Crypto vault growth puts lending risks in focus
Summary
Crypto lending vault deposits have topped $10 billion, up from $4 billion at the start of last year, as investors seek returns on digital assets. DeFi vault curators choose lending strategies and risk limits; typical yields are 3%–10%, with riskier options offering more. Risks include illiquid or falling collateral, cascading liquidations, hacks, coding flaws and inaccurate pricing. Fintech firms, crypto treasuries and hedge funds are among depositors. Two Prime launched a bitcoin lending vault on Pareto targeting 1.5%–2% annual yields, with about $10 million of its capital committed to absorb initial losses. U.S. and European regulators are considering how existing rules apply to vaults and DeFi intermediaries.
