Grayscale says on-chain vaults, a $7.3B market, could disrupt the $1.5T CLO space. S&P Global sees real-world asset tokenization and SEC clarity as key. Grayscale's Pandl says vaults could follow stablecoins into mainstream finance.
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On-chain lending vaults, which pool crypto assets to generate yield through smart contracts, could become the next crypto product to break into mainstream finance. Grayscale's Head of Research Zach Pandl compared the structure to collateralized loan obligations, or CLOs, a $1.5 trillion market where asset managers bundle corporate loans and pass interest payments to investors. In vaults, asset managers and custodians are replaced by code and curators like Steakhouse and Gauntlet.
Pandl said the vault market is worth about $7.3 billion, with three curators controlling more than 70% of the share. There are 57 curators managing over 3,000 vaults. He argued the structure could scale to disrupt the CLO market, which proved resilient through the 2008 financial crisis and the 2020 pandemic. Ethena, the stablecoin protocol, has already turned to CLOs to diversify yield generation away from crypto's volatility, Pandl noted.
S&P Global echoed a similar view in a recent report. "We expect real‑world asset applications of vaults to expand and ultimately become their dominant use case," the rating agency wrote, citing real-world asset tokenization and regulatory clarity as catalysts. S&P added that many institutional investors are avoiding direct investment in vault tokens because they cannot be certain which regulatory regime applies.
In July, the U.S. Securities and Exchange Commission said most vaults will fall under federal securities law. The agency said the determination will be made case by case based on each vault's design. That leaves some uncertainty, though the SEC's willingness to address the question points toward clearer rules over time.
Pandl drew a parallel to stablecoins and tokenized assets, products that started as niche crypto experiments and are now used by traditional finance firms. Vaults, he said, could follow the same path. The SEC's July statement is scheduled for further review in the coming months, with industry groups expected to submit comment letters.
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