Tiger Research: DeFi Risk Operators Emerge as Key Players, $70B Market Gap from $147T in Traditional Assets

This report is prepared by Tiger Research. In the decentralized finance lending space, decision-making power is gradually shifting from project protocols to professional entities that control risk management. The fundamental choice for market entrants has been reduced to one of three options: leveraging others' analytical capabilities, exporting your own analytical capabilities, or building and controlling your own analytical capabilities.

• The decentralized finance sector is giving rise to entirely new asset management roles, marking the end of an era where protocols and community governance fully dominated the industry.
• The sector is still in its early stages, but capital flows and channel resources are rapidly converging toward leading risk management teams, whose past operational performance has become the core benchmark for institutional entry.
• The three existing entry paths in the industry are: channel distribution (with an operational team providing backend support), asset supply (tokenizing offline assets), and self-operation (building an in-house team to act as the risk operator).
• The entry path directly determines the subject's influence, required core capabilities, and potential risks assumed.
• The industry's critical decision is not whether to enter decentralized finance, but how to allocate responsibilities: which risk management decisions to outsource and which core authorities to retain internally.

Traditional finance has long separated decision-making and trading execution responsibilities. As the crypto market becomes increasingly mature, specialized functions have now evolved into dedicated professional operating entities.

Traditional financial functional specialization

• Asset Manager: The central decision-making body for fund operations, responsible for formulating overall investment strategies and issuing specific execution instructions to the asset custodian.
• Asset Custodian: Responsible for holding and safeguarding assets, executing investment operations strictly in accordance with the manager’s instructions, and continuously monitoring asset security.
• Channel distributors: Sell fund products to investors to complete market fundraising and capital aggregation.

The cryptocurrency industry has evolved a corresponding functional system. Early decentralized finance relied entirely on smart contracts, but market practice has shown that code alone cannot comprehensively mitigate all on-chain risks. To ensure the smooth implementation of on-chain lending, a group of specialized professionals focused on complex risk assessment and coordinated resource allocation has emerged—known as risk operators—who have formally taken on the role of asset managers within the on-chain ecosystem.

Early-generation decentralized lending protocols such as Aave and Compound tightly integrated their lending infrastructure with risk control standards into a unified architecture. Although risk management professionals already existed at the time, all assets across the network were consolidated into a single liquidity pool, limiting these professionals to acting as global risk administrators for the protocol—capable only of fine-tuning overall risk parameters. When high-volatility assets entered the pool, the single-pool structure easily triggered risk contagion, causing losses from a single poor-quality asset to rapidly spread throughout the ecosystem. The industry urgently needed dedicated personnel to manage such cascading risks.

Until Morpho’s emergence, the industry landscape was completely transformed. The project separates collateral types and loan durations into independent trading markets, replacing traditional single-pool structures with a modular multi-custody architecture, fundamentally redefining asset operations and radically transforming the role of risk managers. Practitioners are no longer confined to passive risk management within fixed protocol frameworks; external professional teams can now autonomously design risk rules and independently build and operate dedicated lending vaults. With the complete separation of underlying infrastructure and risk assessment authority, risk managers have officially transitioned from protocol-wide risk overseers to professional asset operators in the crypto market, independently managing multiple lending vaults.

As of May 2026, the global risk-managed trading sector manages approximately $7 billion in assets, with the top three teams accounting for 70% of the market share. This sector only entered its explosive growth phase in 2025, and capital is now rapidly consolidating around proven teams, with strong investor preference for operators demonstrating mature, track-record performance.

The three leading teams have entered the space through different paths:

1. Steakhouse: A risk-managed trading institution specializing in stable, conservative strategies, and a pioneer in compliantly tokenizing high-quality real-world assets such as U.S. Treasuries for collateral. As the exclusive backend risk partner for Coinbase’s lending business, Steakhouse leverages top-tier distribution channels. As of February 2026, it manages $1.53 billion in assets—the largest in the industry—and leads the establishment of准入 standards for real-world assets eligible as compliant collateral in the DeFi ecosystem.
2. Sentora: Built on an AI-driven risk management model and an institutional-grade data system, it is deeply integrated with Kraken Exchange as its backend service provider, establishing a secure channel for institutional capital inflow. With assets under management of $1.34 billion, it ranks second in the industry, focusing on connecting the fund flow between exchanges and institutional clients.
3. Gauntlet: A seasoned on-chain quantitative risk modeling firm specializing in simulating various market risk parameters. In October 2025, it successfully handled an inflow of $775 million, restoring abnormal annualized returns within just 10 days—demonstrating industry-recognized expertise in large-capital risk management and crisis response. Currently managing $1.29 billion in assets, Gauntlet is widely regarded as the industry benchmark for stabilizing markets during large capital inflows.

At this stage, competition in the sector has long moved beyond mere asset size comparisons, with the key battlegrounds now shifting to three core barriers: collateral admission standards, capital distribution channels, and emergency risk response capabilities.

With Morpho completing the modular separation of its market components, each category of collateral asset now requires independent analysis and management by specialized teams. Professional risk management teams such as Steakhouse have consequently entered the space as dedicated DeFi risk operators, gradually aligning decentralized finance operations with traditional, mature asset management processes.

From top to bottom, it is clear that the current DeFi infrastructure has fully replicated the entire workflow division system of traditional finance:

1. Top-tier fundraising and distribution: Institutional investors serve as the primary source of capital, with vast amounts of funds flowing into the on-chain ecosystem through major centralized exchanges and integrated service platforms, fulfilling the roles of traditional financial brokers and capital distribution channels.
2. Mid-level strategy formulation and risk management: DeFi risk traders oversee the planning of capital operation models, establishing asset entry criteria and position limits by benchmarking against traditional asset management portfolio managers and risk committees, and building an overall capital operation strategy.
3. Underlying Product Development and Asset Custody: Leveraging the treasury as a vehicle, trading strategies are transformed into on-chain financial products available for external investment; the foundational lending protocol handles asset storage and on-chain settlement execution, fulfilling the functions of traditional financial asset custody and transaction clearing infrastructure.

From fundraising and strategy management to asset custody and settlement, the entire operational process has been fully aligned with the mature traditional financial system. For traditional financial institutions, on-chain lending is no longer an unfamiliar emerging sector, but a standardized market with clear logic and a well-developed framework, significantly lowering the entry barrier for institutions.

After on-chain lending has completed the functional decomposition characteristic of traditional asset management, it has officially opened its doors to various institutions; however, entry barriers vary significantly across different levels of the sector:

• Distribution Channel Layer: Directly targeting end-user markets, leading crypto institutions have already achieved market dominance, making direct competition with traditional financial institutions highly uncompetitive.
• Strategy Management: The core competition lies in financial expertise and professional talent reserves, with asset risk assessment, control, and product packaging being the traditional core businesses of asset management. There is no need to develop complex underlying technical systems; by leveraging mature, modular infrastructure to implement your own risk management system, you can quickly establish a stable and profitable business model, making it the optimal entry pathway.
• Asset custody and infrastructure layer: Focuses on the practical application of blockchain technology research and development, representing a highly technology-intensive field with extremely high requirements for underlying public chain development capabilities; it is very difficult for traditional financial institutions to independently build systems to enter this space.

Compared to other sectors that rely on traffic resources and underlying technology, the strategy management and risk control layer has the lowest entry barrier; traditional financial institutions can quickly seize market leadership by leveraging their own mature risk control systems, developed over many years.

Currently, institutions entering DeFi primarily adopt three main models; regardless of the chosen path, the core competitive advantage of the sector remains the professional risk management and analytical capabilities of the trading team.

5.1 Channel Distribution Model: Leverage Professional Teams for Backend Support

Leveraging a mature external risk management team as a backend service to rapidly capture market share, this model is tailored for exchanges and fintech platforms with massive user traffic but lacking in-house on-chain risk operation capabilities. Under this model, investment strategies are fully outsourced, yet the platform retains full responsibility for brand reputation risks and business accountability risks introduced by the partner team. Centralized exchanges possessing terminal traffic but unwilling to independently develop complex on-chain lending risk management systems commonly adopt this approach: integrating reputable, compliant external risk teams as backend partners to launch lending services. The platform handles traffic acquisition and large-scale capital inflow, while all collateral review and end-to-end risk management are fully delegated to the partnered risk operations team.

5.2 Asset Supply Model: Compliance-Driven On-Chain Integration of High-Quality Offline Assets

Asset management institutions holding high-quality underlying assets such as real-world assets and credit instruments can directly channel their existing assets into on-chain markets. Taking Apollo as an example, institutions not only supply their assets to the blockchain but also position themselves in governance tokens of leading lending protocols, actively participating in shaping industry collateral admission standards tailored to their own assets. The core challenge of this model lies in achieving standardized, compliant asset structuring and establishing a robust regulatory infrastructure to support it. Large private equity firms and physical asset holders can directly connect their existing high-quality assets to on-chain financial channels. Apollo goes beyond mere asset supply by increasing its holdings in governance tokens of top-tier lending protocols and deeply engaging in the formulation of industry rules, aiming to make its offline assets recognized as official, compliant collateral with higher market acceptance and higher risk-preference rankings. However, asset providers cannot arbitrarily include any asset as collateral; the market requires independent third-party verification to objectively validate the true security of assets and confirm their ability to be swiftly and fully liquidated in on-chain settlement scenarios. This process relies heavily on rigorous qualification reviews and credit endorsements by professional risk management teams. Ultimately, the sustainable implementation of asset supply models still depends on the asset management institutions’ own expertise in risk assessment and verification.

5.3 Self-Operated Model: Building an In-House Team to Serve as the Risk Management and Trading Operator (Representative Institution: Bitwise)

Asset management firms independently develop investment strategies and build and operate their own on-chain vaults. Bitwise was the first to define the on-chain vault as a Version 2.0 exchange-traded fund, formally entering the space with deep commitment. This model grants the firm full autonomy over fee pricing and collateral eligibility criteria, but the institution bears full responsibility for all risks and losses arising from operations—making it ideal for large asset managers with established in-house risk management teams. Traditional asset managers that sever reliance on external platforms and directly transition into independent risk operators exemplify this model. Leveraging its mature asset portfolio infrastructure and risk management systems, Bitwise has independently designed and fully controls the operation of its on-chain vault, directly generating stable management fees on-chain.

From the perspective of industry trends, as the on-chain lending ecosystem continues to mature, traditional large asset management institutions hold the strongest competitive advantage for entering the market. After the DeFi ecosystem has undergone modular functional decomposition, the core market demand has shifted: the industry no longer lacks smart contract development talent, but instead urgently needs professional financial capabilities such as collateral due diligence, risk limit setting, and other practices refined over decades in traditional finance. The decades of hands-on risk management expertise accumulated by traditional asset management institutions can be seamlessly adapted and migrated to on-chain financial scenarios.

However, at this stage, the overall market size of DeFi is still insufficient to accommodate direct large-scale entry by global top-tier institutional asset managers: the total size of the global traditional asset management industry is as high as $147 trillion, with BlackRock alone managing assets of $14 trillion; in contrast, the total market size of the entire crypto DeFi sector is only $80 billion, with the risk-managed sub-segment accounting for just $7 billion—less than one two-thousandth of BlackRock’s managed assets.

The significant disparity in scale underscores the enormous growth potential of this sector. Institutional capital has always prioritized risk management, entering only mature markets with robust risk control systems. Once a secure and stable on-chain fund transfer system is established by risk management teams, and a supporting regulatory framework is implemented, the industry will undergo a qualitative transformation. Even a small fraction of the $14.7 trillion traditional asset management market could rapidly trigger explosive growth in the $80 billion DeFi market.

Many industry benefits exist only during the early stages of a sector’s development. Currently, there are only a handful of top-tier risk management teams globally. Institutional large-scale entry urgently requires well-established and mature industry operating rules; the team that first builds the underlying operational framework will firmly control the主导权 of setting industry standards. Later entrants may benefit from a more refined and risk-controlled market environment, but they can only participate in market competition under established rules, missing out on the core influence and first-mover advantages of early positioning.