Author: Danny @IOSGVC
1. The Curator Boom
DeFi is heating up but still below the ATH TVL of DeFi summer. At the same time the supply of stablecoins keeps growing at a higher rate and hit new ATH. This points to a paradox: there’s more money on-chain than ever, but DeFi products are still too complex for most people to understand, use, and adopt.
Over the past few years, DeFi infrastructure solved for access and composability, but it turned into a high-stakes game that’s tough for newcomers to play. For the average user, a seemingly simple stablecoin yield is actually a rabbit hole of nested strategies: lending spreads, layered incentives (like funding and airdrops), structured products (like Pendle), and leveraged looping.
Risks have also evolved. We’re way beyond simple smart contract hacks now. Today’s risks are a vicious cycle of shaky LTVs, poor liquidation liquidity, and oracle failures feeding on each other. For example, in October 2025, a glitch in Binance’s internal oracle caused a flash crash in USDe’s price on the platform, setting off a chain of liquidations.
DeFi is in a strange spot: the better the tech gets, the harder it becomes for users to understand the risks. When people can’t figure out where the yield is coming from or where the real risks are, DeFi’s growth hits a wall.
This is where Curators come in. They act as a new layer in the stack, connecting complex protocols with the vast pools of capital sitting on the sidelines. As protocols increasingly hand off the job of creating yield and pricing risk, Curators are stepping up to fill the gap.
2. The Business of Curation
In ecosystems like Morpho, the protocol provides the neutral rails, but Curators are the ones who decide which assets to list, set risk parameters, and manage positions day-to-day. They have three main jobs:
Strategy Selection
A good Curator knows the difference between a solid, long-term yield and a temporary, degen opportunity. Strategies aren’t set-and-forget; they need constant tweaking as market conditions and capital flows change. Two Curators running the same USDC strategy can have wildly different results during a market crash. What sets the best apart is their ability to stay on top of the market and de-leverage when things get shaky.
Risk Pricing
In a modular world, the Curator is the one calling the shots on risk. Deciding what collateral to accept and how much leverage to use are the core acts of risk pricing. Curators don’t just execute strategies; they price the risk itself. But even the pros get it wrong sometimes. Re7 Labs, for instance, saw user positions get liquidated incorrectly because the Pyth oracle they used had a price feed delay. This is a huge red flag: the biggest systemic risks this cycle are coming from this new middle layer.
Productization & Distribution
For users, a productized Curator is a simple, one-click way to get into and out of a strategy. For front-ends like CEXs and wallets, it’s a non-custodial yield module with clear, defined risks. Curators aren’t trying to steal users from protocols; they’re helping capital find risks it’s comfortable taking.
The Curator model is an asset management business driven by AUM. Since revenue is tied directly to AUM, this creates a natural tension. Growing AUM means more revenue, but growing too fast can stretch a strategy too thin and expose LPs to nasty tail risks.
Market cycles also dictate how Curators behave. In a bull run, they’re pushed to maximize capital efficiency with leverage, stacked incentives, and looping. With more borrowers in the market, beta hides the underlying risks, APYs are juicy, and capacity is high — but so is the risk.
During choppy or bear markets, strategies have to go back to basics and find real yield from lending spreads, RWA cash flows, or low-correlation assets. In these conditions, playing defense is more important than offense.
3. The New Distribution: From Institutions to Retail
According to DefiLlama data from February 2026, the total TVL in Risk Curators hit $5.9B. The top three, Steakhouse Financial ($1.53B), Sentora ($1.34B), and Gauntlet ($1.29B) — make up almost 70% of that. This concentration means that if a top Curator messes up a strategy or parameter, the damage won’t be contained to just one protocol.
The Curator space won’t be a monolith. It’s already splitting into at least three different camps:
1: The Capacity Maximizers
These Curators are all about handling huge sums of low-volatility capital. They stick to sustainable yield sources like lending spreads, stable incentives, and RWAs, focusing on conservative, easy-to-understand parameters. They’re a natural fit for CEXs, wallets, and Fintech front-ends, and they represent the main type of large-scale vault on Morpho today. Some protocols are even getting their hands dirty in the vault tech stack to help build more institution-friendly Curator businesses from the ground up.
Many of these large Curators also act as a “Curator of Curators” lending out their AUM to smaller, more aggressive Curators to generate extra yield. They work hand-in-hand with the opportunity-driven players.
For institutions, the game is now about whether to build their own Curator or partner with a top firm. With its open, modular design, Morpho is becoming the go-to for institutions that want to build. Bitwise is a perfect example. In January 2026, they launched their own non-custodial vault on Morpho, managed by their in-house team. This is a big deal: pro asset managers are shifting from just using DeFi to building it.
Coinbase took a different route. They use a third-party Curator, Steakhouse Financial, to manage the backend of their lending products on Morpho. The front-end is the slick Coinbase app users know, but the engine is pure DeFi. It’s the classic “DeFi Mullet”: business in the front, party in the back.
And the big money is coming. Apollo Global Management (over $938 billion in AUM), inked a deal with Morpho in February 2026 to buy up to 9% of the $MORPHO token over four years. Apollo is playing both sides. Their credit funds are already tokenized as RWAs (like ACRED and ACRDX) and plugged into Morpho’s lending markets through top Curators like Steakhouse. By also holding the governance token, they get a direct say in the future of on-chain credit.
That same month, Taurus, a custodian for over 40 banks, plugged Morpho into its platform. Now, traditional financial institutions can allocate capital to Morpho Vaults right from their existing, compliant setups, with Curators managing the money. For institutions, the question is no longer if they should get into DeFi, but where in the stack they should play.
2: The Opportunity Chasers
These Curators are the degens. They hunt for new structures, novel assets, and short-lived incentive programs. They’re willing to cap their AUM and take on more risk to chase that sweet, sweet alpha. Think small AUM caps, short-lived strategies, and a high tolerance for volatility. They cater to pro funds and DeFi natives.
These are the first guys to ape into new L1/L2 ecosystems. When a new chain like Hyperliquid, Plasma, Monad, or Megaeth launches with juicy liquidity mining rewards, the opportunity chasers are the first responders. They spin up vaults on these new chains to farm the early, one-off bonuses for their users.
They also love to experiment with new assets and DeFi primitives. While the big guys stick to blue chips like ETH and USDC, these Curators are happy to play with new stuff. Re7 Labs, for example, became the Curator for BlackRock’s BUIDL, pioneering the use of RWAs in lending at scale.
These Curators are also hyper-aware of market shifts, ready to pounce on any arbitrage opportunity. Their strategies are often more complex, involving things like cross-protocol rate arb or profiting from liquidations. It’s riskier, for sure, but the potential returns can blow the market average out of the water.
3: The Productizers
Productizers take curation a step further. They don’t just manage money on the backend; they package their strategies into products for everyday users, like a “Vault as a Service,” a tokenized asset, or even a stablecoin. This is the holy grail of distribution, but it comes with immense pressure to get risk management, transparency, and liability right.
The biggest hurdle for them is finding strategies that have both high yield and high capacity. Almost every DeFi strategy has a ceiling. The popular looping/basis trades, for instance, have ballooned to a $20 billion market (nearly 10% of all DeFi TVL), up from just $5 billion six months ago. As these trades get crowded, yields compress, and the room for error shrinks.
But if they can crack the code, these productized vaults can be plugged directly into Fintech apps, opening the floodgates for Web2 capital. This is how curation goes mainstream.
4. Let the People Use DeFi
DeFi’s biggest problem right now is that it’s just too damn complicated and risky for the average person. No one wants to deposit their life savings into something they don’t understand. And when projects like Streamfinance blow up after misusing user funds, it spooks the market. During the last bear, we saw capital flee back to the safety of conservative lending protocols.
Today, about 45% of DeFi’s TVL (~$56B) is chasing yield in protocols like Aave, Morpho, and Spark. But tons of USDC is still just sitting there, doing nothing. It’s not because there are no opportunities; it’s because understanding the strategies, assessing the risks, and managing positions is a full-time job.
Most users don’t need more protocols. They need:
- A simple, trustworthy on-ramp;
- A mix of yields that are always being adjusted;
- A clear, easy-to-understand picture of the risks they’re taking.
We can create better on-ramps by building better vault interfaces and productizing strategies. We can get better yields as more high-quality Curators enter the market. But to really bring back confidence, we need a transparent Curator audit system. This means:
- On-chain proof of where the money is going;
- Standardized labels for different types of risk;
- A clear emergency exit so users know what happens and what to do when things go wrong.
This won’t get rid of risk, but it will change it from a scary, unknown unknown into a clear, priceable choice. Without this transparency, the Curator space could easily become a shadow banking system, no different from Celsius or BlockFi. But if Curators can properly slice, price, and manage risk in this middle layer, they can act as a shock absorber for the entire DeFi ecosystem, not an amplifier. They can be the professional risk managers that DeFi needs.
Curation isn’t the final form of DeFi, but it’s a necessary step to get to mass adoption. The core infrastructure of DeFi works. What’s missing is the middle layer to package it, distribute it, and plug it into real-world applications. Curators are stepping up to do just that.
Once the complexity is hidden, the risks are transparent, and the responsibilities are defined, DeFi can finally deliver on its original promise: to build a financial system for every banked and unbanked.
References
[1] BeInCrypto. (2025, October 12). Ethena USDe “Depeg”, What Really Happened?. Retrieved from
[2] Blockworks. (2025, March 20 ). Who’s responsible when something breaks in DeFi?. Retrieved from
[4] DefiLlama. (2026, February 24 ). Risk Curators Rankings. Retrieved from
The Curator Paradigm: Bridging DeFi’s Great Divide was originally published in IOSG Ventures on Medium, where people are continuing the conversation by highlighting and responding to this story.
