Onchain Vaults: Emerging Infrastructure for Fund Tokenization

Onchain vaults, or pooled investment vehicles deployed on blockchain rails, have scaled rapidly from $24B AUM in 2023 to $131B in 2026, a 541% increase according to S&P Global.

Today, more than 90% of that capital remains tied to crypto-native strategies, where capital is deployed across crypto markets to generate yield. But the market is beginning to shift.

The 15,000% growth in tokenized MMF and 30,000% growth in tokenized assets since 2023 demonstrate increasing demand for regulated, institutionally familiar investment exposures delivered through onchain infrastructure.

As fund tokenization accelerates, onchain vaults are likely to evolve beyond crypto yield aggregation into a new operating layer for onchain capital aggregation and deployment, with significant implications for the asset management business.

In this Market Insight Note, we cover:

1. Where onchain vault AUM sits today

2. What onchain vaults unlock for fund tokenization

3. What needs to evolve for institutional adoption

Let’s dive in.

Where onchain vault AUM sits today?

At its core, a vault is a programmable fund structure. Capital is pooled, deployed into strategies, and represented via share tokens that encode ownership and returns.

Current AUM concentration reflects crypto-native demand:

• Staking and restaking vaults

  Capital is deployed to secure proof-of-stake networks such as Ethereum and Solana, generating protocol rewards which flow back to depositors and vault operators. This remains the largest segment, reflecting vaults’ origin as a simplified access layer to staking yields. Examples include Lido and Jito.

  
  

• Crypto-backed lending

  Vaults allocate into overcollateralized lending markets, managing collateral, liquidations, and yield distribution.This is the second largest segment, driven by demand for leverage in crypto trading. Examples include Maple.

  
  

• Real-world asset (RWA) vaults

  Exposure to tokenized Treasuries, credit, and invoices, generating yield from offchain cashflows. This is a recent phenomenon, reflecting the growth in demand for a more stable collateral profile in lending yield generation. Examples include Morpho’s RWA vaults and SKY’s savings vault.

But the shift is already underway.

While DeFi AUM has fallen from ~$160B to ~$80B between Oct 2025 and May 2026, tokenized MMFs have nearly doubled from $8B to $15.3B over the same period.

Capital is rotating away from volatile, variable and crypto opportunities towards predictable, fixed-income-like yield with lower risk profiles. As institutional-grade tokenized fund offerings expand, RWA vaults are likely to scale rapidly and ultimately become the dominant use case.

What onchain vaults unlock for fund tokenization?

As I noted in Onchain Vaults: the New Capital Aggregator for Onchain Finance, vaults are not just investment vehicles. They are distribution and liquidity infrastructure for tokenized assets.

How?

While stablecoin holders can deposit their idle stablecoins into vaults and make them available for borrowing, capital users - or tokenized fund holders - can deposit their tokenized fund shares into the vault as collateral and borrow stablecoins to purchase more tokenized funds, using vault as the vehicle for gaining leverage.

Smart-contract enabled composability and automation unlocks frictionless leverage and additional liquidity for the tokenized financial layer.

Vault shares are:

• Fungible → interchangeable units of exposure

• Interoperable → usable across protocols

• Composable → embedded into broader strategies

  
  

This transforms traditionally illiquid instruments like fund shares into liquid, collateralizable building blocks.

In effect, vaults do for tokenized assets what ETFs did for securities: standardize access, improve liquidity, and enable reuse.

The real unlock is not yield. It is capital efficiency.

Vaults:

• Compress idle capital

• Enable secondary liquidity for otherwise static assets

• Introduce leverage in a programmable, transparent way

For tokenized funds, this directly addresses one of the biggest bottlenecks today:

Distribution without liquidity is not enough.

Liquidity without reuse is not scalable.

Vaults solve both.

What needs to evolve for institution adoption?

Despite the growth, vaults remain largely crypto-native in design and crypto-native in strategy as evidenced by the current AUM composition.

In the previous Market Insight note, I noted two particular gaps hindering institutional adoption:

1. Identity and access controls

Most vaults lack KYC/AML frameworks required by institutional allocators

2. Liquidity depth in RWA strategies

Demand for tokenized fixed income is growing, but still lacks sufficient scale and secondary activity

Following conversations with vault protocols and risk curators, I would add a third critical gap:

3. Disclosure and risk management standards

While traditional funds operate with documented investment mandates, allocation and concentration constraints, standardized risk disclosures and ongoing reporting obligations, crypto vaults largely do without. 

As a result, the burden of risk assessment falls heavily on the end user. But without clear disclosure around underlying protocols, interconnected exposures, concentration risks, and collateral dependencies, that assessment risks becoming superficial and perfunctory.

The good news is that this is likely to evolve quickly.

As more traditional asset managers begin leveraging vaults for onchain distribution, liquidity, and collateral utility, they will inevitably bring with them the operational disciplines and governance expectations of traditional finance.

That transition should accelerate industry-wide standardization around disclosure, reporting, and risk management, which are foundational requirements for institutional-scale adoption.

Disclaimer: This content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice.