DeFi lending is shifting from collateral-based lending (crypto-native) → cash flow-based credit (real-world loans) The research from @Solofunk makes this explicit. Why is this transition necessary for DeFi? DeFi today acts as a leverage engine. You deposit $150 → borrow $100 → loop → farm yield Through all these, no new capital is actually created. For example, though @aave has ~$14B TVL, most of it is leverage loops, arbitrage flow, and delta-neutral strategies, not real credit formation. DeFi yield is structurally mispriced. With smart contract, oracle, and liquidation risk, base yields should clear >12.5%, as @dunleavy89 outlined in his recent article. Instead, they’re pricing below the risk-free rate. That gap exists because DeFi lacks access to real yield. This is where DeFi x TradFi starts to matter. Tokenized credit is already scaling on-chain, with ~$21B+ in represented assets: > @Figure + @HastraFi have originated $16B+ in HELOCs (Home Equity Line of Credit), with $610M deposits in 4 months and $6.5M+ interest distributed. > @kamino RWA has scaled to ~$1.3B, with $PRIME at ~$600M and yields in the ~7–10% range. This is the convergence of DeFi and Tradfi. DeFi → capital allocator TradFi → credit originator RWAs → core collateral layer Yield → sourced from real economic activity DeFi is becoming a distribution layer for real-world credit. (Data: @RWA_xyz)