Crypto's Yield Revolution Just Hit $400 Billion—And Traditional Finance Is 5 Years Behind

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The gap between how crypto and traditional finance generate yield has grown so massive that it represents one of the most compelling investment opportunities in digital assets—yet the infrastructure to support it safely is only now catching up.

Yield-bearing assets in crypto have reached approximately $300 billion to $400 billion in market capitalization, but that figure represents just 8% to 11% of the total $3.55 trillion crypto market, according to a Nov. 12 report by decentralized oracle network RedStone. In stark contrast, yield-generating instruments like bonds and dividend-paying equities comprise 55% to 65% of investable capital in traditional financial markets, which total roughly $141 trillion in bonds alone.

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That disparity suggests crypto’s yield infrastructure is underdeveloped by a factor of five to six times compared to traditional finance, according to RedStone.

The Regulatory Green Light That Changed Everything

The catalyst driving current adoption isn’t technological innovation—it’s regulatory clarity. The GENIUS Act has been called “the most important event for this industry since the Bitcoin whitepaper,” according to the RedStone report.

This regulatory framework has dissolved the legal uncertainties that previously kept traditional financial institutions cautious about entering crypto markets. The result has been explosive growth in yield-bearing stablecoins, with market capitalization surging 300% year-over-year, the report said.

Stablecoins remain the dominant real-world asset class in crypto, representing 90% of all tokenized assets. Tether’s USDT leads with $180 billion in supply, followed by Circle’s (NYSE:CRCL) USDC at $75 billion, according to the report.

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From Idle Capital to Productive Assets

The structural shift in crypto markets has made yield-generating versions of major assets the new default standard. Liquid-staked Ethereum has grown from approximately 6 million ETH in early 2023 to more than 16 million by November, adding $34 billion in notional value, the report said.

Products like Lido’s wstETH and Rocketpool’s rETH solved a critical problem: allowing staked capital to remain liquid while earning rewards. Liquid restaking tokens from protocols like Ether.fi and Renzo have layered additional complexity, enabling staked ETH to secure multiple networks simultaneously and earn multiple yield streams.

Even Bitcoin, which resisted yield mechanisms for a decade, has developed infrastructure through the Babylon Protocol, which introduced native Bitcoin staking. This allows BTC to secure proof-of-stake chains without being wrapped, accumulating roughly $6 billion in total value locked, according to RedStone.

Wall Street’s Tokenization Push

Traditional institutions are accelerating tokenization efforts because onchain finance offers fundamentally superior capital efficiency, the report said. The onchain real-world asset market has surged from roughly $5 billion to $10 billion in 2022 to over $36 billion by November, with a 260% surge in the first half of 2025 alone.

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Beyond stablecoins, private credit and U.S. Treasuries are leading capital inflows across all tokenized asset categories. Major asset managers including BlackRock’s (NYSE:BLK) BUIDL and VanEck’s VBILL are moving tokenized U.S. Treasuries directly onto public blockchains, according to the report.

Perhaps most significantly, the Canton Network is processing over $350 billion in U.S. Treasury repo transactions daily and hosts over $6 trillion in tokenized assets for over 400 major institutions, including Goldman Sachs (NYSE:GS), the DTCC and Circle, the report said.

The Risk Infrastructure Gap

The rapid growth in yield-bearing assets has created a critical need for institutional-grade risk evaluation frameworks. Institutions accustomed to relying on established rating agencies in traditional finance currently lack tools to independently evaluate complex onchain risks, according to RedStone.

The complexity of yield-bearing assets requires structural curation, including isolated collateral architecture and differentiated loan-to-value ratios to prevent risk contagion and ensure safe scaling. As RedStone said in the report, curation is “not as a brake on DeFi, but as the mechanism that allows productive capital to scale safely.”

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This article Crypto's Yield Revolution Just Hit $400 Billion—And Traditional Finance Is 5 Years Behind originally appeared on Benzinga.com