GSR and Turtle Launch $100M Credit Underwriting Platform Hare to Address DeFi Credit Risks

Author: Alea Research

Compiled by Deep潮 TechFlow

DeepFlow Summary: DeFi makes every on-chain loan transparent, yet often obscures the offline credit risks behind the collateral. While custodial vaults display on-chain positions, the underlying collateral is typically a claim against off-chain fund managers or borrowers—hidden risks invisible to blockchain explorers. The collapse of Stream Finance’s xUSD in November 2025 demonstrated that even with perfectly functioning smart contracts, a default in off-chain credit can deliver a fatal blow to custodial vaults. To address this critical gap, market-making giant GSR, in partnership with the liquidity distribution network Turtle, has launched Hare, a credit underwriting platform backed by $100 million in funding, designed to fill this void with an institutional-grade underwriting framework. This article provides a comprehensive breakdown of Hare’s operational logic, business model, and the latest ecosystem landscape of custodial vaults.

DeFi makes every loan publicly visible, yet leaves the underlying creditworthiness behind the collateral unexamined. A curated vault can fully represent each position on-chain, but its collateral assets are often merely claims against off-chain fund managers or lending entities—information that blockchain explorers cannot display.

When xUSD experienced a depeg collapse in November 2025, the on-chain vault contract executed precisely as programmed, but its underlying credit safeguards completely failed. Hare, a new credit service launched in partnership by market-making giants GSR and Turtle, was designed specifically to underwrite this invisible layer of credit risk—including asset quality, counterparty creditworthiness, and the actual cash recoverable by depositors under extreme market stress.

Hare’s entry coincides with a period of explosive growth for the curator treasury. In the just-concluded third quarter of 2026, total deposits in the curator treasury increased by 28.0% to $8.96 billion. GSR has committed to providing $100 million in自有capital to support this business over the coming years, with GSR’s capital assuming risk ahead of external funds entering the treasury.

Key data highlights for the Q3 curated treasury include:

• The curation vault attracted $1.3 billion in new funds during the third quarter, more than triple the $394 million added in the second quarter. On a comparable basis, total curated deposits increased quarter-over-quarter by 28.0% to $8.96 billion (compared to just a 1.9% increase in the second quarter), with an additional $670 million in asset appreciation driven by higher token prices.

• Clear division of responsibilities: GSR provides initial capital, Hare handles institutional-grade underwriting, and Turtle is responsible for acquiring deposit clients. Hare’s operations begin with asset generation and structuring by asset issuers, while Turtle connects the treasury to a broad range of asset allocators.

• In its initial phase, Hare will launch two flagship vaults on Aave, targeting large-scale USD and gold holdings. The USD Earn vault aggregates major USD stablecoins into a single vault, designed specifically for large capital allocations; the Gold Earn vault accepts PAXG and PAXGy and will offer zero fees during its initial launch period.

• Based on a curator fee share rate of 6.8% for the third quarter and an average yield of 2.9%, a curator managing $1 billion in deposits earns approximately $2 million annually. The curator fee share rate slightly declined from 7.0% in the second quarter; among top curators with earnings exceeding $1 million, the fee share ranges from 1.2% at Gauntlet to 11.7% at Sentora.

Figure 1: Bridge chart showing changes in the curated treasury deposit from June 30, 2026, to September 30, 2026. The treasury started at $7 billion, with a net inflow of $1.3 billion in new funds, $569 million in interest income, and a $670 million increase from token price appreciation, resulting in a total ending size of $8.96 billion.

The launch of Hare marks GSR’s official entry into the curator lineup alongside market-making giants such as Wintermute, Galaxy, and Keyrock. Previously, Armitage, a subsidiary of Wintermute, launched on Morpho on May 19, with its deposit volume surging from $56.4 million to $131.5 million in the third quarter—an increase of 133%, far exceeding the industry’s average growth rate of 28%. Galaxy also launched a curated vault on Morpho on July 16 for its 2,400 institutional clients using Fireblocks, while Keyrock similarly manages a dedicated vault on Morpho.

Unlike competitors, Hare has chosen to heavily invest in the Aave ecosystem, personally underwriting the underlying assets it originates, while leveraging Turtle to precisely link each deposit to its corresponding distribution channel. The curation market is gradually becoming more open: as of June 30, Steakhouse, Sentora, and Gauntlet collectively controlled 74.7% of deposits, and in Q3 new funds, these three captured 64% of the share.

Figure 2: Top Earners by Curator in Q3 2026 (after interest deductions). Sentora leads with $461 million, Steakhouse attracts $347 million, K3 Capital attracts $181 million, Hyperithm attracts $148 million, RockawayX attracts $138 million, and Armitage, under Wintermute, attracts $74 million.

Aave is currently replicating Morpho’s modular curation approach by opening its doors to external, independent curators. In early October, the Aave DAO voted in favor of a proposal led by Sentora to implement an external curation Hub-Spoke framework, enabling it to independently manage collateral screening, risk parameters, interest rate curves, and oracle settings on Aave V4. This architecture bypasses the traditional, lengthy internal review process for risk providers within the DAO. On Aave, curation credit now directly depends on the curator’s own independent underwriting capability—exactly the core niche Hare is targeting.

Hare CEO Connor Milner defines their work as underwriting four layers of core risk: market risk, asset risk, smart contract risk, and counterparty risk. Hare assists issuers in bringing assets on-chain, structuring DeFi-compatible frameworks, and connecting them with capital allocators.

The USD Earn vault, Hare’s inaugural offering, consolidates all major USD stablecoins into a single pool and innovatively introduces a fixed-rate option to effectively mitigate the yield dilution that inevitably occurs as deposit volumes grow. The Gold Earn vault is exclusively available for PAXG and PAXGy, with Paxos Labs serving as the core strategic partner.

The mechanism of PAXGy vividly illustrates Hare’s original intent to build underwriting capacity. Paxos Labs launched this asset on September 24, generating commercial rental income by leasing the physical gold backing the tokens to refineries, jewelers, miners, and bullion market-making banks, and accumulating this income into PAXGy’s redemption value. However, PAXGy holders also directly assume the credit default risk of the gold lessees, and redemptions require passing through a vetting process with eligibility thresholds.

Hare’s layered liquidity mechanism is designed to scientifically price tenant credit and exit liquidity. Over the past year, PAXG’s circulating supply increased by 45% to approximately 435,000 troy ounces, while the gold price rose by 3% during the same period. This rapidly growing group of gold asset holders constitutes the core target audience for Gold Earn.

The vault's code faithfully records on-chain positions, but the credit backing these positions is often hosted off-chain. While every on-chain rule set by curators is fully transparent, the code has no way of knowing whether the entity issuing the collateral tokens is solvent.

On November 4, 2025, Stream Finance announced a suspension of withdrawals after its external fund manager disclosed losses of up to $93 million in assets, causing xUSD to sharply depeg within hours. The curated lending markets on Morpho and Euler, which accepted xUSD as collateral, suffered severe impacts. Although all smart contracts across protocols executed flawlessly, the full burden of systemic defaults ultimately fell on innocent depositors in the treasuries. This collapse originated at the fund manager level and was entirely outside the scope of all smart contracts previously audited by the curators.

Hare is dedicated to cutting through this gray area in underwriting. For each curated vault, Hare conducts rigorous liquidity stress test modeling to clearly reveal to asset allocators the exit timeline under extreme stress: how much liquidity can be withdrawn immediately, how much will be available after delays such as T+7, and how much requires a longer period to be recovered.

Connor Milner believes that DeFi lending is giving rise to an entirely new business model akin to traditional investment banks. GSR, which has been deeply involved in crypto market making since 2013, spent $57 million in March to acquire the consulting firms Autonomous and Architech, aiming to become a one-stop capital markets partner in the crypto space; previously, in October 2025, GSR reached an agreement to acquire a U.S. broker-dealer regulated by FINRA. The launch of Hare completes this ecosystem’s credit trading desk, bringing with it a network of over 110 institutional counterparties.

As a distribution partner, Turtle’s channel network encompasses self-custody wallets, centralized exchanges, and digital neobanks. Each deposit into the vault is uniquely tagged with the distributor’s专属 ID; as long as the deposit remains in the vault, the distributor continues to earn a share of the revenue, while the vault protocol that initiated the asset pays the channel fees for these net deposits.

In addition, Aave is closely collaborating with GSR to develop the vault infrastructure and curation mechanism, with Chainlink providing dedicated data sources and oracle price feeds, and Hypernative handling 24/7 security monitoring.

In terms of business model, curators rely on an extremely small cut of the treasury’s earnings to sustain themselves. In the third quarter of 2026, the curator treasury generated $56.9 million in interest income for depositors and curators combined, with curators retaining $3.9 million, resulting in an overall take rate of 6.8%, a slight decline from 7.0% in the second quarter.

Figure 3: Allocation of interest earnings per $100 in the curated vault for Q3 2026. Across the industry, depositors receive $93.17, while curators take $6.83; of this, Sentora takes as much as $11.73, whereas Gauntlet takes only $1.19.

Based on an average revenue share of 6.8% and an annualized composite treasury yield of 2.9% in the third quarter, a curator managing $100 million in assets would earn approximately $2 million annually, while a curator managing a $1 billion treasury would earn about $20 million per year. If market conditions improve and the composite annual yield rises to 5%, the curator’s earnings from a $1 billion treasury would increase to $34 million; if the curator’s revenue share increases to 20%, their annual income would reach $58 million.

Milner compared Hare with two other curation models on the market: one resembling the hedge fund model that chases performance fees, and another being a mining model that simply earns project token subsidies and liquidity rewards by deploying stablecoins. Hare places asset issuance and underwriting at its core, with asset issuers covering listing and distribution costs, as Turtle charges fees to the protocols that receive deposits.

Once Hare officially announces its liquidity tiering framework, it will establish a new standard of transparency for the entire institutional DeFi allocation space, one that can be uniformly demanded by all curators. The commercial credit of PAXGy’s lessees will become the first real-world case study for pricing within this system.

The curated vault has successfully addressed the first phase of challenges surrounding on-chain custody and position transparency. Meanwhile, the next generation of institutional infrastructure, exemplified by Hare, aims to reprice the underlying credit behind wrapped assets: GSR’s initial $100 million commitment will serve as the foundational capital in the vault, while Turtle’s extensive distribution network will fully connect with global capital allocators to jointly advance the maturation of DeFi credit.