The ETH staking rate is not isolated inside the validator system. It is one of the core rates used to price DeFi. Lower the staking rate and the whole market adjusts: .ETH borrow demand falls .Collateral becomes less productive .Stablecoin loans become more expensive in real terms .Stablecoin lenders earn less This proposal does not model DeFi at all. And the timing could not be worse. Institutions are moving on-chain because yields are becoming competitive. Now the EF is proposing to cut one of DeFi’s core rates, making on-chain yields less attractive just as the market is starting to grow. This EIP focuses only on validators and it does not consider the economy built on top of them.

Lending protocols are showing good momentum since early June, with borrow books increasing week over week across the major protocols, +$2.5B in total. @aave leads in terms of borrow book growth (+$1.38B), more than all the other lending protocols combined (+$1.15B).

After the discussion in the tweet below, Morpho now surfaces donations to vaults in the UI as an incentive. Vaults receiving direct donations show an "Includes donations" tag, saying that part of the yield comes from assets paid directly into the vault's underlying asset, which can push the APY above the market rate. Related to this it's worth looking at the Coinbase Earn and Robinhood Earn products and where the yield comes from. Both products route user deposits into Morpho vaults: - Coinbase to Steakhouse High Yield USDC Edition on Base - Robinhood to Steakhouse USDG on Robinhood Chain In both cases the yield the user ends up seeing comes from different sources: i) vault level incentive, ii) market level incentive, iii) market native yield. The first one is a Merkl campaign running on the vault supply side that tops the rate up to the advertised number, showing 5.4% APR on the Coinbase App and 6.99% APR on the Robinhood App. The second one sits at the market level that the vaults deploy to. USDe collateral deposits are being paid around 4.5% on both markets, on the USDe/USDC market on Base ($245M supplied and $211M borrowed) and on the USDe/USDG market on Robinhood Chain ($136M supplied and $90M borrowed). Rather than paying the lenders directly, the incentive pays the users who deposit collateral, and those users then borrow the stablecoin against it and loop the position back in, which is what creates the borrow demand, pushes utilization up, and produces the yield the vault passes along to depositors. A handful of loopers account for most of the collateral, running roughly 9x leverage, meaning the supply figures are mostly looped capital. At the vault level, it appears as organic yield even though it is indirectly subsidised at the market level. The 4.5% paid on collateral in USDe sits above sUSDe's own native yield of around 4%, and it currently produces 3.99% of vault yield on Base and 2.86% on Robinhood Chain. Together with the vault-level campaigns on both consumer vaults, the structure runs at roughly $683k a week, close to 30% of all spend across Merkl's top 40 campaigns. A note that Coinbase Earn also allows depositing to a vault that allocates mostly to cbBTC/USDC, the market behind Coinbase's onchain loans product, where borrow demand comes from real users borrowing USDC against cbBTC, that portion of the yield is native. Also worth noting that Ethena itself (as disclosed on its transparency dashboard), supplies stablecoins into both of these markets through two vaults Ethena x Steakhouse USDC on Base and Ethena x Steakhouse USDG on Robinhood. Which brings the question back to where it started. An incentive that sits on the collateral of the underlying market, and its entire purpose is to generate the yield the vault reports (that is mostly incentivised yield). Should that be surfaced on the vaults UI but also in the Coinbase and Robinhood apps?

Savings GHO (sGHO) by Aave currently pays a higher yield than sUSDS, and more than every Spark Savings product as well. Last week Sky cut its Savings Rate (sUSDS) from 3.60% to 3.52%. Back in February the rate stood at 4% and after several consecutive cuts it now sits at 3.52%. Spark Savings products also have been cutting the rates in the last months. Current rates: → sGHO: 4.25% → sUSDS (Sky): 3.52% → Spark Savings (USDC/USDT/USDS/PYUSD): 2.75% to 3.52% sGHO is currently paying 73bps above sUSDS. GHO is Aave's native stablecoin, over-collateralized by assets held inside the protocol. Savings GHO can be redeemed for GHO at any time, with no minimum deposit required. It provides a savings rate automatically, paid out in GHO, funded by two sources: - interest paid by GHO borrowers, and - yield earned on the stablecoin reserves that back GHO

The SEC published a statement on crypto vaults and onchain lending strategies and the main takeaway is that moving activity onchain doesn't exempt it from securities law. This raises the compliance bar for anyone running curated vaults or lending strategies. Fewer crypto-native curators can absorb that cost, which reduces fragmentation as barriers to entry rise. It structurally favors TradFi-native curators who already operate inside SEC compliance.

Aave v4 is very close to reaching $300M in deposits, almost doubling the amount in the last month. Deposits asset category are composed by: - 40% stables - 22% Bitcoin assets - 17% ETH liquid staking assets - 4% Pendle PT assets - 2% Gold assets Deposits split per Spone is: - 65% Main Spoke - 10% Bluechip Spoke - 9% Etherfi Spoke - 6.5% USDG Pendle Spoke

Aave V3 core market increased ~$1B in deposits and $487M in borrows over the last 7 days. Five assets are driving deposit growth: → WETH +$322M → USDT +$279M → USDe +$260M → wstETH +$160M → weETH +$125M Borrows are led by WETH (+$186M) and USDT (+$193M). wstETH is the largest collateral in DeFi, with $5.7B deposited across lending protocols. Aave wstETH deposits are now ~$2B and up $180M this week, while SparkLend fell $99.65M Aave also added $128M in weETH deposits in the last 7D, over 6x the next-largest protocol for this asset. These LSTs deposits naturally translate into borrows and revenue for the protocol, as these assets are typically used as collateral to borrow WETH or, to a smaller extent, stablecoins.

Steakhouse's EURCV Prime vault is intriguing. UI shows 4% APY, 0% incentives, but ~78% of the $100M deposits are sitting idle. The remaining allocation earns closer to ~1.3-1.4%. Blended organic yield is actually ~0.3%. So where does the yield come from? The vault's holding address has received ~546,100 EURCV across 22 transfers since Feb, roughly weekly, all from the same sender. Mechanically, it's a straight ERC-4626 donation: sending assets directly into the vault raises totalAssets without minting new shares, so every depositor's share value rises. The address donating also manages Merkl incentives on Steakhouse x AUSD vaults, suggesting this is Steakhouse related address and this likely reads as SG-Forge/Steakhouse incentivising yield to bootstrap the markets while there is no EURCV borrow demand, which is a normal practice. The issue isn't the incentive, it's not disclosing it in the UI. Two things matter for depositors: - The advertised 4% isn't organic, it's incentivised, with no visible schedule or end date. If transfers stop, APY reverts toward the ~0.3% blended rate. - It's invisible on every dashboard depositors actually check, so new entrants can't price the risk. This doesn't seem malicious, Steakhouse are a serious, established player in the space. But the mechanism itself could be used maliciously by less scrupulous curators/protocols, and undisclosed direct-transfer subsidies aren't great practice regardless of intent.

The ones with the most negative revenue correlation with other categories are RWAs, Prediction Markets, and Physical TCG. A new revenue class in crypto is forming irrespective of how others perform.

The Morpho x Robinhood deal is strange for an outside observer. Most of Morpho's growth and TVL has been driven by Coinbase. Coinbase is an investor in Morpho, gave it preference on their onchain products, and that's a big part of how the protocol scaled. That growth is what allowed Morpho to negotiate bigger BD deals including Robinhood. Robinhood is one of Coinbase's main competitors. Robinhood chose to build its onchain product on a protocol that's economically and intrinsically tied to its competitor. This is odd because: 1) It makes it harder to differentiate the offer from a technical perspective (besides with incentives). 2) It creates a risk vector between the companies. Isolated markets and separate chains limit direct financial contagion but they don't isolate reputation. If there's a bank run or liquidity crunch on either side, users won't distinguish between "Robinhood's Morpho markets" and "Coinbase's Morpho markets." Also, Robinhood's markets are curated by Steakhouse, one of the biggest Morpho curators and one of the same curators active across Coinbase-linked Morpho markets. A curator stress event damages confidence in every market they curate, on both sides. The obvious defense is that Morpho is just the neutral infrastructure, but in this case there’s no neutrality since Morpho is subsidizing a competitor growth. Robinhood is advertising a 7% yield that is largely subsidized by Morpho. In other words, Morpho is subsidizing a product that directly competes with a Coinbase product. And to add to all this, in Morpho's latest funding round which likely funds growth campaigns like this, Coinbase Ventures is not listed as an investor, though they were a previous known backer. Curious on what Coinbase does in response: → Do they launch their own DeFi lending market and compete with Morpho? Coinbase has past examples of shipping products that cannibalize partners. → Do they drop Morpho's exclusivity on Coinbase onchain products and open up to other lending markets?

Two new lending markets launched this week. → Aave on Monad: $116M deposits, $48M borrows. Most stablecoin deposits earn ~6.7% APY, partly subsidized by Monad. → Morpho on Robinhood Chain: $11.4M deposits, $10.3M borrows across isolated markets. The Steakhouse USDG vault backing it holds $15M total ($4M idle). Native vault APY sits at 1.72%; the delta to the 7% advertised (5.28%) will be subsidized by Morpho.

Aave V4 is accelerating in the last 30D. → Deposits: $119M → +$230M (~1.9x MoM) → Borrows: $33M → +$75M (~2.3x MoM) @global_dollar Hub launch on @aave v4 on June 30 was the single biggest day for deposit and borrow inflows since launch.

Lending protocols were forced a choice between two problems: → Pooled design: shared liquidity per market/chain. Capital efficiency is high within a market, but risk isolation is partial. Isolation Mode and debt ceilings are a workaround on top of a fundamentally shared pool. Each new deployment still starts liquidity from zero, since pools don't share depth across chains. → Isolated design: fully separate markets, permissionless to create. Each market is isolated at the protocol level, but liquidity is siloed with no sharing between markets. In practice, curated vaults that allocate deposits across several isolated markets can still transmit stress between them and a bad debt event in one market a vault is exposed to can trigger withdrawal pressure across the other markets that same vault allocates to. @aave V4 uses another design system, Hub + Spoke: a unified Liquidity Hub with modular Spokes drawing from it via credit lines and caps. Isolation is structural at the Spoke level while the Hub keeps liquidity shared, so fragmentation stays low without collapsing risk boundaries. The @global_dollar Hub is the first new Hub since Aave V4 launched, built for USDG-correlated strategies. PT-USDG-24SEP2026 is the first supported collateral. USDC, USDT, and USDG are borrowable. USDC and USDT sit in the new Hub but USDG is drawn from the Core Hub through a cross-hub credit line. A new Hub for a single stablecoin strategy launches with access to Core Hub depth on day one, rather than siloing liquidity or diluting a shared pool's risk parameters. The thesis around this design is that every new Spoke on Aave V4 compounds the network instead of fragmenting liquidity.

Standard Chartered initiated ethereum:0x1f9840a85d5af5bf1d1762f925bdaddc4201f984 coverage today with a $100 target by 2030 (a 40x from current levels). This is the first token-specific price target to come out of a DeFi thesis they published in October 2025. In October they published "DeFi 101", a framework for how DeFi disrupts TradFi, built around five categories on one chain: → Lending, led by Aave and Compound → Liquid staking, dominated by Lido → Restaking, led by EigenLayer → DEXs, led by Uniswap → RWAs Concluding also that the vast majority of DeFi disruption this is likely to happen on Ethereum. Today they quantified the macro behind that framework: → Tokenised assets active in DeFi grow 37x by end-2030. → $2.7T locked in DeFi. →Tokenised RWAs reach $2T in market cap by 2028. →ETH reaches $ 40k by 2030. UNI gets the first target because DEXs are the most immediate TradFi integration point as tokenised assets move onchain. But the October report was explicit that lending and RWAs are "the key areas where DeFi protocols can disrupt TradFi", with democratised borrowing against tokenised assets as the central use case. If Standard Chartered follows its own framework, the remaining four categories each have a dominant protocol already previously mentioned. ethereum:0x7fc66500c84a76ad7e9c93437bfc5ac33e2ddae9 in lending, ethereum:0x5a98fcbea516cf06857215779fd812ca3bef1b32 in liquid staking, ethereum:0xec53bf9167f50cdeb3ae105f56099aaab9061f83 in restaking.

Coinbase Crypto-Backed Loans are one of the first DeFi consumer integrations reaching real scale, letting users borrow USDC using cbBTC as collateral but the current loan conditions are becoming hard to justify compared to going onchain directly. The cost for the borrower has two parts: - the onchain borrow rate on the Morpho cbBTC/USDC market according to market conditions, and - the Coinbase origination fee (2% on the first $ 250k, then 1%). The current Morpho rate is 5.78% avg over the last 6h, making the total loan cost of 7.78% annualised. On a $250k loan held for 12 months that's ~$19.4k total in borrow interest. The same loan on Aave V3 costs ~$8.7k at 3.49% (USDT) or $9.8k at 3.95% (USDC). On Aave V4, USDG is available at 1.71%, making a equivalent loan cost of $4k total. That's 2x to 4x cheaper between Coinbase product and using Aave directly. Coinbase uses a single isolated Morpho market (cbBTC/USDC). In an isolated model, supply and demand for that specific collateral-borrow pair have to balance within the market itself. If there isn't enough USDC supply relative to borrow demand, rates climb, with no broader liquidity pool to absorb the imbalance. A pooled or hybrid model allows USDC supplied across other collateral types to serve borrowers, which keeps rates structurally lower. Also, the one-time fee is a strange structural choice. A user borrowing for a few months to cover expenses while holding BTC ends up paying a disproportionately large cost for their duration. At 3 months, the origination fee alone adds 8 percentage points to the annualised rate. Even if current users borrowing against Bitcoin on a Coinbase app are still not comparing rates on Aave, that window narrows over time as users become more comfortable with onchain tools, and as interfaces like wallets and aggregators surface rate comparisons, making the cost gap harder to defend.

Circle (@circle) launched cirBTC on Ethereum on June 8, a 1:1 BTC-backed ERC-20 where each unit sits in segregated, regulated custody at a Circle entity, marking a new product line for Circle beyond the stablecoin categories. The tokenized Bitcoin market currently exceeds $10 billion in total supply across all wrapped formats, one of the most actively used collateral asset classes in DeFi, yet still represents under 2% of Bitcoin's total market cap. The vast majority of Bitcoin value sits idle, never deployed as collateral or generating yield. For any issuer that can solve the custody and trust problem convincingly enough to attract that capital, the addressable market is orders of magnitude larger than what exists today. WBTC and @coinbase cbBTC are the two dominant wrapped Bitcoin formats on Ethereum, together representing the majority of tokenized Bitcoin supply deployed in DeFi. The protocol that makes most of that supply productive in DeFi is @aave, being the primary collateral venue where wrapped BTC is usded as the basis for borrowing, leverage, and liquidity strategies. Looking at the top 50 Ethereum holders of WBTC ($5B) and cbBTC ($2.5B), Aave V3 absorbs $3.1B (41% of combined supply), more than Morpho Blue, L2 bridges, Compound, SparkLend, and all DEXes combined. There is already an ARFC to onboard cirBTC on both Aave V3 Core and Aave V4 Core on Aave governance, also bringing DeFi utility to Circle new asset. Running in parallel on Aave V4, @babylonlabs is integrating Trustless Bitcoin Vaults into Aave V4. Under this model, users lock native BTC directly on the Bitcoin blockchain in Taproot UTXOs and use that position as collateral to borrow stablecoins on Aave V4 through a dedicated Babylon Core Lending Spoke, without wrapping, bridging, or giving up custody at any point. Babylon has already secured 51k BTC trustlessly. This is the first major native BTC collateral primitive on Aave V4. Bitcoin's market cap stands at $1.32 trillion. The entire tokenized BTC market represents roughly +$10 billion in deployed supply, under 2% of that total. Every incremental unit of Bitcoin that moves into regulated wrappers like cirBTC, or gets deployed trustlessly through primitives like Babylon's native BTC vaults, expands the total productive capacity of DeFi in a way that hardly any new stablecoin or synthetic asset can replicate.