Onchain Dollar-Yield Buyers Are Crypto-Native, Not Banks, Arrakis Finds

Onchain Dollar-Yield Buyers Are Crypto-Native, Not Banks, Arrakis Finds

Custom Image

Crypto-Native Capital Dominates Onchain Dollar-Yield Demand

Arrakis Finance published a detailed on-chain forensic study in July 2026 that examined 71,697 buyers and $91.3 billion in gross acquisitions across ten tokenized dollar-yield products, using Ethena’s sUSDe as a benchmark. The research classified demand by buyer type, wallet size, acquisition path, geography, and funding origin. Of the $12.4 billion that could be attributed to a named category, every dollar proved crypto-native. Protocol and DAO treasuries accounted for roughly two-thirds of that attributed volume. The remainder came from individuals, exchanges, market makers, and crypto funds.
 
Not a single dollar was traced to a pension fund, traditional asset manager, bank, or other conventional finance allocator on the allocation side. The study arrives at a clear thesis: the buyers of on-chain dollar-yielding real-world assets are already operating inside the crypto ecosystem. Tokenized treasuries, private credit, and crypto-native yield products are primarily serving protocol treasuries, DAO balance sheets, and specialized crypto funds rather than traditional institutions seeking new yield channels. This concentration of demand among crypto-native capital shapes product design, liquidity needs, retention patterns, and the next phase of market development.

Protocol and DAO Treasuries Supply Two-Thirds of Attributed Demand

Arrakis was able to attach a buyer-type label to approximately $12.4 billion of the observed demand. Within that subset, protocol and DAO treasuries supplied 66 percent. The residual share was divided among individual wallets, exchange desks, market makers, and crypto funds. The complete absence of identifiable traditional-finance institutions on the allocation side is the most striking finding. Issuers of tokenized yield products are therefore selling primarily to entities that already hold capital on-chain and prefer instruments that settle, custody, and redeem without leaving the blockchain environment.
 
This composition carries direct implications for product strategy. Crypto-native treasuries and funds face idle stablecoin balances that generate zero return until deployed. Onchain dollar-yield instruments solve that problem without requiring an exit to traditional prime-broker channels. Settlement, attestation, and redemption occur on public chains, reducing operational friction relative to offchain alternatives. The capital is therefore sticky within the DeFi stack, yet it remains specialized rather than representative of broad institutional balance sheets. Design choices that prioritize primary subscription mechanics, transparent reporting, and predictable redemption windows align more closely with the observed buyer set than features aimed at pension-fund compliance workflows.

Four Percent of Wallets Control Ninety-Three Percent of Capital

Institutional-scale buyers, defined as wallets deploying at least $1 million, represent only about 4 percent of the 71,697 addresses yet hold roughly 93 percent of the capital across the products studied. A core group of 2,586 such wallets accounts for more than 90 percent of nominal purchase volume. Retail participation appears mainly as head-count. In products such as Ondo’s USDY, retail wallets can exceed 95 percent of the buyer list while contributing under 1 percent of total value. Ethena’s sUSDe shows the highest retail share, yet even there retail capital remains a minority of acquired notional.
 
The concentration means a small number of large limited partners determine the success or failure of any given tokenized yield book. Issuers must therefore structure primary processes, custody arrangements, and ongoing reporting around the operational preferences of these sizeable allocators. Marketing aimed at a broad retail audience produces limited capital impact. The data also show that the largest individual tickets flow toward products that most closely resemble traditional credit or Treasury instruments. Centrifuge’s JAAA recorded a median institutional acquisition of approximately $29.1 million, nearly three times the next-largest product in the sample. Ticket size rises with the degree to which the asset mirrors familiar offchain credit characteristics.

Primary Subscription Dominates Acquisition Paths

More than 93 percent of the RWA volume examined originated through primary subscription rather than secondary-market purchase. Genuine open-market buying on decentralized exchanges accounted for less than 6 percent overall. Only sUSDe exhibited meaningful secondary activity, with roughly 55 percent of its acquisitions occurring via DEX routes. The remaining products function largely as subscription vehicles whose tokens then sit in spot holdings or limited collateral positions.
 
The thin secondary market constrains composability. Without continuous pricing and deep exit liquidity, the tokens cannot readily serve as collateral across lending protocols or structured products at scale. Primary issuance has already demonstrated the ability to attract billions in capital. Secondary depth remains the principal gap that prevents these instruments from becoming fully integrated components of onchain finance. Issuers that solve for reliable, NAV-aligned secondary liquidity stand to convert subscription products into assets that can be leveraged, hedged, and transferred more freely.

EMEA and APAC Hours Account for Over Eighty Percent of Activity

When significant allocators are strategically assigned to the eight-hour window during which they engage in transactions most frequently, it becomes evident that Europe, the Middle East, and Africa collectively capture a substantial 42 percent of the total buyers in the market. In contrast, the Asia-Pacific region secures a noteworthy 40 percent of buyers, while the Americas account for a mere 18 percent of the total. This geographic distribution of activity hours strongly suggests that a considerable share of the capital flowing into these markets originates from non-US investors. For these investors, onchain access to US credit and Treasury exposure is particularly attractive and advantageous.
 
Consequently, business development, coverage, and support functions that strategically concentrate their resources around the European and Asian time zones align more closely with the observed operating patterns than a traditional US-centric approach would. This same pattern further reinforces the crypto-native character of the buyer base. Wallets that are primarily active outside of conventional US market hours are consistent with the profiles of offshore crypto funds, foundation treasuries, and family offices. These entities are typically less aligned with the interests of regulated US pension funds or mutual-fund allocators, highlighting a distinct divergence in market participation.

Stablecoin Rails Concentrate Heavily in USDC

Approximately 80 percent of the total product notional, which translates to around $17.4 billion, was settled in USDC. The remaining portion, which is primarily accounted for by USDT, amounted to approximately $4.4 billion, with nearly all of this sum flowing into Maple’s syrupUSDT product. When the same issuer provides parallel versions of an identical strategy in both USDC and USDT, it is observed that the USDC tranche tends to attract not only a larger total volume but also a significantly broader base of buyers. In contrast, the USDT version primarily serves to re-denominate demand that is already present in the USDC product, rather than effectively expanding the overall set of participants involved in the market.
 
As a result, issuers are faced with a distinct preference hierarchy when it comes to the choice of stablecoin. By denominating first in USDC, they can maximize their reach and impact, as this particular stablecoin currently underpins the deepest decentralized exchange (DEX) markets and looping ecosystems that are utilized for these financial instruments. On the other hand, parallel offerings in USDT can cater to existing holders who have a preference for that specific unit; however, they appear to be less effective at attracting additional incremental capital into the market.

Buyer Wallets Are Predominantly Fresh Capital from 2024

Both retail and institutional cohorts exhibit a median first-activity date that is notably concentrated around the middle of the year 2024. A striking observation is that very few wallets can be traced back to a time before the year 2021. Consequently, the capital that is currently flowing into these products does not represent a rotation of legacy crypto wealth that has been accumulated from earlier investments in Bitcoin or Ether into safer yield-generating opportunities. Instead, this capital influx is arriving through wallets that have been purposefully built and designed by specialized allocators who are deeply entrenched in the crypto-native ecosystem.
 
This freshness of capital has several practical implications that are worth noting. The buyers who are entering the market now are significantly less likely to be burdened by legacy operational constraints or outdated risk management frameworks that may have hindered previous market participants. They are more inclined to assess products based on pure on-chain criteria, which include factors such as smart-contract risk, the speed of redemption, and the availability of secondary liquidity. As a result, product roadmaps that prioritize these critical dimensions over traditional fund-administration features are likely to align more effectively with the capital that has been observed in the current market landscape.

Leverage Remains Limited and Market-Gated

Most of the examined products currently exhibit a notable absence of active decentralized finance (DeFi) lending markets. In instances where borrowing markets do exist, the level of utilization has generally experienced a decline from earlier peaks that were observed in the market. However, there are exceptions to this trend, such as certain offerings from Maple and FalconX, which have managed to maintain more stable borrowing levels compared to their counterparts. The usage of leverage remains low and tends to be short-lived, primarily constrained by the limited availability of secondary liquidity and the risk preferences exhibited by the dominant institutional wallets that are active in the space.
 
This restrained leverage profile plays a significant role in reducing systemic risk within the current market structure. However, it also imposes limitations on the total addressable demand that can be tapped into. Traditional asset managers, who already have access to comparable yields in offchain environments, see little incentive to accept the inherent risks associated with smart contracts when they can achieve identical returns without such exposure. This calculus regarding risk and return only shifts when onchain composability enables the possibility of meaningful leverage or other structured enhancements that cannot be easily replicated in offchain environments.

Retention Favours Tokenized TradFi Credit Over Crypto-Native Carry

Tokenized traditional-finance credit products have demonstrated a remarkable retention rate, with approximately 68 percent of their buyers remaining engaged after a full year of investment. In comparison, tokenized treasuries have managed to retain about 60 percent of their purchasers. On the other hand, crypto-native credit and carry products have shown a significantly lower retention rate, with only 28 percent of their buyers continuing to hold these assets. This notable differential in retention rates suggests that products whose underlying risk and return profiles closely resemble those of familiar and traditional credit instruments tend to generate a higher level of stickiness among the institutional wallets that predominantly control capital in the market.
 
Issuers of these financial products can interpret the existing retention gap as a valuable signal, indicating the need to place greater emphasis on institutional-grade underwriting practices, transparent and comprehensive reporting, and predictable cash-flow characteristics that investors can rely upon. Products that primarily function as short-duration carry trades tend to experience a more rapid rotation of capital once alternative yields become available in the market, highlighting the dynamic nature of investor behavior in response to changing financial landscapes.

Funding Origins Trace Back to Exchanges and DeFi-Native Sources

Of the substantial total of $5.17 billion in institutional-scale capital that remains otherwise unattributed, a detailed analysis involving two hops of tracing has successfully resolved an impressive 78 percent of the overall volume. Among these funds, those sourced from exchanges accounted for a significant 40 percent, with Binance and Coinbase emerging as the largest identified origins of this capital influx. Capital that is native to decentralized finance (DeFi), which includes various named entities and market-maker desks, contributed a noteworthy 38 percent to the total. However, it is important to note that the remaining 22 percent of the capital has not been identified, leaving a gap in our understanding of its origins.
 
Even after conducting deeper tracing efforts, no verified traditional finance funder has been identified. This funding pattern strongly reinforces the core conclusion drawn from the analysis. It indicates that the capital that ultimately reaches these innovative financial products has already traversed through crypto-native rails, highlighting the interconnectedness of the crypto ecosystem. The noticeable absence of traditional institutional funding sources at the second hop of tracing serves to further distance the current buyer base from conventional asset-management channels, suggesting a significant shift in the landscape of capital flow within the financial markets.

Market Context Shows Tokenized RWAs Near $39 Billion Distributed Value

By late September and early October of the year 2026, the value of distributed on-chain Real World Assets (RWAs) that was meticulously tracked by major financial dashboards stood within the impressive range of $38 to $46 billion. This figure notably excludes stablecoins and varies depending on the specific methodology employed for the assessment. Within this landscape, US Treasuries and cash-equivalent products represent the largest category of assets, followed closely by private credit offerings and various yield strategies. The Arrakis sample, which consists of ten dollar-yield products, therefore occupies a significant position within a broader market that has experienced quick expansion, yet it remains concentrated among a limited set of issuers and types of buyers.
 
The ongoing growth in this sector continues to be primarily driven by the same crypto-native cohorts that were identified in the previous study. For broader participation from traditional institutional investors to materialize, there would need to be the development of deeper secondary markets, the establishment of clearer regulatory pathways for on-chain holdings, and the demonstration of leverage or composability advantages that would justify the inherent risks associated with smart contracts when compared to existing off-chain alternatives. This evolution is crucial for fostering a more inclusive and robust financial ecosystem that can accommodate a wider range of institutional participants.

Secondary Liquidity Remains the Principal Constraint on Further Adoption

The primary subscription model has demonstrated significant effectiveness in attracting substantial investments, often referred to as "large tickets," from institutions that are deeply rooted in the cryptocurrency space. However, a notable challenge persists: the almost complete lack of secondary trading activity. This absence hinders the tokens from being utilized as liquid collateral, which is essential for various financial operations, or from being incorporated into more intricate on-chain strategies that could enhance their utility and value. Addressing this issue by developing continuous, low-slippage secondary markets that are consistently aligned with the net asset value of the tokens would not only broaden the usable capital base but also significantly increase the pool of potential buyers interested in these assets.
 
Until such market depth is achieved, it is highly likely that the market will continue to be dominated by the same specialized crypto-native treasuries and funds that currently account for the overwhelming majority of demand in this space. Therefore, product roadmaps that prioritize secondary liquidity as a fundamental design requirement, rather than relegating it to a later-stage feature, are more likely to succeed in expanding the buyer set over time and fostering a more vibrant trading environment.

What Crypto-Native Demand Means for Issuers and Liquidity Providers

Issuers should strategically design their primary processes, reporting mechanisms, and support systems with a focus on a select group of large, crypto-native limited partners, rather than attempting to cater to a broad and diffuse retail audience. This approach should include denomination in USDC, a concentrated allocation of business-development resources during EMEA and APAC hours, and a strong emphasis on institutional-grade credit characteristics, all of which align with the data that has been observed in the market. Liquidity providers who are capable of maintaining deep, net asset value-aligned secondary markets for these financial instruments are addressing the most prominent and visible bottleneck that currently exists in this space.
 
The findings from Arrakis thus serve a dual purpose: they provide a snapshot of the current landscape of buyers and also act as a practical guide for the next stage of product development. The capital that is native to the cryptocurrency ecosystem has already shown a significant willingness to deploy tens of billions of dollars into tokenized dollar-yield instruments, indicating a robust interest in this area. However, expanding that capital base beyond the existing specialized cohort of investors hinges on effectively closing the secondary-liquidity gap and delivering composability features that traditional asset managers are unable to obtain through off-chain methods. This evolution is essential for fostering a more inclusive and dynamic financial ecosystem that can accommodate a wider range of institutional participants, ultimately enhancing the overall market ecosystem.

🔥 Beyond the Headlines: What KuCoin 5.0 Means for You

Market news moves fast — but where you act on it matters just as much. This October, KuCoin launches KuCoin 5.0, transforming KuCoin into a rebuilt platform. Here's what actually changes for you:
 
  • One account for everything. Older platforms split your money across separate "spot," "margin," and "futures" accounts and expected you to understand why. KuCoin 5.0's unified account removes that entirely — deposit once, and everything is simply there (only available to VIPs for now).
  • Stocks, indices, and commodities. KuCoin 5.0 expands beyond crypto into global markets. When crypto chops sideways and equities rally (or the reverse), you rotate in minutes instead of opening a brokerage account and waiting days for fiat rails.
  • Real-world assets (RWA). Tokenized exposure to traditional assets like commodities, right inside your crypto account. One of the fastest-growing segments in global finance is no longer reserved for institutions — you access it from the same balance you trade with.
  • Earn while you learn. Not ready to trade? KCUSD lets your stablecoins earn daily, auto-compounding interest. The lowest-stress way to put your idle deposit to work for 4% yield.
  • An AI assistant in plain language. Ask questions, get market context, understand what you're looking at — built into the platform, no jargon required.
  • An app that doesn't overwhelm. Faster, cleaner, and consistent — intuitive from the first tap, not after a tutorial.
  • Safety you can check, not just trust. A MiCAR-licensed EU entity, Proof of Reserves you can verify yourself, and internationally certified security (SOC 2 Type II, ISO 27001:2022).
 
Create your account in minutes — and start on the platform built for where crypto is going, not where it's been.

FAQs

What exactly did the Arrakis study measure across the ten products?

The analysis constructed a buyer ledger that traced each acquisition back to the wallet that actually paid, overcoming the obscuring effects of bundlers and intermediary contracts. It covered ten tokenized dollar-yield instruments plus Ethena’s sUSDe as a benchmark, recording 71,697 distinct buyers and $91.3 billion in gross acquisitions. Attribution by buyer type, size, path, geography, and funding origin produced the core findings on the absence of traditional-finance allocators and the dominance of protocol and DAO capital.
 

Why were no traditional banks or pension funds identified as buyers?

Large traditional managers already access comparable Treasury and credit yields through established off-chain channels. Accepting smart-contract risk for identical returns offers limited incremental benefit. Crypto-native funds and treasuries, by contrast, hold idle stablecoin balances that earn nothing until deployed onchain and therefore value instruments that remain inside the blockchain settlement and custody environment. The study’s two-hop funding traces further confirmed that even unlabelled institutional capital originated from exchanges and DeFi-native sources rather than traditional finance.
 

How concentrated is the capital among large wallets?

Wallets deploying $1 million or more constitute roughly 4 percent of the buyer population yet control about 93 percent of the capital. A group of 2,586 such wallets accounts for more than 90 percent of nominal volume. Retail participation is visible in head-count statistics but contributes only a small fraction of total value, with the highest retail share appearing in sUSDe while still remaining a minority of that product’s notional.
 

What role does USDC play in these acquisitions?

USDC funded approximately 80 percent of the observed notional, or $17.4 billion. USDT supplied most of the balance and was used almost exclusively for one specific product. Parallel offerings from the same issuer show that USDC attracts both larger volume and a broader set of participants, making it the default rail for maximizing reach among the current buyer base.
 

Are secondary markets expected to grow in the near term?

Secondary purchases currently represent less than 6 percent of volume for the pure RWA products. The thin secondary layer limits collateral use and composability. Issuers and liquidity providers that establish reliable, NAV-aligned secondary depth would remove the principal constraint identified in the research and potentially open the products to a wider set of participants.
 

How fresh is the capital entering these products?

Median wallet first-activity dates cluster in mid-2024 for both retail and institutional cohorts. Very few wallets predate 2021. The pattern indicates specialized crypto-native capital arriving through purpose-built addresses rather than legacy crypto wealth rotating into yield instruments.
 
Disclaimer: This content is for informational purposes only and does not constitute investment advice. Cryptocurrency investments carry risk. Please do your own research (DYOR).