Crypto lending is beginning to resemble traditional cash savings accounts: Asia Morning Update

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The era of easy returns in crypto appears to be over. According to market maker Flowdesk, this shift is rooted in fundamental changes to the market structure, not just temporary cycles.

In its 2025 review of crypto credit, Flowdesk highlights that yields have tightened across staking, stablecoin lending, and bitcoin-backed loans. Rather than a lack of demand, the firm attributes this to increased liquidity and more efficient arbitrage. As more participants entered onchain money markets, derivatives, and futures, volatility decreased and returns became more stable, even as overall usage soared to new heights.

Onchain metrics reveal this transformation. ETH staking yields have stabilized around 2.5%, a significant drop from the double-digit peaks of previous cycles, despite the total value locked (TVL) approaching $30 billion.

(DefiLlama)

Stablecoin lending has followed a similar trend. In 2025, demand to borrow USDC reached unprecedented levels, but an even greater surge in supply kept interest rates suppressed. Flowdesk notes that this balance between robust demand and ample liquidity has led to reduced volatility, not increased instability.

Derivatives markets echo these patterns, Flowdesk reports.

Perpetual funding rates rarely entered exuberant territory, even as prices climbed to new records. Futures basis spreads remained narrow, as traders increasingly favored delta-neutral strategies over speculative bets. This has resulted in a flatter yield curve across crypto, with fewer opportunities for outsized gains.

The impact is also evident in bitcoin-backed lending. The strong liquidity and high-quality collateral of BTC have attracted a wave of new lenders, including traditional financial institutions. What was once a niche trade has evolved into a mainstream, balance-sheet-driven business. As competition intensified, profit margins shrank, loan-to-value ratios became more conservative, and excess returns faded.

Flowdesk concludes that crypto credit markets now resemble those of established financial systems.

Today, returns from ETH staking and USDC lending are clustered in the mid-single-digit range, similar to money market funds, savings accounts, and short-term Treasuries.

With deeper liquidity, improved arbitrage, and broader participation, core yield products have become foundational infrastructure rather than sources of exceptional profit.

With traditional yield strategies now crowded and efficient, where might the next opportunities arise? Flowdesk suggests that future growth will come from more sophisticated products, such as customized credit, altcoin-backed loans, or hybrid on- and offchain solutions—sometimes referred to as CeDeFi.

Market Snapshot

• BTC: Bitcoin remained relatively stable as Asian markets opened, dipping about 0.3% to around $91,000, though it has gained nearly 4% over the past week.
• ETH: Ether slipped roughly 0.4% to about $3,150, paring back some of its more than 6% weekly advance.
• Gold: Gold continued to face technical selling pressure, falling 1.26% to approximately $4,436 per ounce, after a U.S. private payrolls report showed only 41,000 jobs added in December—below expectations. Stable wage growth lessened the report’s market impact.
• Nikkei 225: Japan’s Nikkei 225 index opened down 0.46%.

Other Crypto Headlines

• World Liberty Financial, a company with ties to Donald Trump, has submitted an application for a federal bank charter ().

• A16z Crypto has invested $15 million in BABY tokens to support Babylon’s development of new Bitcoin Vaults ().