Hi readers,
Welcome to our institutional newsletter, Crypto Long & Short. This week:
- Most people who lost money in DeFi this spring weren't hacked, writes David Plisek of Solstice Finance — they were holding a yield that finally stopped working
- Top headlines institutions should pay attention to by Francisco Rodrigues
- “Crypto-collateralized lending declines in line with the broader market” in Chart of the Week
Thanks for joining us!
- Kim Klemballa
Where DeFi yield really comes from and why it broke this spring
by David Plisek, chief operating officer, Solstice Finance
Most people who lost money in DeFi this spring didn’t lose it because someone hacked a smart contract. They lost it because a story they’d been sold about yield finally stopped working.
The numbers were hard to ignore. In April, the Kelp DAO bridge was drained for $292 million. Within 48 hours, DeFi had lost $13 billion in total value locked (TVL). Aave alone lost $8.45 billion. Two weeks before that, Drift on Solana got hit for $285 million.
Most of the coverage treated these as contagion events, which they were. But contagion describes how losses spread, not why some positions were exposed, and others weren’t. That question has a more useful answer, and it starts with how the industry talks about yield: as a product, something you market, package and sell like a phone plan, then stack against your competitor's number and let users sort by size. That framing makes yield easy to compare. It also strips out almost everything that determines whether a given yield holds up.
On any exchange interface, yield arrives as a figure on a list: 8%, 24%, whatever the next protocol needs to advertise. The figure is usually accurate and close to uninformative. Behind it sits a system: where capital is deployed, how risk is priced, what happens at redemption, who holds custody, which regulatory perimeter applies and what the underlying assets are. The annual percentage yield is that system’s output. Read that alone, and it tells you the system was functioning at the moment the number was generated, and nothing about how it behaves under stress.
Kelp's rsETH shows how far a headline figure can drift from what's underneath it. It was sold as a yield-bearing liquid staking token. Still, structurally it was a token with 20 bridge dependencies and a single-verifier configuration that needed multiple human operators to remain uncompromised, backed by assumptions most of its users had no way to read. The oracle kept valuing it at par long enough for the attacker to borrow $190 million against fabricated supply before Aave could freeze the market. The failure was architectural, several layers below the number holders were pricing off.
Crypto Long & ShortCoinDesk Indices Related Assets Syrup$0.152.97%
Latest Crypto News
- 1 AI could supercharge crypto but there’s a catch, Fidelity Digital Assets says 18 min ago
- 2 HSBC, Standard Chartered execute first live banking transaction on Swift’s 24/7 ledger26 min ago
- 3 Cantor opens Kalshi prediction markets to thousands of institutional clients35 min ago
- 4 Beyond crypto funding rates: Ethena diversifies USDe backing with $1 billion FalconX facility2 hrs ago
- 5 Strengthen the Clarity Act2 hrs ago
- 6 Bitcoin is flashing 8 of 12 capitulation signals, but bottom's not yet in, says VanEck2 hrs ago
- 7 A year after losing $1.46 billion, Bybit says AI helped it save $700 million3 hrs ago
- 8 China triples its e-CNY network in 2026 as 8 more banks join the CBDC push this week3 hrs ago
- 9 Fed decision making comes into focus as bitcoin holds steady, bond yields surge4 hrs ago
- 10 Bitcoin stuck in a six-week range as global bond yields hit highest levels for decades4 hrs ago
Latest Research
Building the Zcash Machine: Tachyon and Quantum Readiness
Building the Zcash Machine: Tachyon and Quantum Readiness
Zcash’s Tachyon upgrade aims to scale shielded payments, improve quantum readiness, and test whether its funding, security, and governance can hold.
By CoinDesk Research Jun 30, 2026 Commissioned byGenZcashZcash’s Tachyon upgrade aims to scale shielded payments, improve quantum readiness, and test whether its funding, security, and governance can hold.
Why it matters:
Zcash’s Tachyon upgrade aims to scale shielded payments, improve quantum readiness, and test whether its funding, security, and governance can hold.
View Full Report More From CoinDesk Indices
Crypto for Advisors: The crypto advice gap
Crypto Long & Short: When capital can't move fast enough, markets pay the price
Crypto for Advisors: Europe's crypto rules, U.S. Preview
More From Syrup
AI could supercharge crypto but there’s a catch, Fidelity Digital Assets says
HSBC, Standard Chartered execute first live banking transaction on Swift’s 24/7 ledger
