90% of Crypto Investors Are Missing Out: The Shocking Truth About Dead Money in Digital Assets

Crypto's dirty little secret? Most portfolios are collecting dust.

While yield-hungry traders chase double-digit APYs, the vast majority of digital assets sit idle—untapped potential in cold storage wallets and forgotten exchange accounts. The numbers don't lie: only 10% of crypto holdings currently generate passive income.

Welcome to the era of zombie assets.

DeFi summer promised democratized finance, but 2025's reality looks more like a yield apartheid. Institutional players dominate staking pools while retail bags gather metaphorical mold. Even Bitcoin maximalists can't ignore the opportunity cost—though they'll still pretend Satoshi planned this.

The fix? Stop treating crypto like a lottery ticket and start treating it like an asset class. Compound or get left behind.

Policy as catalyst, not solution

The GENIUS Act established a federal framework for payment stablecoins, requiring full reserve backing and oversight under the Bank Secrecy Act.

RedStone pointed to that clarity as the catalyst behind roughly 300% year-over-year growth in yield-bearing stablecoins, a segment that had stalled under regulatory uncertainty.

The law doesn’t mandate risk transparency, but addresses reserve composition and compliance, removing the binary question of whether stablecoins could operate in a legal gray zone.

That shift allowed issuers and platforms to MOVE from “is this allowed?” to “how do we scale this?” and created the conditions for institutions to start asking more challenging questions about asset quality, collateral chains, and counterparty risk.

Independent coverage of the Act reflects a similar dynamic: regulation reduces uncertainty, but institutions still require more robust risk metrics before scaling up allocations. The law is necessary but not sufficient.

What’s missing is the apparatus that enables a treasury desk or asset manager to compare the risk-adjusted return of a yield-bearing stablecoin to that of a money-market fund, or to evaluate the credit exposure of a DeFi lending pool against a corporate bond ladder.

TradFi has that apparatus, with credit ratings, prospectuses, stress scenarios, and liquidity buckets. Crypto has APY leaderboards and TVL dashboards, which indicate where yield is generated, but not what risks underpin it.

Transparency deficit

RedStone’s analysis distills the problem into a single line: “The barrier to institutional adoption at scale is risk transparency.”

Unpack what that means in practice. First, there’s no comparable risk scoring across yield products. A 5% yield on staked ETH carries different liquidity, slashing, and smart contract risks than a 5% yield on a stablecoin backed by short-term Treasuries.

However, no standardized framework exists to quantify these differences.

Second, asset-quality breakdowns remain inconsistent. DeFi protocols disclose collateral ratios and liquidation thresholds, but tracking rehypothecation requires piecing together on-chain forensics and off-chain custodian reports.

Third, oracle and validator dependencies are rarely disclosed with the rigor TradFi applies to operational risk.

A yield product that depends on a single price feed or a small validator set carries concentration risk that isn’t surfaced in user-facing dashboards.

Then there’s the double-counting issue that RedStone explicitly flags. When staked ETH is wrapped, deposited into a lending protocol, and then used as collateral for another position, TVL metrics increase, and “yield-bearing” percentages overstate the actual capital deployed.

Traditional finance accounting rules separate principal from derivative exposure. Crypto’s on-chain transparency creates the opposite problem, with everything being visible, but aggregating it into meaningful risk metrics requires infrastructure that doesn’t yet exist at scale.

Closing the gap

The next leg isn’t about inventing new yield products. Staked blue chip assets, yield-bearing stablecoins, and tokenized government debt already cover the risk spectrum, ranging from variable to fixed, and from decentralized to custodial.

What’s needed is the measurement layer: standardized risk disclosures, third-party audits of collateral and counterparty exposure, and uniform treatment of rehypothecation and double-counting in reported metrics.

That’s not a technical problem, since on-chain data is auditable by design, but it requires coordination across issuers, platforms, and auditors to build frameworks that institutions recognize as credible.

Crypto’s yield pipes now exist. Staking on proof-of-stake networks delivers predictable returns tied to network security. Yield-bearing stablecoins offer dollar-denominated income with varying degrees of reserve transparency.

DeFi protocols offer variable rates that are driven by the supply and demand for specific assets. The 8% to 11% penetration rate isn’t a signal that crypto lacks yield opportunities.

It’s a signal that the risk attached to those opportunities isn’t legible to the allocators who control the bulk of global capital.

TradFi’s yield penetration didn’t emerge because traditional assets are inherently safer, but rather because their risks are measured, disclosed, and comparable.

Until crypto builds that measurement layer, the adoption bottleneck won’t be product gaps or regulatory ambiguity, but the inability to answer what is at risk for the yield.