Written by: Danny @IOSG

The intensity of DeFi activity has returned to levels close to DeFi Summer, but the supply of on-chain stablecoins continues to expand. This means that there is increasingly more money on-chain, while the product forms of DeFi remain difficult for a broader user base to understand, use, and distribute.

▲ DeFi TVL, Source: Defillama

▲ Stablecoin MC, Source: Defillama

In the past few years, the DeFi infrastructure has solved accessibility and composability, but it has become an extremely difficult game. For ordinary users, what seems like a simple stablecoin yield may be nested with lending spreads, multi-layer incentives (Funding/airdrops), structured products (Pendle), and leverage looping.

▲ USDE AAVE Pendle loop

The risks have long exceeded the scope of contracts being hacked, evolving into the magnification of LTV, liquidation liquidity, and oracle risks. For instance, in October 2025, due to a malfunctioning internal oracle at Binance, the price of USDe on its platform experienced a brief flash crash, triggering a chain of liquidations.

DeFi is experiencing a "counterintuitive" evolution: as technology matures (upward), the understanding costs and risk judgment difficulties for users rise (downward). When individuals can no longer identify "whose money they are earning" and "where the risks are," the growth of DeFi hits a ceiling.

The Curator exists to solve this distribution problem; there is no direct translation for it in Chinese, more akin to "strategist." As yield provision and risk pricing power shift from the protocol layer, the Curator has become a packaging layer that connects complex protocols with widespread capital.

In the system represented by Morpho, the protocol provides neutral infrastructure, while it is the Curator that decides which assets are available, the level of risk, and daily management. It assumes three core responsibilities:

The value of the Curator lies in their judgment of which yields are structural and which are merely temporary opportunities. Strategies are not set-and-forget; they need to be continuously adjusted as capital scales and risk exposures evolve. Even with the same USDC strategy, different Curators can yield vastly different results in extreme market conditions, with the essential difference being the ability to sustain judgment and dynamically contract leverage.

In a modular system, it is the Curator that truly determines risk exposure. Accepting what collateral, how high to leverage, all fundamentally come down to risk pricing. Curators hold the power of risk pricing rather than mere execution power. Even leading Curators can make mistakes, as seen with Re7 Labs, which, due to delayed price updates from its relied-on Pyth oracle, resulted in incorrect liquidations of user positions. This warns us: the greatest systemic risk in the current cycle arises from this.

For users, productization provides a single interface for entry/exit; for front ends (CEX/wallets), it offers non-custodial, clearly defined risk yield modules. It is not competing for protocol users but rather helping capital find understandable and bearable risk structures.

The Curator is a driven asset management business. Since income is tightly bound to AUM, this brings about incentive tension: expanding AUM can amplify income, but rapid expansion can erode strategy capacity and magnify tail risks.

The market cycle has a very direct impact on Curator behavior. In bull market phases, Curators are more likely to amplify capital efficiency, using leverage, layered incentives, and looping structures; at this time, borrowers are more numerous, Beta hides risks, and APYs are high with large capacities, but risks are elevated as well.

In a turbulent or bear market, strategies are forced to revert to real sources of yield: lending spreads, RWA cash flow-type assets, low-correlation allocations. Real yields surpass leverage and airdrop benefits, with defensive capabilities outweighing offensive ones.

▲ Defillama: Curator

Risk Curator Protocols total TVL ≈ $5.68b

AUM is highly concentrated, with leading Steakhouse Financial ≈ $1.55B, Gauntlet ≈ $1.23B, and the top two accounting for nearly 50% of market share, showcasing a typical power law structure.

As Curators continue to scale up asset management (annual growth rate of 2000%), their role has evolved from strategy executors to central nodes of DeFi risk and liquidity.

▲ Curator AUM, Source: Defillama

According to DefiLlama data, as of February 2026, the total TVL of Risk Curators is approximately $5.9B, with Steakhouse Financial ($1.53B), Sentora ($1.34B), and Gauntlet ($1.29B) collectively accounting for nearly 70% of the market share, indicating a significant concentration effect. This means that if the strategies or parameter judgments of leading Curators display systemic deviations, the impact will far exceed that of a single protocol.

In the future, Curators will not converge into a single form but will differentiate into at least three categories:

The first category prioritizes capacity Curators.

This category of Curators has the core goal of accommodating large-scale, low-volatility funds, leaning towards sustainable sources such as lending spreads, stable incentives, and RWA yields, emphasizing parameter conservatism and explainability. These Curators are more easily integrated by CEX, wallets, and Fintech front ends, representing the mainstream form for most large Vaults currently on Morpho. Some protocols even delve deep into the Vault tech stack to help build more institution-friendly Curator businesses from the ground up.

Currently, many large-capacity Curators operate more as borrowers, redistributing the AUM they manage to other Curators that will be mentioned later, who have more diverse yield sources and more aggressive strategies—they decide who to lend money to, thereby creating more returns for their own AUM. They increasingly become a "Curator of Curators," closely collaborating with opportunity-driven Curators mentioned later.

For institutions looking to enter DeFi, the choice has shifted to either building in-house or collaborating with leading Curators, actively becoming curators themselves. Morpho, with its open and modular architecture, is becoming the preferred infrastructure for institutions to build Curator businesses. Bitwise is a typical example, having launched an internally managed non-custodial vault Curator service on Morpho in January 2026, marking the transformation of professional asset management from "users" of DeFi to "builders."

Conversely, Coinbase has chosen a different path, delegating the backend of its lending products (USDC lending and collateralized loans on assets like XRP, ADA) to third-party Curator Steakhouse Financial on Morpho — the frontend is a familiar Fintech interface for users, while the backend is driven by DeFi, known as the "DeFi Mullet" model.

▲ Coinbase DeFi Mullet

The scale of institutional involvement is rapidly growing. Apollo Global Management, which manages over $938 billion in assets, signed a strategic partnership agreement with Morpho in February 2026, planning to acquire up to 9% of $MORPHO governance tokens over four years. Apollo's strategy is two-pronged: on one hand, its credit fund has tokenized its RWA assets into ACRED, ACRDX, etc., through Securitize and Anemoy, integrating into the Morpho lending market through top Curators like Steakhouse; on the other hand, by holding governance tokens, it directly participates in shaping the future of on-chain credit infrastructure.

In the same month, Taurus, which provides custodial services to over 40 banks, also integrated Morpho into its custody platform, allowing traditional financial institutions to allocate funds directly to Morpho Vaults within existing compliance frameworks, managed directly by Curators. The issue of institutional entry into DeFi has shifted from "whether to participate" to "at which level to participate."

The second category is opportunity-driven Curators.

This category of Curators focuses more on new structures, new assets, and early incentive windows, willing to sacrifice capacity for higher alpha by taking on more risk. Typical characteristics include clearly defined AUM limits, short strategy lifecycles, and high volatility tolerances, serving mainly professional funds or the DeFi community. These Curators occupy emerging L1/L2 ecosystems; for example, when a new public chain (such as Hyperliquid, Plasma, Monad, Megaeth) launches, it is often accompanied by generous liquidity incentive programs to attract early users and developers. Opportunity-driven Curators are usually among the first participants, quickly deploying vaults on these new chains and leveraging their expertise to capture these one-time early benefits for users, such as airdrops and high liquidity mining rewards.

Additionally, these Curators explore new assets, new structures, and new DeFi primitives: unlike blue-chip Curators that focus on mature assets (such as ETH, USDC), opportunity-driven Curators are more willing to incorporate new asset categories into their strategies. For example, Re7 Labs has become a Curator providing RWA assets for BlackRock's BUIDL, being the first to explore the large-scale application of RWA in lending.

Another advantage of these Curators is their extreme sensitivity to market changes, enabling them to quickly respond and leverage market fluctuations or specific events for arbitrage. They often include more complex logic in their strategies, such as arbitraging interest rate differences across protocols or profiting from liquidation mechanisms. Although such strategies carry higher risks, they can also yield returns far exceeding market averages.

The third category is productized Curators.

Productized Curators no longer merely handle backend configurations; they further encapsulate strategies into Vault as a service, asset, or stablecoin forms, directly facing users. This path demands high standards for risk control, transparency, and accountability boundaries, but once established, its distribution efficiency is also the highest.

The challenge for these Curators is to find high-yield strategies while also having large capacities—almost all DeFi strategies have explicit capacity limits. Taking the current mainstream looping/basis strategies as an example, the market size has approached $20B (about 10% of DeFi TVL), whereas six months ago, it was only about $5B. Once capacity is rapidly filled, marginal yields drop significantly, and parameter tolerance spaces shrink dramatically.

If this type of Curator can successfully productize, it can be better integrated into Fintech apps, incorporating Web2 funds, which is a critical step for Curators towards mass adoption.

The biggest issue currently facing DeFi is that the complexity and risk exposure methods have exceeded the decision-making capacity of individual users, leading to a lack of confidence in depositing money. Events like the misuse of funds leading to explosive incidents with yield-stable coins such as Streamfinance, combined with a bear market, have caused a decline in overall yield-bearing stablecoin TVL, resulting in capital regrouping towards conservative lending protocols.

Today, about 45% of DeFi TVL (~$56B) is chasing new yield opportunities, concentrated in protocols like Aave, Morpho, and Spark, yet a substantial amount of USDC remains idle for long periods. The reason is not a lack of opportunities, but rather the high costs of strategy understanding, risk judgment, and dynamic management.

For most users, what they truly need is not more protocol choices, but rather:

• A simple, trustworthy entry;

• A diverse, continually adjusting yield structure;

• A clear and understandable method of risk exposure;

The entry could be accomplished by consolidating the current Vault exposure methods or through productization. The yield structure can be enhanced through more high-quality Curators entering the market. I believe that the current lack of market confidence necessitates building a healthy and transparent Curator auditing system, including:

• On-chain verifiable asset allocation paths;

• Structured labeling of risks;

• In extreme scenarios, users should know the exit conditions and exit paths.

While this cannot completely eliminate risks, it can transform risks from vague systemic uncertainties into understandable, priceable choices. Without such transparency, Curators can easily evolve into shadow banking systems, indistinguishable in essence from Celsius and BlockFi. Conversely, if Curators can decompose, price, and pre-converge risks at an intermediary level, they may instead serve as buffers at the protocol layer rather than amplifiers, allowing professionals to control the overall DeFi risks.

▲ DeFi Dashboard for Asset Management Transparency

In the long run, Curators are not the endgame of DeFi, but they are almost an unavoidable layer before DeFi becomes accessible to a larger user scale. DeFi has already proven the viability of its infrastructure; what is currently lacking is an intermediary layer that can package, distribute, and embed these capabilities into real-world use cases. Curators are assuming this role.

When complexity is reasonably encapsulated, risks are clearly labeled, and accountability boundaries are sufficiently clear, DeFi has the potential to truly return to its original promise: not just serving the most professional few, but becoming a financial system that can be widely participated in.

References

[1] BeInCrypto. (2025, October 12). Ethena USDe "Depeg", What Really Happened?. Retrieved from

[2] Blockworks. (2025, March 20). Who's responsible when something breaks in DeFi?. Retrieved from

[3] Chorus One. (2025, December 2). DeFi Curators in 2025: Navigating Chaos, Building Resilience. Retrieved from

[4] DefiLlama. (2026, February 24). Risk Curators Rankings. Retrieved from

[5] Chorus One. (2025, December 2). DeFi Curators in 2025: Navigating Chaos, Building Resilience. Retrieved from