I’m thrilled to sit down with Vijay Raina, a renowned expert in the rapidly evolving world of cryptocurrency and blockchain technology. With his deep insights into on-chain asset management and decentralized finance (DeFi), Vijay has been at the forefront of analyzing how digital assets are transforming investment landscapes. Today, we’ll dive into the explosive growth of on-chain asset management, exploring the strategies driving this boom, the key players shaping the industry, and what this means for both new and seasoned investors.
Can you start by explaining what on-chain asset management means for someone who might not be familiar with the term?
Absolutely. On-chain asset management refers to the process of managing digital assets directly on a blockchain. Unlike traditional finance, where assets are often held by intermediaries like banks or brokers, on-chain management happens in a decentralized environment. This means assets—think cryptocurrencies or tokenized securities—are stored, traded, and managed using smart contracts and protocols on the blockchain. It offers transparency since every transaction is recorded publicly, and it cuts out many middlemen, potentially reducing costs and increasing efficiency.
What do you think are the primary drivers behind the 118% surge in assets under management to $35 billion in 2025?
The surge we’ve seen in 2025 is really a culmination of several factors. First, there’s growing trust in blockchain technology as it matures—more investors are comfortable with the security and reliability of these systems. Second, the high yields and innovative strategies offered by DeFi protocols have attracted a lot of capital, especially from those frustrated with low returns in traditional markets. And finally, the broader adoption of crypto by institutions and retail investors alike has poured significant liquidity into the space, pushing assets under management to new heights.
Looking ahead, projections suggest AUM could nearly double to $64 billion by 2026, or even hit $85 billion. What factors do you believe could fuel this kind of growth?
I think continued innovation in DeFi protocols will play a huge role. As these platforms become more user-friendly and secure, they’ll attract even more capital. Regulatory clarity is another big factor—if governments provide frameworks that support rather than stifle growth, we’ll see more institutional money flowing in. Additionally, if the broader economy faces challenges like inflation or low interest rates, investors will likely seek out the higher returns often found in on-chain strategies, accelerating that growth to the higher end of projections.
Let’s talk about discretionary strategies, which have seen a staggering 738% increase this year. Can you break down what these strategies are and why they’re gaining so much traction?
Discretionary strategies in the on-chain space are investment approaches where managers actively make decisions based on market conditions, much like hedge funds in traditional finance. They might capitalize on arbitrage opportunities, market trends, or specific protocol developments. The massive growth this year comes from their ability to deliver outsized returns in a volatile crypto market. Investors are drawn to the flexibility these strategies offer, especially when paired with the transparency and liquidity of blockchain technology.
How do these discretionary strategies stack up against traditional finance options in terms of performance and benefits?
Compared to traditional finance, discretionary strategies in DeFi often provide similar or better returns, especially in bullish crypto markets, because they can react quickly to opportunities. The real edge, though, comes from benefits like liquidity—you’re not locked into long-term commitments as you might be with some traditional funds. Plus, the transparency of blockchain means you can see exactly where your money is going and how it’s being managed, which is a huge trust factor compared to the often opaque nature of traditional hedge funds.
Yield vaults have emerged as a major entry point for investors, with $18 billion in deposits. What makes them so appealing?
Yield vaults are attractive because they offer a relatively simple way to earn passive income on crypto holdings. Essentially, these are automated protocols that pool investor funds and allocate them to various DeFi strategies to generate returns, often through lending or staking. They’re appealing due to their ease of use—you don’t need to be a DeFi expert to participate—and the yields are often much higher than what you’d get from a traditional savings account. It’s a low-barrier way to dip into on-chain investing.
There’s a notable concentration in the industry, with three protocols controlling 31% of AUM. Do you see this as a strength or a potential risk for the sector?
It’s a double-edged sword. On one hand, concentration in a few leading protocols shows they’ve built trust, scalability, and robust systems, which can stabilize the market and attract more investors. On the other hand, it poses risks—if one of these protocols faces a security breach or operational failure, it could have a ripple effect across the industry. Diversification of protocols and decentralization should remain a priority to mitigate these risks over time.
The data shows smaller wallets dominate in number, but larger investors contribute 70% to 99% of the capital. Can you explain why this disparity exists?
This disparity reflects the nature of wealth distribution in most financial systems, but it’s amplified in crypto due to the high-risk, high-reward environment. Smaller wallets belong to retail investors who are testing the waters with modest amounts, often cautious about volatility. Larger investors, often called whales or dolphins, have the capital to take bigger risks and deploy substantial funds into strategies that can yield significant returns. They also tend to have more access to sophisticated tools and knowledge, allowing them to dominate capital contributions.
How does the performance of automated yield vaults compare to traditional finance markets after accounting for fees?
Automated yield vaults have shown strong performance, often outperforming traditional finance options by a noticeable margin even after fees. This is largely because they can optimize returns through constant rebalancing and access to high-yield DeFi opportunities that traditional markets can’t match. For instance, while a savings account might offer 1-2% annually, some yield vaults can deliver much higher returns, though with added risk. Fees can eat into gains, but the net returns still often come out ahead of traditional peers.
Structured products and on-chain credit seem to lag behind traditional markets. What challenges are holding these areas back?
Structured products and on-chain credit face hurdles like regulatory uncertainty, which makes investors hesitant due to potential legal risks. There’s also a lack of standardization—unlike traditional markets, on-chain products can vary widely in terms of risk and structure, which creates confusion. Additionally, credit protocols often struggle with collateral volatility; since crypto prices fluctuate wildly, over-collateralization is common, reducing efficiency. These areas need more maturity and trust to close the gap with traditional finance.
Discretionary strategies are described as offering hedge fund-like results with added liquidity and transparency. Can you elaborate on how this works and why it’s a game-changer?
In discretionary strategies, managers can pivot quickly based on market signals, much like hedge funds, aiming for high returns. What sets on-chain versions apart is the blockchain’s inherent transparency—every move is traceable on a public ledger, so investors know exactly what’s happening with their funds. Liquidity is another advantage; unlike traditional funds where you might wait months to withdraw, on-chain platforms often allow near-instant access. This combination of performance, visibility, and flexibility is revolutionary, making high-level investing more accessible and trustworthy.
There’s been recent expansion in the industry through acquisitions focused on asset and wealth management. How do you think such moves will impact the on-chain space?
These strategic acquisitions signal a push toward professionalizing the on-chain asset management sector. By integrating traditional wealth management expertise with DeFi innovation, companies can offer more comprehensive services, bridging the gap between crypto and conventional finance. This could attract a broader investor base, especially institutions, and enhance credibility. It also likely means better tools, risk management, and customer support, which will help scale the industry while maintaining trust and stability.
What trends or developments do you foresee shaping the future of on-chain asset management over the next few years?
I see a few key trends on the horizon. First, interoperability between blockchains will become crucial, allowing assets to move seamlessly across networks and increasing efficiency. Second, we’ll likely see more hybrid products that blend traditional finance with DeFi, catering to cautious investors. Lastly, advancements in AI and analytics will enhance automated strategies, making them even more competitive. As these developments unfold, I expect on-chain management to become a mainstream option for a wider range of investors.
Do you think on-chain asset management is becoming a serious competitor to traditional finance, and if so, in what ways?
Absolutely, it’s already a serious contender in certain areas. On-chain management competes by offering higher yields, greater transparency, and lower barriers to entry—you don’t need a million dollars to access sophisticated strategies. It’s particularly appealing to younger, tech-savvy investors who value decentralization and distrust traditional institutions. While it won’t replace traditional finance overnight due to risks like volatility and regulation, it’s carving out a significant niche, especially for yield-seeking and alternative investments.
Finally, for someone new to this space, what advice would you give them if they’re considering investing in on-chain assets?
My advice is to start small and educate yourself thoroughly. Understand the basics of blockchain and DeFi before diving in—there are plenty of free resources online. Only invest what you can afford to lose because the space is volatile. Use reputable platforms and always check the security and audit history of any protocol you’re considering. Lastly, diversify your investments across different strategies or protocols to spread risk. It’s an exciting space with huge potential, but caution and research are key to navigating it successfully.
