Crypto credit takes on savings account features: Asia Morning Briefing

Crypto credit markets are starting to function more like traditional cash-management systems, with deeper liquidity suppressing volatility even as demand reaches record highs, according to market maker Flowdesk.

In its 2025 crypto credit review, Flowdesk argues that the disappearance of easy yield reflects a structural shift rather than a cyclical downturn. Yields across staking, stablecoin lending, and bitcoin-backed credit have compressed not because demand has fallen, but because liquidity has thickened and arbitrage has become more efficient.

Participation has expanded across onchain money markets, derivatives funding, and futures basis trades, Flowdesk said. The influx of capital has dampened volatility and flattened returns, even as usage climbed to unprecedented levels.

Onchain metrics illustrate the change. Ether staking yields have stabilized near 2.5%, well below the double-digit peaks seen in earlier cycles, despite total value locked approaching $30 billion. Stablecoin lending shows a similar pattern: USDC borrowing demand hit record highs in 2025, but an even larger surge in supply kept lending rates compressed. According to Flowdesk, the balance between strong demand and abundant liquidity reduced volatility rather than amplifying it.

Derivatives markets echo the trend. Perpetual funding rates rarely entered euphoric territory even as crypto prices reached new highs, while futures basis spreads remained narrow as traders increasingly favored delta-neutral strategies over directional exposure. The result has been a flatter yield curve across crypto markets, with fewer pricing dislocations to exploit.

Bitcoin-backed lending reflects the downstream impact of these dynamics. BTC’s liquidity and collateral quality have attracted a broader set of lenders, including traditional finance firms, transforming what was once a bespoke trade into a standardized balance-sheet business. As competition increased, margins tightened, loan-to-value ratios became more conservative, and excess returns faded.

Flowdesk concludes that crypto credit now resembles a mature financial system. Returns from ETH staking and USDC lending increasingly cluster in the mid-single-digit range, comparable to money market funds, savings accounts, and short-dated U.S. Treasuries. Deeper liquidity, tighter arbitrage, and broader participation have turned core yield products into infrastructure rather than sources of alpha.

With baseline yield now crowded and efficient, Flowdesk argues that the next opportunities will come from more complex structures, including bespoke credit strategies, altcoin-backed lending, and hybrid on- and offchain products—often referred to as CeDeFi.

Market movement

Bitcoin (BTC): Bitcoin was little changed at the start of Asian trading, slipping about 0.3% to around $91,000, while remaining nearly 4% higher on the week.
Ether (ETH): Ether eased roughly 0.4% to about $3,150, trimming gains after climbing 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. Spot prices fell 1.26% to roughly $4,436 an ounce, as steady wage growth limited the data’s impact on markets.