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The easy yield in crypto is gone, and market maker Flowdesk thinks the reason is structural rather than cyclical.
In its 2025 crypto credit review, the market maker argues that yields compressed across staking, stablecoin lending, and bitcoin-backed credit. This isn't due to low demand, but instead to liquidity deepening and arbitrage tightening, Flowdesk wrote. Across onchain money markets, derivatives funding rates, and futures basis trades, participants increased, which lowered volatility and flattened returns, even as usage hit record levels.
Onchain data illustrates the shift. ETH staking yields have settled near 2.5%, far below the double-digit spikes seen in earlier cycles, despite total value locked (TVL) climbing toward $30 billion.
Stablecoin lending followed a similar path. USDC borrow demand surged to all-time highs in 2025, but an even larger influx of supply kept rates pinned at lower levels. According to Flowdesk, the balance between heavy demand and abundant liquidity reduced volatility rather than amplifying it.
Derivatives markets tell the same story, Flowdesk writes.
Perpetual funding rates rarely pushed into euphoric territory, even as prices reached new highs, while futures basis spreads stayed compressed as traders favored delta-neutral strategies over outright speculation. The result was a flatter yield curve across crypto markets, with fewer dislocations to monetize.
Bitcoin-backed lending reflects the downstream effect. BTC’s liquidity profile and collateral quality attracted a wave of new lenders, including traditional finance firms, turning what was once a bespoke trade into a standardized balance sheet business. As more desks competed for the same borrowers, margins narrowed, loan-to-value ratios tightened, and excess returns disappeared.
Flowdesk concludes that crypto credit is now behaving like a mature financial system.
After all, returns from ETH staking and USDC lending now cluster in the same mid-single-digit range as money market funds, savings accounts, and short-dated Treasuries.
Deeper liquidity, better arbitrage, and broader participation have transformed core yield products into infrastructure rather than a source of alpha.
So, if vanilla yield is crowded and efficient, where will the next trade come from? Flowdesk argues it will be from complex financial products, including bespoke credit, altcoin collateral, or hybrid on and offchain structures (or CeDeFi as it's called).
BTC: Bitcoin was little changed as Asia began its trading day, slipping about 0.3% to roughly $91,000, even as it remained up nearly 4% over the past week.
ETH: Ether slipped about 0.4% to roughly $3,150, trimming gains after rising more than 6% over the past week.
Gold: Gold continued to face technical selling pressure despite a weaker-than-expected U.S. private payrolls report showing 41,000 jobs added in December, below forecasts, with spot prices slipping 1.26% to about $4,436 an ounce as stable wage growth muted the data’s market impact.
Nikkei 225: Japan’s benchmark Nikkei 225 index opened 0.46% lower.
