Institutional New Strategy: How to Use Gate's TradFi + DeFi Hybrid Strategy to Enhance Returns

Institutional investors are accelerating their entry into the crypto market. Data shows that the total amount of crypto assets held by global enterprises has surpassed $6.7 billion, while the tokenization market for real-world assets (RWA) reached $33.91 billion in Q2 2025.

For institutions seeking stable returns within a compliant framework, pure speculative trading is a thing of the past. Instead, hybrid strategies that combine the rigorous risk controls of traditional finance (TradFi) with the efficiency advantages of decentralized finance (DeFi) are becoming the new mainstream allocation.

01 Market Trend: Why Do Institutions Urgently Need Hybrid Strategies of TradFi and DeFi?

Changes in the global interest rate environment are forcing traditional institutions to seek new sources of yield. Some DeFi protocols can offer returns significantly higher than those in traditional money markets, making them the most direct attraction.

Pure DeFi environments still pose challenges for institutions: smart contract risks, private key management burdens, regulatory compliance uncertainties, and cross-chain operation complexities are all hurdles to overcome.

On the other hand, pure TradFi paths, such as investing in Bitcoin via ETFs, are compliant and stable but miss out on on-chain native yields generated through staking, lending, liquidity provision, and other DeFi activities.

This tension has driven natural market evolution: a hybrid model is emerging as an industry standard. Institutions need the custody security, fiat on/off ramps, and compliance frameworks of TradFi, along with the transparency, programmability, and higher capital efficiency of DeFi.

02 Core Strategy: A Three-Layer Architecture for Building a Hybrid Yield Engine

An effective hybrid strategy is not just a simple stacking of components but is achieved through a carefully designed architecture that isolates risks and optimizes yields.

Layer One: Using TradFi as a Shield to Build a Secure, Compliant Foundation

This is the starting point for all strategies. Institutions first need a regulated, secure entry point that supports seamless fiat on/off ramps.

At this layer, institutions can convert funds into stablecoins like USDT, USDC via compliant exchanges such as Gate, and manage their primary assets through institutional-grade custody and custody partners (e.g., BitGo, Copper). This ensures fund safety and operational compliance.

Layer Two: Strategy Execution to Capture Diverse On-Chain Yields

This is the core of generating excess returns. Institutional funds are transferred into various blockchain networks via secure bridges and deployed into carefully selected DeFi protocols. Current main sources of yield include:

• RWA Yields: Investing in tokenized government bonds like BlackRock BUIDL to earn stable returns linked to US Treasuries (current annualized yield around 4%).
• On-Chain Lending: Depositing stablecoins into leading lending protocols like Aave to earn lending spreads.
• Derivative Hedging Yields: Using delta-neutral strategies similar to Ethena USDe, holding spot assets while opening hedging positions in perpetual markets to earn funding rates.
• Staking and Liquidity Mining: Participating in platforms like Gate Launchpool, staking mainstream assets to receive airdrops of tokens from emerging projects, with historical yields reaching as high as 4,509%.

Layer Three: Risk Management and Yield Aggregation

This reflects the professionalism of institutions. Using tools like Pendle, which are interest rate derivatives protocols, future floating yields can be monetized or converted into fixed income, actively managing interest rate risks.

Simultaneously, multi-chain wallets and asset dashboards provide unified monitoring and risk exposure management for all on-chain positions.

03 Gate’s Advantages: One-Stop Infrastructure Connecting TradFi and DeFi

Faced with this complex architecture, Gate offers what is arguably the most comprehensive one-stop solution on the market, seamlessly integrating the three layers within a single ecosystem.

Gate Bridge: The Core Pipeline Connecting Two Worlds

This is the foundation of Gate’s hybrid strategy. Gate Bridge is a revolutionary modular infrastructure that integrates traditional custodial banks with crypto custody providers, enabling hybrid collateralization of traditional and digital assets via smart contracts, offering unprecedented flexibility and capital efficiency for institutions.

This means institutions can leverage parts of their balance sheets’ traditional assets as collateral to participate in DeFi activities, greatly unlocking capital potential.

Complete Institutional Service Suite

Gate Institutional Service and Lending Center provides full lifecycle solutions for corporate clients, from trade execution and dedicated APIs to financing, liquidity, and customized risk controls. This meets the high-performance, high-stability backend system needs of institutions.

Rich Product Ecosystem

• Gate Alpha: A platform dedicated to trading early on-chain assets, allowing institutions to capture early alpha opportunities on DEX with the convenience of CEX.
• Gate Web3 Wallet: A non-custodial wallet solution supporting multi-chain asset management and one-click participation in airdrops, staking, and other DeFi activities, serving as a secure operational hub for strategy execution.
• Gate Ventures: As Gate’s venture capital arm, its cutting-edge research reports (such as in-depth analysis of strategy tokens) provide unique industry insights for institutional strategy development.

04 From Theory to Practice: A Simulated Case of an Institutional Hybrid Strategy

Suppose a family office with $100 million in assets decides to allocate 5% (i.e., $5 million) to a crypto hybrid strategy.

Phase One: Safe Entry and Basic Setup (2 weeks)

Using Gate’s compliant fiat on/off ramp, convert $5 million into USDC. About 60% ($3 million) is transferred into cold wallets managed by Gate’s custody partners, serving as core secure assets.

Phase Two: Yield Strategy Deployment (1 week)

• $1.5 million is routed through Gate Bridge, utilizing some traditional assets as additional credit support to mint collateralized assets for DeFi, deposited into RWA protocols (e.g., tokenized US Treasuries) and top-tier lending protocols (e.g., Aave), targeting an annualized yield of 3-5%.
• $500,000 is allocated to Gate Launchpool for staking BTC, ETH, and other mainstream assets to earn high-potential project airdrops, aiming for asymmetric high returns.

Phase Three: Dynamic Management and Risk Hedging (ongoing)

Using Pendle and similar tools, the floating yields generated from RWAs and lending are sold in advance to lock in fixed profits. All positions are monitored via Gate’s institutional dashboards, with quarterly rebalancing based on market conditions (such as changes in funding rates and new airdrop opportunities).

05 The Future Is Here: Strategy Evolution Driven by Compliance and Innovation

As the US SEC shortens the approval cycle for crypto ETFs to 75 days and the EU’s MiCA regulations are fully implemented, compliance thresholds are becoming clearer. This paves the way for institutions to adopt hybrid strategies on a larger scale.

Future hybrid strategies will emphasize programmability. Through smart contracts, institutions can set automated rules for reinvestment, risk rebalancing, and yield extraction, truly realizing “strategy as code.”

The hybrid collateralization mode represented by Gate Bridge could unlock trillions of dollars of traditional illiquid assets (such as private equity and real estate) into the crypto financial world, creating unprecedented new markets.