CoinShares: TradFi and DeFi Are Merging Into a Hybrid Finance System

The infrastructure of traditional finance and blockchain protocols is no longer running in parallel — it is fusing into a unified system that CoinShares calls "Hybrid Finance." The firm published its findings in a joint report with Token Terminal.

"For the first time, we're introducing a Hybrid Finance report in collaboration with @tokenterminal to map the shift happening across markets. From @ethereum to on-chain platforms like @HyperliquidX, @aave, @MakerDAO, and others. Trading, lending, and capital allocation are…" — CoinShares (@CoinSharesCo), original post

CoinShares analysts noted that public blockchains are already settling institutional assets, Wall Street firms are issuing funds on Ethereum, and derivatives platforms have moved entirely on-chain. Bitcoin, in their view, served as the catalyst for this convergence by proving that crypto can earn the trust of major market participants.

Why This Matters

Hybrid finance marks a shift from abstract narratives about TradFi-DeFi convergence to concrete, measurable metrics. CoinShares identifies three foundational components of this emerging structure:

• Settlement infrastructure capable of servicing real economic activity.
• Tokenization of traditional assets — treasuries, equities, and commodities.
• On-chain applications generating sustainable revenue.

The report's authors believe that this year the segment will definitively transition from a notable trend into a measurable market structure.

The Numbers Behind the Trend

Stablecoins remain the largest segment of hybrid finance. In Q1, their total supply reached $297.6 billion, up 37.2% year-over-year. USDT from Tether and USDC from Circle continue to lead the market.

Tokenized fund volume surged 181% over 12 months to $9 billion, with much of the demand driven by products backed by short-term U.S. Treasuries. The market capitalization of tokenized equities grew from $27.6 million to $773.3 million, while tokenized commodities surpassed $4.9 billion. The total RWA (real-world assets) market is estimated at approximately $29 billion.

Where the Revenue Flows

A dedicated section of the report addresses revenue distribution within the new market architecture. The core finding: applications and companies earn far more than the base-layer blockchains they operate on.

In Q1, leading on-chain businesses generated $587.9 million in revenue. The bulk came from a small group of trading platforms and stablecoin issuers, including Hyperliquid and Sky.

Ethereum settles approximately $180 billion in stablecoins. At a 4% yield on underlying assets, issuers could capture roughly $7 billion in annual revenue, while the network itself earns only transaction fees. CoinShares described this as a "structural gap" between the economic value a blockchain facilitates and the revenue it actually captures.

The Hyperliquid Case Study

CoinShares highlighted Hyperliquid as a prime example of the hybrid model. The platform combines its own L1 blockchain with a perpetual DEX. In Q1, Hyperliquid generated $178.7 million in revenue, with approximately 96% coming from trading activity and a minimal contribution from the base chain.

According to CoinShares, the Hyperliquid case demonstrates that the primary economic value in on-chain finance can concentrate at the application layer. A vertically integrated platform captures revenue directly from user activity, unlike general-purpose blockchains that primarily earn through fees.

This model puts pressure on general-purpose networks. If revenue continues to concentrate in applications, blockchains will need to move up the stack — either by launching their own services or integrating more closely with key protocols.

An Emerging Market Structure

The report concludes that hybrid finance can now be evaluated through specific segments: stablecoins, tokenized funds, equities, commodities, on-chain businesses, and settlement networks. The value distribution mechanism works as follows: assets attract liquidity, applications convert it into revenue, and blockchains monetize the associated transactional activity.

The critical question for the market going forward is which issuers, applications, and networks will be able to retain liquidity and user activity in the coming quarters. Earlier in April, analysts at Jefferies warned that recent DeFi hacks could temporarily slow traditional financial firms' interest in adopting blockchain technology.