DeFi Generated Roughly $8 Billion in On‑Chain Yield in 2025 – A Deep‑Dive Analysis
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A new research report released this week maps the full spectrum of where decentralized‑finance (DeFi) returns originated in 2025. The study, compiled by analyst Vadym (Twitter: @vadymnx) and published on The Defiant, estimates that DeFi protocols generated approximately $8 billion in on‑chain yield over the past twelve months. While total yields remain sizable, the breakdown shows a highly uneven distribution across different mechanisms, with many sources still difficult to capture in tradable products.
Yield Landscape in 2025
| Yield source | Approx. 2025 contribution | Key platforms / notes |
|---|---|---|
| Automated‑market‑maker (AMM) trading fees | $4.2 B (≈ 52 % of total) | Uniswap, Meteora, Raydium together account for the majority. Concentrated‑liquidity LPs face “toxic” order flow, limiting reliable capture for vaults. |
| Borrowing interest | $1.76 B (≈ 22 %) | Money‑market protocols such as Aave, Morpho, Spark, Maple and Fluid. Roughly half of borrowing demand is recursive — users borrow to reinvest in other yield sources (e.g., liquid‑staking tokens, yield‑bearing stablecoins). |
| Perpetual‑contract funding fees | $0.3 B (≈ 4 %) | Primarily generated on Ethena, whose sUSDe token blends staking rewards with short‑position funding. |
| Real‑world assets (RWA) | $0.6‑0.9 B (≈ 8‑11 %) | U.S. Treasuries dominate the RWA basket (~41 % of RWA TVL), followed by private‑credit exposures (~25 %). |
| Network staking rewards & MEV | ~$1 B (≈ 12‑13 %) | Ethereum issuance delivered about 1 M ETH in 2025. MEV share has tapered as private order‑routing services now handle ~90 % of swaps. |
Total estimated on‑chain yield: $8 billion.
The “Safe” Stablecoin Gap
Stablecoins continue to be a major store of value on Ethereum and its Layer‑2 chains, yet the report finds that 58 % of the $20 billion+ TVL in stablecoin vaults is earning under 3 % APY—a rate that trails both U.S. Treasury yields and the Secured Overnight Financing Rate (SOFR). On Aave, the 30‑day average for USDC and USDT hovers around 2 %, underscoring a broader compression of “risk‑free” on‑chain returns.
A Case Study: Sky (formerly MakerDAO)
Sky’s USDS Savings Rate of 3.75 % has drawn significant capital in a low‑yield environment. The protocol’s total value locked (TVL) jumped 38 % in March 2025, pushing Sky into the top‑four DeFi platforms by assets under management.
- Off‑chain origin: Roughly 70 % of Sky’s income stems from traditional finance channels, such as USDC earning rewards through Coinbase’s peg‑stability module (PSM) and exposure to institutional RWA funds (e.g., BlackRock’s BUIDL, Janus Henderson).
- On‑chain allocation: The remaining 30 % is routed via Spark to on‑chain lending avenues—including Sparklend, Maple’s institutional loan book, and Anchorage’s custodial services—allowing the protocol to capture whatever yield is available after the broader market slowdown.
The analysis suggests that while pure on‑chain yields have narrowed, the inflow of TradFi capital through permissioned pathways provides a “floor” for DeFi rates and may catalyse the next wave of structured yield products (fixed‑rate deposits, interest‑rate swaps, tranche‑based offerings).
Undeveloped Opportunities
Despite the $8 billion total, several potential revenue streams remain barely tapped:
| Segment | 2025 Activity | Observations |
|---|---|---|
| Insurance underwriting | $5.5 M in premiums (mainly via Nexus Mutual) | Very low compared with total DeFi TVL. |
| On‑chain options | $1.8 B open interest | No significant structured products have emerged despite a $30‑50 B CeFi options market. |
| Volatility selling & protocol‑risk transfer | Near‑zero capture | Identified as a “white space” for future risk‑curation solutions. |
These gaps point to a nascent market for sophisticated risk‑transfer mechanisms that could attract institutional participants seeking diversified exposure without the on‑chain capital inefficiencies currently observed.
Key Takeaways
- Yield is abundant but concentrated. Over half of the $8 billion came from AMM trading fees, yet that category is notoriously hard to bundle into stable, investor‑friendly products.
- Borrowing demand is increasingly recursive. A sizable share of loans is used to re‑enter other yield streams, amplifying systemic interdependence across protocols.
- Stablecoin “risk‑free” rates lag traditional finance. More than half of stablecoin TVL earns less than U.S. Treasury yields, challenging the narrative of DeFi as a higher‑return alternative.
- Real‑world assets are slowly scaling. Treasuries and private credit now represent a measurable, though still modest, portion of on‑chain yield.
- Traditional finance capital is seeping in via permissioned bridges. Protocols like Sky demonstrate that off‑chain income can subsidise on‑chain rates, creating a hybrid yield floor.
- Untapped niches exist. Low activity in on‑chain insurance, options, and volatility‑selling suggests room for new protocols that can package and distribute these risks efficiently.
Outlook
The 2025 data points to a maturing DeFi ecosystem where raw yield generation is no longer the sole differentiator. As borrowing rates converge with central‑bank policy and “safe” stablecoin supplies offer modest returns, protocols will need to innovate on the packaging side—creating structured, transparent products that can attract both retail and institutional capital. The emergence of off‑chain‑originated income streams, as seen with Sky, may provide the necessary foundation for such evolution, potentially ushering in a new era of on‑chain fixed‑income instruments.
This article was prepared with AI‑assisted workflows and fully fact‑checked and edited by the editorial team.
Source: https://thedefiant.io/news/research-and-opinion/defi-generated-usd8-billion-in-onchain-yield-in-2025-analysis
