Author｜Danny @IOSG

1. The Explosion of Curator Mode

The intensity of DeFi activities has returned to levels close to DeFi Summer, but the supply of on-chain stablecoins continues to expand. This means there is increasingly more money on-chain, yet the form of DeFi products cannot yet be widely understood, used, and distributed by broader users.

▲ DeFi TVL, Source: Defillama

▲ Stablecoin MC, Source: Defillama

In the past few years, DeFi infrastructure has solved accessibility and composability, but it has turned into a game of high difficulty. For ordinary users, a seemingly simple stablecoin yield may be embedded with lending spreads, multi-layer incentives (Funding/airdrops), structured products (Pendle), and leverage looping.

▲ USDE AAVE Pendle loop

Risks have long exceeded the scope of contracts being hacked, evolving into mutual amplification of LTV, liquidation liquidity, and oracle risks. For example, in October 2025, due to an internal oracle failure at Binance, the price of USDe on its platform briefly crashed, triggering a chain liquidation.

DeFi is experiencing an "anti-intuitive" evolution: as technology matures (upward), the cost of user understanding and difficulty of risk judgment increases (downward). When individuals can no longer identify "whose money they are making" and "where the risks are," the growth of DeFi hits a ceiling.

Curator is a role created to solve this distribution problem, lacking a direct translation in Chinese, more akin to "strategist." As the ability to provide yields and price risks moves from the protocol layer, Curator has become a packaging layer connecting complex protocols and extensive funds.

2. What is Curator Business Doing

In the system represented by Morpho, the protocols provide neutral infrastructure, while Curator decides which assets are available, the level of risk, and daily management. It bears three core responsibilities:

Strategy Selection

The value of Curator lies in judging which yields are structural and which are merely temporary opportunities. Strategies are not one-time deployments; they need continuous adjustments as fund sizes and risk exposures change. The same USDC strategy may yield vastly different results under extreme market conditions depending on the Curator's ability to maintain continuous judgment and dynamically reduce leverage.

Risk Pricing

In a modular system, it is Curator who truly determines risk exposure. What collateral is accepted and how high leverage is opened are fundamentally about risk pricing. Curator holds the risk pricing power rather than just the execution power. Even top Curators can make mistakes, such as Re7 Labs, which experienced incorrect liquidations due to delayed price updates from its dependent Pyth oracle. This warns us that the biggest systemic risk in the current cycle comes from this.

Productization Distribution

For users, its productized form provides a single interface for entry/exit; for frontend (CEX/wallet), it offers non-custodial, clearly defined risk yield modules. It is not competing for the protocol's users, but rather helping funds find a risk structure that they can understand and bear.

Curator is an AUM-driven asset management business. Due to the strong binding of income and AUM, it brings incentive tension: expanding AUM can amplify income, but rapid expansion can erode strategy capacity and magnify tail risks.

Market cycles have a very direct impact on Curator behavior. In bullish phases, Curators tend to amplify capital efficiency, employing leverage, layered incentives, and looping structures; during this time, there are more borrowers, with Beta masking risks while APY is high, capacity is large, but risks are also high.

In volatile or bearish markets, strategies are forced to return to true sources of yield: lending spreads, RWA cash flow assets, low-correlation configurations. Real returns surpass those from leverage and airdrops, with defensive capabilities taking precedence over offensive abilities.

▲ Defillama: Curator

3. The Evolution of Distribution Paradigms: Institutional Adoption and Retail Future

Total TVL of Risk Curator Protocols ≈ $5.68b

AUM is highly concentrated, with top players Steakhouse Financial ≈ $1.55B, Gauntlet ≈ $1.23B, and the top two together account for nearly 50% market share, representing a very typical power-law structure.

With the continuous increase in asset management scale by Curators (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 was approximately $5.9B, with Steakhouse Financial ($1.53B), Sentora ($1.34B), and Gauntlet ($1.29B) collectively occupying nearly 70% of the market share, showing a significant head concentration effect. This means that if there is a systematic deviation in strategy or parameter judgment from top Curators, the impact will exceed that of a single protocol.

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

The first category, capacity-prioritized Curators.

This type of Curator's core goal is to accommodate large-scale, low-volatility funds, with strategies leaning towards sustainable sources like lending spreads, stable incentives, RWA yields, emphasizing parameter conservativeness and explainability. Such Curators are easier to integrate with CEX, wallets, and Fintech front-end, and are the mainstream form of most large Vaults on Morpho. Some protocols even dive deep into the Vault tech stack to help build a more institutional-friendly Curator business from the ground up.

Currently, many large capacity Curators act more as borrowers, redistributing the AUM they manage to the subsequent Curators mentioned later, whose sources of yield are more diverse and strategies more aggressive—they decide to whom the money is lent, creating more returns for their AUM. They become a "Curator of Curators," closely collaborating with the opportunity-driven Curators discussed later.

For institutions looking to enter DeFi, choices have turned into either building internally or partnering with top Curators, stepping in directly to become Curators themselves. Morpho, with its open and modular architecture, is becoming the preferred infrastructure for institutions building their own Curator businesses. Bitwise is a typical representative, launching a non-custodial vault Curator service managed by its internal team on Morpho in January 2026, marking a shift of professional asset management from being "users" of DeFi to "builders."

Meanwhile, Coinbase chose a different path, outsourcing the backend of its lending products (USDC lending and XRP, ADA, and other collateralized loans) to the third-party Curator Steakhouse Financial on Morpho—the frontend features a familiar Fintech interface for users while the backend is powered by DeFi, known as the "DeFi Mullet" model.

▲ Coinbase DeFi Mullet

The scale of institutional involvement is rapidly growing. Apollo Global Management, managing over $938 billion in assets, signed a strategic cooperation agreement with Morpho in February 2026 to acquire up to 9% of $MORPHO governance tokens over the next four years. Apollo's strategy is dual-pronged: on one hand, its credit fund has tokenized RWA assets such as ACRED and ACRDX through Securitize and Anemoy, accessing the Morpho lending market via 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 custody services for over 40 banks, integrated Morpho into its custodian platform, allowing traditional financial institutions to allocate funds directly to Morpho Vaults within existing compliance frameworks, with direct management by Curator. The question of institutional entry into DeFi has shifted from "whether to participate" to "at what level to participate."

The second category, opportunity-driven Curators.

This type of Curator focuses more on new structures, new assets, and early incentive windows, willing to sacrifice capacity and take on risks for higher alpha. Typical characteristics include clear AUM caps, short strategy lifecycles, and high volatility tolerances, primarily serving professional funds or the DeFi community. These Curators rush to emerging L1/L2 ecosystems; for instance, when a new public chain (like Hyperliquid, Plasma, Monad, Megaeth) launches, it usually comes with generous liquidity incentives to attract early users and developers. Opportunity-driven Curators become some of the first participants, quickly deploying vaults on these new chains, leveraging their expertise to capture these one-time early rewards, such as airdrops and substantial liquidity mining bonuses.

In addition, these Curators explore new assets, new structures, and new DeFi primitives: unlike blue-chip Curators focusing on mature assets (like ETH, USDC), opportunity-driven Curators are more willing to incorporate new asset classes into their strategies. For instance, Re7 Labs became the RWA asset Curator for BlackRock's BUIDL, pioneering the large-scale application of RWA in lending.

Another advantage of this type of Curator is their heightened sensitivity to market changes, enabling rapid responses and the ability to exploit market fluctuations or specific events for arbitrage. When constructing strategies, they often incorporate more complex logic, such as cross-protocol interest rate arbitrage or profiting from liquidation mechanisms. Although such strategies carry higher risks, they may also yield returns far exceeding market averages.

The third category, productized Curators.

Productized Curators no longer just handle backend configurations but further encapsulate strategies into Vault as a service, assets, or stablecoins, directly facing users. This pathway demands high standards for risk control, transparency, and boundary responsibility, but once established, its distribution efficiency is also the highest.

The challenge for these types of Curators is to find high-yield yet capacity-rich strategies—almost all DeFi strategies have clear capacity limits. Taking the current mainstream looping/basis strategies as an example, the market scale is nearing $20B (about 10% of DeFi TVL), whereas just six months ago, it was around $5B. Once capacity is rapidly filled, marginal returns significantly decline, and the margin for parameter fault tolerance sharply contracts.

When these Curator products are successfully built, they can better integrate into Fintech apps, incorporating funds from Web2, which is a crucial step for Curators toward mass adoption.

4. Returning DeFi to Users

The biggest issue faced by DeFi right now is that the complexity and risk exposure methods have exceeded the decision-making capabilities of individual users. This leads to users being uneasy about depositing money. Events like those involving Streamfinance, where misuse of stable yield funds led to explosions, combined with a bearish market, have resulted in a decline in overall yield-bearing stablecoin TVL, causing funds to once again concentrate in conservative lending protocols.

Today, about 45% of DeFi TVL (approximately $56B) is pursuing new yield opportunities, concentrated in protocols like Aave, Morpho, Spark, but a large amount of USDC remains idly in the long term, not due to a lack of opportunities but because the understanding of strategy, risk assessment, and dynamic management costs are too high.

For most users, what is truly needed is not more protocol options, but rather:

• A simple and trustworthy entry;

• A diverse and ever-adjusting yield structure;

• A clear and understandable risk exposure method;

Entry can be completed by consolidating the current Vault exposure methods or productization. Yield structures can be improved through more high-quality Curators entering the market. I believe the current lack of confidence in the market also requires building a healthy and transparent Curator auditing system, including:

• On-chain verifiable asset allocation paths;

• Structured annotation of risks;

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

This does not fully eliminate risks but can transform risks from vague systematic uncertainties into understandable, priceable options. Without such transparency, Curators may easily evolve into a shadow banking system, presenting no essential difference from Celsius or BlockFi. Conversely, if Curators can decompose, price, and pre-converge risks at the intermediate layer, they may instead serve as buffers to the protocol layer, rather than amplifiers, controlling the overall DeFi risks in the hands of professionals.

▲ Dashboard for Asset Management Transparency in DeFi

In the long run, Curator is not the endpoint of DeFi, but it is an almost unavoidable layer before DeFi can reach a larger user scale. DeFi has already proven the feasibility of its infrastructure, what remains lacking is an intermediate layer that can package, distribute, and embed these capabilities into real usage scenarios. Curators are taking on this role.

When complexity is reasonably encapsulated, risks are clearly annotated, and responsibilities are sufficiently delineated, DeFi has the potential to truly return to its original promise: not just serving a small elite but becoming a financial system that can be widely participated in.

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