Alea Research Report: After major investors withdraw, Centrifuge's fund size drops by 40% and fee revenue actually increases, but CFG holders get nothing.

TechFlow Summary: In the real-world asset (RWA) tokenization sector, Assets Under Management (AUM) is often viewed as the sole gold standard for measuring protocol success. However, Centrifuge’s surreal performance in Q3 shattered this linear assumption: the withdrawal of two institutional whales caused fund sizes to plummet by 40%, yet total fund fee revenue under the protocol counter-trended to increase by 2.8%.

The secret behind this fee paradox lies in a qualitative shift in asset composition. The higher-fee AAA-rated credit fund JAAA replaced the lower-fee treasury fund JTRSY, elevating Centrifuge to second place industry-wide with a composite return of 39 basis points per dollar. However, beneath these polished unit profitability metrics, CFG governance token holders face a harsh reality: they capture nothing.

This article provides an in-depth analysis of Centrifuge’s unique fee funnel, the asset reallocation by institutional whales, and the interest negotiation behind restructuring proposal CP172, offering investors a window into the structural divide in how RWA protocols actually capture economic value.

In Q3 2026, every $1 of assets across Centrifuge’s funds generated higher fee income: despite an average total fund size decline of 9%, overall fund fees counter-trended to grow by 2.8%.

Stablecoin issuer Ethena had previously significantly increased its holdings in JAAA (AAA-rated collateralized loan obligation/CLO fund), which charges exactly twice the fee rate of the short-term treasury fund JTRSY.

However, by September, Grove, a key capital allocator for the Sky stablecoin protocol, redeemed almost all of its JTRSY, while Ethena simultaneously exited most of its JAAA holdings. So, what will fill the massive hole left by this outflow?

Chart: Bridge breakdown of fund fees from Q2 to Q3 2026 (Source: Alea Research)

The shift of capital toward JAAA generated $145,000 in new fee income for the protocol, a surplus that completely offset the $123,000 loss caused by shrinking fund sizes.

JAAA charges a 0.50% annual management fee, compared to JTRSY’s mere 0.25%. JAAA contributed 22 basis points to the overall fee rate in Q3, up from 15 basis points in Q2.

Key Takeaways

Total fund fees grew counter-trend by 2.8% to $1.35 million in Q3, while the average total valuation of funds declined by 9% over the same period. All of these fees went entirely to each fund’s management team, with CFG holders receiving absolutely nothing.

As Grove trimmed its treasury fund positions and Ethena redeemed most of its JAAA, fund sizes under Centrifuge plummeted 40% to $931 million. By comparison, the median AUM change for the other 13 tokenized fund issuers in Q3 was -0.2%.

Excluding Grove and Ethena, external independent holder positions grew 45% to $131 million, with addresses holding over $1,000 increasing from 58 to 81. Notably, JAAA on Aave Horizon alone contributed a $32.9 million increment.

As of October 1, Basin, Grove’s liquidity pool, held $100 million in reserves to facilitate immediate redemptions for JTRSY holders. Grove’s governance subsequently approved a $1.5 billion credit line cap.

The community overwhelmingly passed the CP172 governance proposal with 98.5% in favor, allowing the conversion of one CFG token into one share of Centrifuge, Inc. stock. Voter participation reached 10.6% of the total CFG circulating supply.

Calculated per $1 of fund AUM, Centrifuge’s funds generated more revenue than the majority of their peer fund issuers.

Chart: Comparison of the top seven tokenized fund issuers ranked by revenue per dollar (Source: Alea Research)

In Q3, Centrifuge’s funds earned an average of 39 basis points per $1, ranking second among six revenue-generating fund issuers and significantly outperforming the 23-basis-point median of the other five.

Credit-focused funds explain this elevated fee level: the treasury funds managed by Spiko, Superstate, and BlackRock’s BUIDL yield only 16 to 24 basis points. However, amid Grove’s redemptions and Spiko’s aggressive expansion, Centrifuge’s share of the total AUM across the top seven issuers was halved in Q3, dropping from 11.2% to 6.5%.

Fund Management Fees Belong to Managers

Anemoy, established specifically to develop Centrifuge’s fund business, acts as investment manager issuing several of the largest funds, with Janus Henderson serving as investment advisor for both JTRSY and JAAA.

All management fees flow entirely to these two entities. Fund terms do not disclose any profit-sharing ratios, leaving CFG token holders completely excluded from this revenue stream.

The CP172 proposal aims to swap CFG tokens for corporate shares in Centrifuge, Inc., an entity intended to wholly own all subsidiaries within the group.

To date, no legal documentation confirms that this company has rights to a share of fund management fees. A previous CP162 proposal, suggested in August 2025 to have the foundation collect Anemoy’s fees, failed to reach quorum and was officially invalidated on September 18, 2025.

Grove Rotates Out of Treasury Funds but Retains JAAA

Changes in fee income strictly followed Grove’s asset rotation trajectory. Grove systematically reduced its treasury fund holdings across major issuers but staunchly retained its credit exposures.

Chart: Changes in Grove’s asset positions from June 30 to September 30, 2026 (Source: Grove disclosure)

Grove retained only 36% of its original JTRSY position and 17% of BUIDL, while keeping its JAAA holdings steady at a high of $394 million.

It channeled the withdrawn cash heavily into a warehouse credit line partnered with Galaxy and injected funds into the Morpho vault. For Centrifuge, this rotation effectively preserved high-fee capital while draining low-fee capital.

However, Ethena’s exit directly hammered the high-fee funds. Between September 21 and 22, Ethena cumulatively redeemed $200 million in JAAA, after which its holdings stagnated at $105 million from September 23 onward.

During this period, USDe’s issuance did not contract; Ethena simply shifted this capital into institutional lending, with its backing scale expanding from $508 million to $686 million between September 14 and October 20.

How to Fill the Fund Shortfall

Based on year-end September 30 balances, the fund’s annualized fee income now stands at approximately $3.81 million, down 29% from the Q3 annualized run rate of $5.34 million.

To bridge this revenue gap, attracting new subscription capital is urgently needed. Holding experience for these funds has greatly improved: JTRSY can now be redeemed immediately in large amounts via Grove’s Basin, while Aave has also significantly raised its borrowing-to-value ratio for JAAA.

Chart: Projected new capital required to offset outflows (Source: Alea Research)

To restore fee income to Q3 peak levels, approximately $307 million in new JAAA capital would be needed (equivalent to 1.2 times Ethena’s June allocation), or alternatively, $614 million in new JTRSY subscriptions.

Grove’s Basin offers immediate payouts to exiting JTRSY holders and cancels repurchased shares, greatly accelerating capital exit efficiency without generating additional management fees.

On October 17, Aave significantly raised the staking loan-to-value ratio (LTV) for JAAA on Horizon from 81% to 87%. As long as JAAA’s yield consistently exceeds borrowing rates, this delivers higher returns for leveraged round-trip position holders.

The overall outlook remains cautiously constructive. Despite the sequential departure of two core funding sources, overall fund income still posted growth because remaining capital is anchored in credit assets yielding double the rate of treasuries per dollar.

The final fee levels for Q4 will be determined by December 31: if the weighted average fee holds above the 37 basis points seen in Q3, it will signal that the strategic migration toward higher-fee credit assets has fully consolidated.

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