From pools to vaults: The $21B RWA wave reshaping onchain lending

Executive summary

The onchain lending sector reached 67 4 billion in January 2026 up from 19 7 billion in early 2024.

Within this market, a fundamental architectural divide has emerged pooled protocols that share risk across liquidity pools versus isolated market protocols that compartmentalize risk while aggregating capital through curator managed vaults.

Key findings:

Market structure

Aave V 3 leads with 34 3 B TVL 50 9 share). Morpho ranks 2 with $6,412 B TVL (9.5 share), having grown 58,000%+ from $11 M in 24 months while originating $1.25B+ in institutional loans through Coinbase alone.

Institutional adoption

Morpho secured the first G-SIB (globally systemically important bank) partnership when Société Générale selected it for MiCA- compliant stablecoins.

The Ethereum Foundation, Coinbase, and Fasanara have also deployed significant capital.

RWA opportunity

The distributed tokenized RWA market stands at $21B, projected to reach $2T by 2028. Protocols with institutional grade compliance capabilities are positioned to capture this growth

Five forces

Capital efficiency, risk architecture, RWA integration capability, developer ecosystems, and multi chain distribution consistently predict protocol success.

Core thesis

Isolated market architecture meets institutional requirements (risk compartmentalization, compliance flexibility, audit certainty) that pooled models cannot fully address

In onchain lending, how you build matters as much as what you build.

The paradox

78 of DeFi lending protocols operate on an architecture that creates systemic risk. The remaining 22 is capturing disproportionate growth.

This report examines why.

The onchain lending sector reached 67 4 billion in January 2026 Within this market, a fundamental architectural divide has emerged between protocols that share risk across liquidity pools and those that isolate risk in separate markets The data reveals that this distinction, more than any other factor, predicts which protocols attract institutional capital and which face structural headwinds.

The central question is not which protocol is "best It is why certain architectural choices consistently outperform others across capital efficiency, institutional adoption, risk management, and multi chain expansion.

Understanding this divide is essential for anyone allocating capital, building infrastructure, or evaluating the trajectory of onchain credit markets.

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