Author｜ Danny @IOSG

1. The explosion of Curator mode

DeFi activity has returned to levels close to DeFi Summer, but the on-chain stablecoin supply continues to expand. This means there's increasingly more money on-chain, while DeFi products are not yet widely understood, used, or distributed by a broader user base.

▲ DeFi TVL, Source: Defillama

▲ Stablecoin MC, Source: Defillama

Over the past few years, DeFi infrastructure has solved accessibility and composability, but it has become an extremely difficult game. For ordinary users, what seems like a simple stablecoin yield may actually involve nested lending spreads, multi-layered incentives (funding/airdrops), structured products (pendles), and leverage loops (looping).

▲ USDE AAVE Pendle loop

The risks have long since gone beyond the scope of contract hacking, evolving into a mutual amplification of LTV, liquidation liquidity, and oracle risks. For example, in October 2025, a malfunction in Binance's internal oracle caused a brief flash crash in the price of USDe on its platform, triggering a chain of liquidations.

DeFi is undergoing a counterintuitive evolution: the more mature the technology becomes (upward), the higher the cost for users to understand it and the more difficult it is to assess the risks (downward). When individuals can no longer identify "whose money they are making" and "where the risks are," DeFi's growth hits its ceiling.

Curator is a role that emerged to solve this distribution problem. There's a lack of a direct Chinese translation for it; it's more often referred to as "strategist." As the power to provide returns and price risk shifts from the protocol layer, Curator has become a wrapper layer bridging complex protocols and broad funding sources.

2. What exactly does Curator Business do?

In systems exemplified by Morpho, the protocol provides neutral infrastructure, while Curator determines which assets are available, their risk levels, and their day-to-day management. It undertakes three core responsibilities:

Strategy Selection

The value of a Curator lies in identifying which returns are structural and which are merely temporary opportunities. The strategy is not deployed all at once but needs continuous adjustment as the capital size and risk exposure change. Even with the same USDC strategy, different Curators can produce vastly different results under extreme market conditions; the fundamental difference lies in whether they possess the ability to continuously assess and dynamically adjust leverage.

Risk pricing

In a modular system, the Curator truly determines risk exposure. What collateral is accepted and what leverage is applied are essentially risk pricing decisions. The Curator holds the power to price risk, not just the power to execute it. Even top Curators can make mistakes; for example, Re7 Labs experienced erroneous liquidation of user positions due to price update delays on its Pyth oracle. This serves as a warning: the greatest systemic risk in the current cycle stems from this very issue.

Productized distribution

For users, the product provides a single interface for entry and exit; for the front-end (CEX/wallet), it offers a non-custodial, clearly defined risk-based profit module. It's not about poaching users from protocols, but rather helping funds find a risk structure that is understandable and bearable.

Curator is an asset management business driven by AUM. Because revenue is strongly tied to AUM, it creates incentive tension: expanding AUM can amplify revenue, but too rapid expansion can erode strategy capacity and amplify tail risk.

Market cycles have a very direct impact on Curator behavior. During bull markets, Curators tend to amplify capital efficiency by using leverage, incentive stacking, and cyclical structures; at this time, there are more borrowers, beta masks risk, APY is high, capacity is large, but risk is also high.

In volatile or bear markets, strategies are forced to revert to true sources of return: lending spreads, RWA (Recovery and Waiver) cash flow assets, and low-correlation allocations. True returns outweigh leverage and airdrop gains, and defensive capabilities outweigh offensive capabilities.

▲ Defillama: Curator

3. The Evolution of Distribution Paradigms: Institutional Adoption and the Future of Retail

Risk Curator Protocols Total TVL ≈ $5.68b

AUM is highly concentrated, with Steakhouse Financial at the top and Gauntlet at the top, accounting for approximately $1.55 billion and $1.23 billion respectively. The top two together account for nearly 50% of the market share, which is a very typical power-law structure.

As Curator's assets under management continue to grow (annual growth rate of 2000%), its role has evolved from a strategy executor to a central node for DeFi risk and liquidity.

▲ Curator AUM, Source: Defillama

According to DefiLlama data, as of February 2026, the total TVL of Risk Curators was approximately $5.9 billion, with Steakhouse Financial ($1.53 billion), Sentora ($1.34 billion), and Gauntlet ($1.29 billion) collectively accounting for nearly 70% of the market share, demonstrating a significant concentration effect among leading companies. This means that if a leading Curator's strategy or parameter judgment becomes systematically flawed, its impact will extend far beyond a single protocol.

In the future, Curator will not converge into a single form, but will instead differentiate into at least three categories:

The first type is the capacity-first Curator.

The core objective of this type of Curator is to support large-scale, low-volatility funds. Strategically, it favors sustainable sources such as lending spreads, stable incentives, and RWA (Recovery and Waiver) revenue, emphasizing conservative and interpretable parameters. This type of Curator is more easily integrated by centralized exchanges, wallets, and Fintech front-ends, and is the mainstream form for most large-scale Vaults on Morpho. Some protocols even penetrate deep into the Vault tech stack, helping to build more institutionally friendly Curator businesses from the ground up.

Currently, many large-capital Curators act primarily as borrowers, redistributing the AUM they manage to other Curators (discussed later for their more diverse revenue streams and aggressive strategies)—they decide who to lend to, thereby generating more returns for their own AUM. They essentially become "Curators of Curators," working closely with the opportunistic Curators discussed later.

For institutions looking to enter DeFi, the choice has shifted to building their own Curators or partnering with leading Curators to take the lead and become curators themselves. Morpho, with its open and modular architecture, is becoming the preferred infrastructure for institutions building their own Curator services. Bitwise is a prime example, launching its internally managed non-custodial vault Curator service on Morpho in January 2026, marking a shift in professional asset management from "users" to "builders" of DeFi.

Coinbase, on the other hand, chose a different path, entrusting the backend of its lending products (USDC lending and asset-backed loans such as XRP and ADA) to a third party, Curator Steakhouse Financial, to manage on Morpho—the frontend is a familiar Fintech interface for users, while the backend is driven by DeFi, the so-called "DeFi Mullet" model.

▲ Coinbase DeFi Mutlet

The scale of institutional involvement is growing rapidly. Apollo Global Management, which manages over $938 billion in assets, signed a strategic cooperation agreement with Morpho in February 2026 to acquire up to 9% of the $MORPHO governance tokens over four years. Apollo's strategy is two-pronged: on the one hand, its credit funds have tokenized RWA assets such as ACRED and ACRDX through Securitize and Anemoy, and have been integrated into the Morpho lending market through curated initiatives from leading curators like Steakhouse; on the other hand, by holding protocol governance tokens, it is directly participating in shaping the future of on-chain credit infrastructure.

In the same month, Taurus, which provides custody services to more than 40 banks, also integrated Morpho into its custody platform, enabling traditional financial institutions to directly allocate funds to Morpho Vaults within existing compliance frameworks, which are then directly managed by Curator. The question of institutions entering DeFi has evolved from "whether to participate" to "at what level to participate".

The second type is the opportunity-driven Curator.

These Curators focus on new structures, new assets, and early incentive windows, willing to sacrifice capacity and take risks for higher alpha. Typical characteristics include a defined AUM cap, short strategy lifecycles, and high volatility tolerance. Their clients are often professional funds or the DeFi community. These Curators aggressively enter emerging L1/L2 ecosystems. For example, when a brand-new public chain (such as Hyperliquid, Plasma, Monad, Megaeth) launches, it usually comes with generous liquidity incentive programs to attract early users and developers. Opportunity-driven Curators become among the first participants, quickly deploying vaults on these new chains and leveraging their expertise to capture these one-off early benefits for users, such as airdrops and high liquidity mining rewards.

In addition, these Curators explore new assets, new structures, and new DeFi. Unlike blue-chip Curators who focus on mature assets (such as ETH and USDC), opportunity-driven Curators are more willing to incorporate new asset classes into their strategies. For example, Re7 Labs became the Curator providing RWA assets for BlackRock's BUIDL, pioneering the large-scale application of RWA in lending.

Another advantage of these Curators is their extreme sensitivity to market changes, enabling them to respond quickly and profit from market fluctuations or specific events. When constructing their strategies, they often incorporate more complex logic, such as cross-protocol interest rate differential arbitrage or profiting from clearing mechanisms. While this strategy carries higher risk, it can also generate returns far exceeding the market average.

The third category is productized Curators.

Productized Curator goes beyond backend configuration; it further encapsulates strategies into Vault as a service, assets, or stablecoins, directly engaging users. This approach demands extremely high levels of risk control, transparency, and accountability, but once established, it offers the highest distribution efficiency.

The problem for these Curators is finding strategies that offer both high returns and large capacity—almost all DeFi strategies have a defined capacity cap. Take the current mainstream looping/basis strategy as an example: its market size is approaching $20 billion (approximately 10% of DeFi TVL), compared to only about $5 billion six months ago. Once the capacity is quickly filled, marginal returns drop significantly, and the margin for error shrinks dramatically.

Once this type of Curator product is successfully built, it can be better integrated into Fintech apps and receive Web2 funding, which is an important step for Curator to achieve mass adoption.

4. Return DeFi to users

The biggest problem with DeFi right now is that its complexity and risk exposure methods have exceeded the decision-making capabilities of individual users. This makes users hesitant to deposit their money. Incidents like Streamfinance's misuse of funds leading to collapses, coupled with a bear market, have caused the overall yield-bearing stablecoin TVL to decline, leading to a renewed concentration of funds in conservative lending protocols.

Today, about 45% of DeFi TVL ($56B) is chasing new yield opportunities, concentrated in protocols such as Aave, Morpho, and Spark. However, a large amount of USDC remains idle for a long time. The reason is not a lack of opportunities, but the high cost of strategy understanding, risk assessment, and dynamic management.

For most users, what they really need is not more protocol options, but rather:

• A simple and reliable entry point;

• A diversified and constantly evolving revenue structure;

• Clear and understandable risk exposure methods;

Entry points can be addressed by streamlining current Vault exposure methods or through productization. The revenue structure can be improved by bringing more high-quality Curators to the market. I believe the current lack of market confidence stems from the need to build a healthy and transparent Curator auditing system, including:

• The asset allocation path is verifiable on the blockchain.

• Risks are labeled in a structured manner;

• In extreme cases, the user knows the exit conditions and exit path.

This doesn't completely eliminate risk, but it transforms it from vague systemic uncertainty into understandable and priced options. Without this transparency, Curator could easily evolve into a shadow banking system, no different in essence from Celsius and BlockFi. Conversely, if Curator can break down, price, and converge risk in advance at the intermediate layer, it may become a buffer at the protocol layer rather than an amplifier, keeping the overall DeFi risk under the control of professionals.

▲ DeFi dashboard for asset management transparency

In the long run, Curator is not the end of DeFi, but it is almost an indispensable layer before DeFi can reach a larger user base. DeFi has proven the viability of its infrastructure; what is lacking is a middleware layer that can package, distribute, and embed these capabilities into real-world use cases. Curator is filling this role.

When complexity is properly encapsulated, risks are clearly marked, and the boundaries of responsibility are sufficiently clear, DeFi can truly return to its original promise: not just serving a small group of professionals, but becoming a financial system that can be widely participated in.