Summary
Onchain lending markets are showing selective recovery in the weeks since the April KelpDAO exploit reduced total DeFi TVL by approximately 14%. Capital is not flowing back evenly: newer protocol versions and differentiated yield architectures are drawing fresh deposits while aggregate TVL remains below its April peak. Stablecoin supply continued to expand, with USDC and USDT together circulating above $265 billion, providing a structural base of dollar-denominated capital available to deploy into onchain yield opportunities.
The most consequential development this week was Morpho's release of the Midnight whitepaper on May 28th, detailing a noncustodial, intent-based protocol for fixed-rate, fixed-term credit markets, a structural expansion of onchain lending beyond variable-rate pool models. Aave data published on May 29th showed Aave V4's TVL grew 150% over the preceding 30 days, rising from approximately $42 million on April 29th to a peak of roughly $105 million before settling near $75 million. On May 26th, Stable deployed StableEarn, a USDT yield vault on Morpho curated by Gauntlet and backed by Theo's RWA suite.
Stablecoin developments
Circle (USDC): Circle's USDC circulating supply is approximately $76 billion. On Aave V3, USDC currently earns ~3% APY, and Morpho Blue USDC markets offer 4–9% APY depending on collateral type and utilization. On May 27th, Circle and Nium announced a partnership connecting USDC-based settlement to local-currency payouts across more than 190 countries and 100 currencies, expanding USDC's reach in institutional cross-border payment flows.
Tether (USDT): Tether's USDT circulating supply is approximately $188 billion, the largest of any stablecoin. On May 25th, Tether announced plans to launch GEL₮, a Georgian Lari-pegged stablecoin developed with the support of the Government of Georgia, continuing Tether's expansion into non-USD digital currency instruments.
Sky Money (USDS): Sky's USDS circulating supply is approximately $9 billion, and Sky's protocol TVL is approximately $6.5 billion. The Sky Savings Rate (SSR) currently sits at 3.75% APY, following a governance vote executed in early May that reduced the rate from 4.75% to direct more protocol revenue toward the surplus buffer.
Maple Finance: Maple Finance holds approximately $2.1 billion in TVL across Ethereum and Solana. syrupUSDC and syrupUSDT currently earn 6–10% APY, funded by real loan interest from institutional borrowers rather than token emissions. The protocol exceeded $350 million in loan originations in May, reflecting continued institutional demand for onchain private credit.
Protocol developments
Aave: Aave's TVL is approximately $13.2 billion across all versions and chains. Data released on May 29th showed Aave V4's TVL grew 150% over the preceding 30 days, rising from approximately $42 million on April 29th to a peak of roughly $105 million before settling near $75 million. This growth reflects early depositor and borrower adoption of the new architecture as Aave continues to recover from the broader post-exploit TVL contraction.
Lido Finance: stETH currently earns 2.4% APY. Lido Finance holds approximately $18 billion in TVL as the largest liquid staking protocol by assets. The protocol's stVault framework, which launched in phases through early 2026, allows teams to deploy custom validator environments on top of Lido's infrastructure with the option to mint stETH, expanding the set of products that can be built on the protocol.
Morpho: Morpho holds approximately $7.4 billion in TVL. On May 28th, Morpho released the Midnight whitepaper, detailing a noncustodial, intent-based protocol for fixed-rate, fixed-term credit markets. Unlike Morpho Blue's variable-rate pool model, Midnight enables peer-to-peer loans with fixed terms and rates, externalized risk management, and customizable parameters. The full Midnight codebase was open-sourced at release, enabling developers to build structured credit products directly on top of the fixed-rate layer. Separately, on May 26th, Stable deployed StableEarn on Morpho: a USDT yield vault curated by Gauntlet and backed by Theo's RWA products including thUSD, thBILL, and thGOLD.
Spark: Spark holds approximately $5.1 billion in TVL across SparkLend and the Spark Liquidity Layer, operating as Sky's primary onchain capital deployment layer across lending and savings markets. No specific governance proposals or parameter changes were announced during the coverage window.
Hyperliquid: Hyperliquid holds approximately $5.5 billion in TVL, up from approximately $4.8 billion at the start of May. The platform's active validator set numbers 27 nodes following an expansion completed in early May, part of Hyperliquid's ongoing effort to broaden network decentralization as its Layer 1 architecture matures.
Pendle: Pendle holds approximately $1.5 billion in TVL. The protocol's Boros infrastructure for interest-rate exposure has accumulated approximately $6.9 billion in open interest since its January 2026 launch. PT-stETH holders can currently secure approximately 3% APY through June 24th.
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Morpho's Midnight whitepaper represents a structurally significant step for onchain credit: fixed-rate, fixed-term lending gives borrowers and lenders predictability that variable-rate pool models cannot provide, aligns more directly with institutional treasury requirements, and creates the building blocks for structured credit products. Combined with Maple's real-loan-interest model, Aave V4's growing adoption, and Stable's RWA-backed USDT vault on Morpho, this week's activity shows continued differentiation across the onchain lending stack.
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