain credit sees significant expansion in the bull case to $8.3 billion, fuelled by demand for undercollateralised lending, credit delegation, and the growing integration of real-world borrowers. In the base case, AUM reaches $7.4 billion, while in the bear case it holds at $4.7 billion, with performance closely tied to borrower quality and stablecoin liquidity conditions.

“We can mix asset management processes with DeFi technology to become the largest onchain-based asset manager. Our vision is tokenised funds and our own fund-of-funds protocol, with $1 billion in AUM across USD, BTC, and ETH strategies.” – Juan David Mendieta Villegas, CSO at Keyrock