[Recap] The Search for Sustainable On-Chain Yield

On August 19, 2026, The Tie hosted an Innovator Webinar examining where sustainable digital-asset yield comes from and what institutions must be able to underwrite before allocating at scale. The discussion was moderated by Jackson Weinreb, Director of Protocol Sales at The Tie, and featured David Markley, Chief Operating Officer at YieldPoint; Mike De Melo, Head of Finance and Strategy at RAAC; and Philippe Engels, BD, Partnerships and Strategy at Avantgarde Finance.

Watch the full webinar here.

Who Actually Pays the Yield

The panel opened on the question institutions ask first and protocols answer least clearly: when a product pays yield, who is on the other side of that payment, and why would they keep making it? Three answers emerged, each a different source of return.

At YieldPoint, the payers are leveraged traders in the perpetual futures market. Its token Unity holds spot crypto and shorts an equal notional amount of perpetuals, so when longs pay funding to shorts, that funding flows to holders. David framed the demand as structural rather than promotional: crypto has a persistent appetite for long leverage and a limited balance sheet willing to supply it, and that imbalance does not vanish when a marketing budget does.

At Avantgarde, a DeFi-native asset manager active in the space since 2016 and running strategies since 2019, yield is paid by borrowers in lending markets, options counterparties paying premiums, and the real-world cash flows supporting tokenized assets.

At RAAC, the return profile combines real-world cash flows with DeFi-native incentives. Mike described rental income from fully paid properties as a recurring source of revenue that is less directly tied to crypto-market activity. Curve-linked emissions can supplement liquidity and user incentives, while RAAC's planned lending layer is intended to create an additional source of borrower-paid yield. The institutional question is therefore not only how high the combined return is, but which portion persists if protocol incentives decline.

The shared point was that yield has to come from a real source, whether leverage, lending fees, Treasury interest, an options premium, or rental income. Nothing is free.

What Survives Underwriting

The distinction the panel kept returning to was between yield that comes from an economic activity and yield that comes from a customer-acquisition budget. David was blunt about the industry's record, describing years of dressing up marketing spend as yield, the come-one-come-all rates that vanish the moment the incentive pool runs dry. His test was three questions: who pays the yield, what are they paying for, and would they keep paying it if the protocol did not exist?

Philippe added that on-chain execution can materially improve transparency because allocations and transactions are directly observable. But visibility into transactions is not the same as complete underwriting: institutions still need reliable information on liabilities, custody, counterparty exposure, valuation, and off-chain obligations.

Institutions also judge on-chain yield against what they can already access. David positioned tokenized money market funds as the on-chain risk-free rate and the CME Bitcoin basis trade as the closest off-chain parallel, with the on-chain version paying a meaningful premium for smart-contract, custody, counterparty, and venue-concentration risk. Philippe drew the hard line: if a strategy only clears Treasury bills by a little, take the Treasury bill.

Mike noted that as benchmark rates have risen, the hurdle for on-chain strategies has risen with them, an argument for a core-and-explore approach rather than chasing a single headline number.

Scaling the Opportunity Set Without Diluting Discipline

As Bitcoin and Ethereum basis trades become more crowded, YieldPoint is expanding across a broader set of perpetual markets. David argued that this creates access to a wider and less-arbitraged funding surface, particularly as perpetuals expand beyond crypto into tokenized equities, commodities, and other financial assets.

The additional return does not come without additional risk. Altcoin perpetual markets often have thinner books, greater price impact, more execution complexity, and exposure to less-established venues. YieldPoint therefore sizes positions against open interest and trading volume, conducts venue and counterparty diligence, and tests new markets using its own capital before moving them into the broader portfolio.

David emphasized that even a triple-digit funding rate can be unattractive if slippage, liquidity, or venue quality makes the trade difficult to manage. The broader institutional lesson was that capacity cannot be judged by headline demand alone. A strategy remains sustainable only if expanding the opportunity set does not require weaker counterparties, thinner liquidity, or looser risk limits.

When a Rising APY Is a Warning

Philippe took high APY head on, since in lending markets a climbing rate is genuinely ambiguous. The borrow rate is a formula, and it can rise because lending supply is leaving or because borrow demand is growing, two situations that call for opposite responses. The work is understanding how liquidity is structured and whether the stress behind a rate is specific to one asset or part of a wider dislocation. He pointed to a recent episode where liquidity thinned across markets very quickly.

Stress is not automatically a reason to walk away, since the risk being priced is sometimes uncorrelated to the position at hand. The discipline is separating noise from signal.

Mike added that an elevated launch APY can reflect a fixed reward budget spread across a relatively small asset base. That does not automatically make the return unsustainable, but institutions still need to determine whether the reward economics can scale as deposits grow.

What October 10 Tested

The conversation turned from how returns are made to how principal gets lost, with the October 10 liquidation event, by many accounts the largest in crypto history on a notional basis, as the reference point. David reported that Unity's maximum intraday drawdown was roughly 39 basis points, with the portfolio net positive again by the end of the day. He characterized Unity as an outlier and said some competing strategies recorded nine-figure holes in net asset value that contributed to subsequent contagion.

What protected the book, in his telling, was the boring things: minimal leverage, position sizes set against each asset's open interest and volume, cross-venue price checking, and collateral held largely off exchange. The strategy did not reach for a high APY on maximum leverage, because auto-deleveraging engines penalize that profile first.

His read on institutional psychology followed: allocators are more suspicious of an unusually high APY than a credible single-digit-to-low-double-digit return with a real track record. Mike used gold and real estate as examples of assets that can behave differently from crypto-native collateral, reinforcing the diversification case for bringing real-world assets on-chain.

Building the Guardrails In

On-chain infrastructure lets risk controls be enforced before a trade rather than audited only after it. Avantgarde runs mandates through role-based, non-custodial permissions that hard-code allocation limits, so a cap on exposure to a given market is enforced programmatically and the manager cannot exceed it.

Philippe said the permissions framework had received external validation and emphasized that clients can revoke the manager's permissions programmatically at any time. Conservative treasury mandates can therefore be steered toward more liquid collateral and away from higher-yield, less-proven venues. On the collateral side, Mike described RAAC's gold-backed stablecoin as supported by proven in-ground reserves through a reserve partner and said the structure carries a five-to-one coverage ratio.

The through-line was that credible backing and enforceable limits are what let an institution get comfortable, not the size of the yield.

Liquidity When It Matters

Yield only counts if capital can be recovered under stress. David explained YieldPoint's seven-day redemption window and on-chain liquidity buffer: the window gives the desk time to respond to an anomaly and allows an orderly unwind so a large redemption is not forced into fire-sale pricing. The yield-bearing token redeems instantly into the dollar variant, and it is the exit from the protocol that carries the bonding period, with small redemptions served instantly and larger ones funded ahead of maturity.

Instant liquidity, he argued, is reasonable when assets and liabilities are matched and becomes a problem when they are not. Mike drew the distinction that tokenizing an illiquid property does not make the underlying property liquid. It can improve access, transferability, and composability, while RAAC intends for the tokenized asset to support borrowing and other on-chain strategies as its lending infrastructure develops.

Philippe explained why institutions often prefer a dedicated vault or separately managed account over a public pool: pooled products can be difficult to risk-assess when counterparties and exposures are not fully controlled, whereas a managed account gives an institution greater control over liquidity, reporting, and strategy parameters. For real-world-asset strategies, KYC, KYB, licensing, and investor-eligibility constraints can make a segregated mandate more practical than an open vault.

Looking Ahead

Asked to picture 2030, with on-chain yield an established institutional allocation, each panelist named what would have to change first. David pointed to standardized disclosure, a uniform definition of APY, and a move from proof of attestation toward proof of solvency, none of which requires new law, only agreement on definitions and diligence.

Mike wanted liquidity growing on the stable side of a market he sees as too weighted toward risk assets, including non-dollar stablecoins in currencies such as the yen and euro. Philippe returned to real-world assets: institutions can already buy them off-chain, so the incentive to come on-chain has to be unambiguous, through better margins or genuinely open infrastructure rather than siloed private chains.

The thread across all three was that the next phase will be won on execution and standards: returns that can be sourced, risks priced honestly, and disclosure that lets an allocator compare products without being a full-time practitioner.