Crypto lending vaults now hold more than $10 billion in deposits, compared with about $4 billion at the start of 2025, based on Blockworks data cited by the Financial Times. These DeFi structures use smart contracts, but a curator selects strategies, collateral parameters and fees. Depositors may not control those choices directly.
The risks depend on what each vault actually holds. Illiquid collateral, tokenized private credit, smart-contract failures and inaccurate pricing can affect withdrawals or trigger forced liquidations. Some vaults advertise yields above conventional lending rates, but higher quoted returns do not remove counterparty or liquidity exposure.
One example is a $WBTC lending vault described by CoinDesk, illustrating that Bitcoin-linked assets can also be used in these structures. The $10 billion figure represents deposits, not confirmed losses, and regulators have not announced a blanket ban.
The risks depend on what each vault actually holds. Illiquid collateral, tokenized private credit, smart-contract failures and inaccurate pricing can affect withdrawals or trigger forced liquidations. Some vaults advertise yields above conventional lending rates, but higher quoted returns do not remove counterparty or liquidity exposure.
One example is a $WBTC lending vault described by CoinDesk, illustrating that Bitcoin-linked assets can also be used in these structures. The $10 billion figure represents deposits, not confirmed losses, and regulators have not announced a blanket ban.