Institutions warm to ‘invisible DeFi’ as crypto-native yield platforms mature, Artemis report finds

Crypto research firm Artemis and DeFi project Vaults say that there is growing “institutional appetite” for onchain yield, in a report published on Wednesday. The interest is accompanied by an emerging trend of "invisible DeFi," where protocols successfully “abstract” away complexity, opening access beyond just crypto-natives.

“The data shows DeFi is becoming backend infrastructure for mainstream finance while users don't even realize they're using it,” Ryan Rodenbaugh, co-founder of Vaults, told The Block in a direct message. 

“By abstracting DeFi’s complexity, these platforms can embed yield directly into their user experience, enhancing retention, opening new monetization avenues, and improving capital efficiency,” Artemis writes. 

The report's overview of the sector encompasses everything from the rise of crypto-native asset managers to white-gloved permissioned markets, as well as aggregator protocols and yield-bearing stablecoins, all of which are experiencing growth, particularly amid a thawing regulatory environment in the U.S.

Perhaps the most visible example of “invisible DeFi” is the partnership between Coinbase and the decentralized lending protocol Morpho, which powers the exchange’s credit operation, where users deposit bitcoin to receive USDC. 

As of June 2025, over $300 million worth of loans have been originated, according to Artemis, indicating that Coinbase has found a winning model for bringing actual bitcoin holders into onchain credit markets. 

This growth isn’t just limited to centralized players. As of June 2025, the total value locked in leading collateralized lending platforms, including Aave, Spark, and Morpho, climbed to over $50 billion, according to the report. 

These platforms offered 30-day lending yields on USDC ranging from 4% to 9%, according to the report, “broadly at or above traditional benchmarks,” such as the three-month U.S. Treasury bills, which returned around 4.3% over the same period.

Rodenbaugh also pointed to the growth of crypto-native asset managers and curators, such as Gauntlet and Steakhouse Financial. This sector has seen its assets under management spike to $4 billion from $1 billion in January, another sign of a maturing sector.

“These managers are deeply embedded in the onchain ecosystem, quietly deploying capital across a diverse range of opportunities, including advanced stablecoin strategies,” the authors note.

Crypto-native asset managers deploy “professional capital allocation frameworks” and operate using robust “risk parameters,” thereby “positioning themselves to compete as the leading money managers of the next generation.”

Similarly, Euler, Morpho, and Aave’s white-listed permissioned markets are “deliberate efforts to meet institutional needs” that appear to be paying off. “Institutional sentiment is moving towards seeing DeFi as a complementary, configurable financial layer – not merely a disruptive, ungoverned space,” the authors wrote. 

“DeFi is increasingly being leveraged not just by crypto-native individuals but also by fintechs, wallets, and exchanges as 'invisible' backend infrastructure,” the authors wrote. “By abstracting DeFi’s complexity, these platforms can embed yield directly into their user experience, enhancing retention, opening new monetization avenues, and improving capital efficiency.”