TLDR Tech / Crypto
Vaults: The Infrastructure Layer for Institutional Finance
Castle Labs' 'Vaultification of Finance' report maps $120.4B in net DeFi vault TVL across eight structural categories, down roughly 50% from the October 2025 peak of $241B, with the Stream Finance blowup, Resolv incident, and Kelp hack driving cascading liquidations that hit lending, liquid staking, and restaking vaults hardest. RWA credit vaults diverged from the broader drawdown, posting 37.8% growth over the same stress period, with Aave's Horizon product accumulating $350M+ TVL as institutional allocators rotated toward off-chain yield exposure. The Kelp hack stripped $12B+ from Aave's TVL and compressed the Aave-to-Morpho ratio from 5-6x down to below 2x, while Morpho's Base deployment scaled from $604M to $2.8B with roughly 40% of USD TVL in cbBTC backing over $1B in Coinbase-originated loans. Aave's V4 launch introduced modular spokes with a unified liquidity hub, and Spark captured the largest post-rsETH hack inflows, pointing to modular architecture and RWA integration as the two structural differentiators separating protocol winners in the post-stress vault market.
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