HTX Ventures Decodes CeFi, DeFi, and TradFi Convergence: Institutional Finance Enters the Era of Modular Division of Labor

Recently, HTX Ventures, the global investment arm of Huobi HTX, released its latest research report titled "The Convergence of CeFi, DeFi, and TradFi in 2026: How Institutional-Grade Hybrid Architecture Is Taking Shape". The report posits that over the past few years, these three systems have completed their institutionalization along their respective product lines: exchanges have developed institutional custody and prime brokerage services, DeFi protocols have introduced professional risk managers and Vault structures, and traditional financial institutions have continued to advance the tokenization of funds and treasury bonds. Entering 2026, layers such as custody, collateral, execution, yield, and risk management have been disaggregated and specialized, with professional institutions across the three systems collaborating through modular division of labor.

Whether digital asset management is pointing toward a more long-term shift in market structure? HTX Ventures believes that demand-side changes are structural, and supply-side capabilities are already in place. However, the sustainability of this architecture depends on two conditions: whether short-term interest rates can cover intermediary costs, and whether a clear framework for loss liability can be established.

Tokenized Funds Begin Entering Exchange Margin Systems

Institutional trading at exchanges requires upfront margin deposits, which typically do not generate yield while locked. According to CryptoQuant data, stablecoin reserves at centralized exchanges stood at approximately $61.8 billion in July 2026. Based on the 3.86% yield of the 3-month US Treasury bill as of September 1, the industry foregoes approximately $2.39 billion in annual interest income. In the era when interest rates hovered near zero, this opportunity cost was negligible; with rates rising, it has begun to be taken seriously by institutions.

Franklin Templeton's collaboration with top-tier exchanges on over-the-counter collateral represents a representative response to this demand. Qualified institutional clients can use tokenized money market fund shares, BENJI, as trading margin: the shares are held by a third-party custodian, the exchange logs their mirror value on a risk ledger, positions trade normally on the exchange’s matching engine, and the fund shares continue to accrue Treasury yields while pledged.

HTX Ventures believes this implies that one of RWA's largest future markets may be the collateral layer within the digital asset financial system. Tokenized treasuries and money market funds have always seen low turnover rates. According to rwa.xyz data, as of September 9, 2026, the total on-chain value of BENJI was approximately $687 million, with monthly transfer volumes totaling only around $18.17 million. If the primary utility of these assets is to serve as collateral, the metric for measuring their success should shift to how many trading venues are willing to accept them as margin.

DeFi Yields Accessed by Institutional Accounts via Custodians and Trading Platforms

Historically, obtaining DeFi yield exposure required institutions to set up their own wallets, manage signing permissions, and select protocols, with operational complexity and internal risk approval processes remaining major hurdles. This landscape was rewritten in the first half of 2026: Fireblocks integrated Aave and Morpho into its platform serving over 2,400 institutional clients, BitGo opened access to Aave, Spark, and Tesseract via its Narval gateway, and partnered with Morpho to launch an institutional Vault. On the trading platform side, the backend for mortgage products at certain exchanges is powered by Morpho, launched in early 2025, and had facilitated approximately $2.3 billion in cumulative loans by mid-May 2026. Institutions complete configuration on familiar front ends, while lending and yield generation occur behind the scenes through on-chain protocols.

As access expands, decisions on which lending market to allocate capital to and the magnitude of exposure are delegated to professional risk managers such as Galaxy, Sentora, Steakhouse, and Gauntlet. According to DefiLlama statistics, this sector currently manages approximately $9.26 billion in assets. The report builds a schematic model based on this: calculating on a base yield of 3.86%, every $100 generates a $3.86 yield pool annually (386 basis points), while custody, mirror settlement, Vault infrastructure, lending protocols, and risk managers collectively take approximately 100 basis points. Among these, risk managers account for approximately 58 basis points, estimated at the upper bound of a 15% performance fee, representing over half of the intermediary layer's revenue. However, they bear no custody responsibility nor make capital-based compensation for losses. If short-term rates fall to 2.00%, the same fee structure would consume approximately 37.5% of total returns.

The New Division of Labor Must Still Be Tested by Loss Events

While the division of labor is clear in theory, determining who actually bears responsibility becomes evident only under stress events. In November 2025, an external fund manager at Stream Finance incurred approximately $93 million in losses, causing its yield-bearing stablecoin, xUSD, to drop by roughly 77% within 24 hours. Since xUSD was repeatedly used as collateral across multiple lending markets, this loss eventually cascaded into a cross-protocol debt exposure of approximately $285 million. Meanwhile, some markets had hard-coded xUSD's oracle price at $1, preventing liquidations from triggering when it truly depegged. In April 2026, KelpDAO's cross-chain bridge was hacked, and approximately $292 million in unsupported rsETH was deposited into Aave to borrow real-world assets. Despite having no vulnerabilities in its own contracts, Aave saw $8.45 billion in deposits drained within 48 hours.

Both incidents exposed the same set of problems. The on-chain environment lacks buffers like clearinghouses and settlement cycles, meaning a single oracle misconfiguration can propagate losses across multiple protocols within hours. Furthermore, the entities collecting performance fees do not align with those ultimately bearing the losses, allowing protocol operators, risk managers, and custodians each to find reasons to avoid responsibility.

The Three Systems Are Assembling into a Unified Institutional Stack

HTX Ventures believes that if these trends continue, the institutional digital asset market will gradually form a unified institutional-grade stack: tokenized treasuries, money market funds, stablecoins, and mainstream crypto assets will enter a consolidated collateral management layer via qualified custodians, then be deployed to exchanges, OTC desks, and DeFi lending markets based on demand, with risk managers, oracles, compliance, and monitoring woven throughout the entire process. This architectural restructuring alters the pathways of risk transmission and the entities responsible for absorbing losses, but the total volume of risk does not diminish as a result.

The report outlines three indicators observable over the next two quarters: whether risk managers' AUM can recover following the next major loss event, whether cases emerge where the same tokenized collateral is accepted simultaneously by more than one trading venue, and whether new institutional client adoption for OTC collateral slows down when the 3-month Treasury yield drops below 3.00%. As an investment research firm long focused on institutional digital asset infrastructure, HTX Ventures will continuously track these metrics, using actual data to test and update its assessment of this wave of convergence.

About HTX Ventures

HTX Ventures is the global investment arm of Huobi HTX, combining investment, incubation, and research to identify the world's finest and smartest teams. As an industry pioneer, HTX Ventures possesses over 11 years of blockchain development experience, excelling at identifying cutting-edge technologies and emerging business models within the space. To drive growth within the blockchain ecosystem, we provide comprehensive support to projects, including funding, resources, and strategic advice.

HTX Ventures currently supports over 300 projects spanning multiple blockchain sectors, with several high-quality projects already listed on Huobi HTX. Additionally, as one of the most active FOFs, HTX Ventures invests in 30 top-tier global funds and collaborates with premier blockchain funds worldwide such as Polychain, Dragonfly, Bankless, Gitcoin, Figment, Nomad, Animoca, and Hack VC to co-build the blockchain ecosystem. Visit Us.

For investment opportunities and partnerships, please contact VC@htx-inc.com at any time.

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