GM, and happy Tuesday! 

Breadth is weak and strength is narrow as crypto continues to underperform equities and gold. 

Sorting for strength in Ethereum’s lending sector shows that Morpho leads the pack in YTD growth in loans, with its RWA deposits sitting near all-time highs. Enjoy!

BTC fell 4.5%, while SPY (−0.6%) and QQQ (−0.5%) only nudged lower; gold was the outlier at +1.6%. The dispersion indicates that Monday’s pressure was crypto-specific rather than a broad risk-off, with gold catching the defensive bid and equities absorbing only a trim.

No fresh macro print drove the move. Positioning likely tightened ahead of NVDA earnings midweek and PPI later in the week, so desks reduced risk instead of leaning into last week’s bounce. Ongoing ETF outflows left BTC more exposed to that de-risking than equity benchmarks.

Within crypto, leadership was razor-thin. Crypto Miners finished +3.9%, and Meme Top 10 held +1.0%, while most baskets fell 3−6%. Laggards were Perp Index (−9.4%), DeFi Top 20 (−6.0%), Revenue Top 10 (−5.3%), Privacy Index (−5.3%), and Layer-1 Top 10 (−5.1%), reinforcing that Monday was de-risking with only a couple of idiosyncratic winners.

The main takeaway is that breadth is weak and strength is narrow. Miners look supported by a commodity-sensitive bid and name-level dispersion; meme gains feel tactical given simultaneous pressure on DeFi, L1s and revenue-linked baskets.

Unless breadth stabilizes, this setup tends to resolve with another broad downside day rather than a healthy rotation. Watch funding/OI in perps and whether BTC can reclaim relative strength versus SPY; if not, expect further trimming across high-beta baskets.

— Daniel

Sorting for strength in onchain finance

As crypto’s bear persists, top-line metrics and KPIs contract across the board. Sorting for relative strength in these metrics can surface the signal in which applications are still growing, or at least not rapidly shrinking. Applying this to money markets, aggregate active loans have collapsed from the $30 billion level at the start of the year to just $23.4 billion now. However, sorting across major lenders in this sector tells a more nuanced story. 

As demonstrated in the chart below showing YTD percentage change in active loans, Aave, acting as the largest lender in the sector, exhibited a 24% contraction in active loans. Euler, perhaps the smallest lender in this cohort, has been hit even harder, with active loans contracting 32%. Unlike these two, Morpho and Maple show relative strength. While Maple’s active loan base has held flat, Morpho’s has grown 4% YTD.

One such sleeve behind Morpho’s relative strength is the growing traction in RWA collateral deposits. 

While crypto prices contract, these offchain investment funds (typically private/structured credit or tokenized gold) offer uncorrelated yield and return profiles from the rest of the crypto-native collateral universe. 

Permissionless credit-market creation and highly configurable risk controls offer Morpho an edge here. An asset that might take half a year or more to pass through Aave’s governance and risk assessment to receive a listing can instead be listed on a Morpho market almost immediately by an issuer with high intent, letting the credit flow. As crypto instruments decline in price, this growing RWA sleeve has insulated Morpho from the prevailing downturn, with RWA deposits sitting near all-time highs. 

Among these tokenized credit issuers, competition is emerging for onchain money-market utilization and lending liquidity from stablecoin suppliers.

The once-dominant mF-ONE, with over $220 million in collateral, is issued by Midas, with the underlying loan book managed by Fasanara’s F-ONE credit vehicle. However, a component of the F-ONE loan book held exposure to the First Brands bankruptcy, leading the fund administrator to mark down the NAV by 2% in December 2025. Subsequently, mF-ONE deposits on Morpho cratered to the near $50 million level exhibited currently.

Up and coming in this sector is FalconX’s credit vault. Originated by FalconX, a leading digital-asset prime brokerage, the vault packages institutional loans into a structured product that institutional investors can access through Pareto’s Credit Vault infrastructure. In this model, liquidity providers deposit capital into the vault and earn yield as FalconX deploys those funds into credit lines to professional trading firms, hedge funds, and other institutional counterparties. Pareto functions as the onchain marketplace and infrastructure layer that enables this product, offering regulated, transparent Credit Vaults that support tokenized private credit, while M11 Credit acts as the curator responsible for underwriting, administering and reporting on the FalconX vault’s credit exposures according to institutional standards.

Demand to use this credit-vault product as collateral on Morpho has seen stair-step demand higher, now putting it as the largest tokenized credit collateral type with ~$150 million in deposits.

Finally, despite being perhaps the biggest name in private credit, Apollo is actually struggling with their onchain go-to-market. ACRDX and ACRED/sACRED each show de minimis utilization as collateral on money markets, with less than $1 million apiece utilized as collateral despite over $100 million in AUM in the underlying product.

RWAs exhibit growing traction in onchain money markets. While being diversified from the volatility and cyclicality of crypto prices, these instruments embed their own set of unique operational risks regarding NAV calculations, oracle logic, redemption windows, and secondary market liquidity. While still early in this trend, Morpho has separated itself from the pack by leaning into this sector, putting its YTD growth in active loans at the top of its cohort. 

— Luke

1. Richard Craib - Crowd-Sourced Alpha with Numerai

In this episode of Flirting with Models, Corey Hoffstein speaks with Richard Craib, founder and CEO of Numerai, about how the firm evolved from a crypto-data science experiment into a $600 billion+, institutional-scale, market-neutral hedge fund. 

Craib explains Numerai’s core innovation: aligning incentives in crowdsourced modeling by requiring researchers to stake the NMR token on their predictions, rewarding not just performance but unique, additive alpha through its meta model contribution (MMC) framework. They discuss lessons from Numerai’s 2023 drawdown, including the importance of diversification, anti-crowding measures, and enhanced risk systems, as well as how portfolio construction neutralizes traditional factor exposures. 

The conversation concludes with Numerai’s push into AI-driven research via agentic AutoML tools, predictive LLM-generated features, and new product structures like portable alpha strategies.

2. Zero Just Made Blockchains 100x Better

In this episode of Empire, LayerZero co-founders Brian Pellegrino and Raz discuss the launch of Zero, a new Layer-1 blockchain designed to dramatically scale throughput without sacrificing decentralization. 

Zero uses a unified, first-principles architecture that separates execution from verification through zero-knowledge proofs, aiming to eliminate redundant computation and support millions of transactions per second. 

The founders argue this design moves the industry forward by enabling real-time settlement, 24/7 global markets, and institutional-scale adoption. They emphasize that pairing breakthrough technology with real-world demand — particularly from major financial institutions — is key to making this next phase of blockchain infrastructure viable.

3. The 2028 Global Intelligence Crisis

In “The 2028 Global Intelligence Crisis,” Citrini imagines a near-future scenario in which AI exceeds expectations, triggering a deflationary economic spiral rather than a productivity boom. 

In this “memo” from 2028, Citrini describes the following scenario: As companies replace white-collar workers with increasingly capable agents, wages and consumer spending collapse, undermining the human-centric economy even as corporate profits and AI investment surge. The disruption spreads from software to payments, private credit, and ultimately prime mortgages, revealing a financial system built on the assumption of scarce human intelligence and stable incomes. 

The piece argues that while collapse is not inevitable, policymakers and investors must confront the structural consequences of abundant machine intelligence before feedback loops overwhelm the economy.

DAS NYC's lineup is bringing the biggest names in finance to the stage.

Don't miss the institutional gathering of the year — this March 24−26.