Institutional Access to DeFi Infrastructure via ETPs: Ethena and Morpho Bridge Traditional Finance and High-Growth Protocols

The convergence of traditional finance and decentralized finance (DeFi) has accelerated in 2025, driven by innovative structures like exchange-traded products (ETPs) that enable institutional investors to access high-growth DeFi protocols without direct exposure to on-chain complexity. Ethena and Morpho, two leading DeFi infrastructure projects, have emerged as pivotal bridges between these worlds through their ETPs. These products not only democratize access to DeFi's yield and liquidity but also address institutional concerns around custody, risk management, and regulatory alignment.

Ethena ETPs: Yield-Bearing Stablecoins as a Monetary Backend

Ethena's ETPs, including its stablecoins USDe and sUSDe, have redefined the role of stablecoins in both DeFi and traditional finance. By offering a yield-bearing alternative to conventional stablecoins, sUSDe currently generates an annual percentage yield of approximately 3.83%, making it an attractive asset for institutions seeking passive income. To further bridge the gap, Ethena introduced iUSDe, a fixed-income product tailored for asset managers, private credit funds, and prime brokers. This innovation allows traditional entities to access Ethena's yield without engaging directly with crypto markets, effectively translating DeFi's value proposition into familiar financial instruments.

Institutional adoption has been a cornerstone of Ethena's strategy. The project expanded its presence on major exchanges like Binance, Kraken, and Coinone in 2025, while its white-label issuance framework enabled the creation of native stablecoins such as JupUSD and suiUSDe across multiple blockchain ecosystems. These developments position Ethena as a foundational monetary backend for blockchain, with its assets now integrated into protocols like Aave, Pendle, and Uniswap. For instance, USDe and sUSDe were added as collateral for HONEY on Berachain, and mStable's mPT-sUSDe product combines Ethena yield with fixed APY exposure through Pendle according to the governance update. Such integrations underscore Ethena's role in cross-chain collateral and settlement layers, with total value locked growing significantly.

Morpho ETPs: Programmable Lending Markets for Institutional Scales

Morpho's ETPs, such as the 21shares Morpho ETP (MORPH), provide institutional investors with exposure to Morpho's native token while abstracting the complexities of on-chain lending. Morpho Blue supports over $9 billion in deposits and $4 billion in active loans, enabling institutions and developers to create customized, risk-isolated lending markets. The ETP structure allows custodians to offer DeFi access securely and scalably via the Narval DeFi Gateway, addressing institutional concerns around custody and operational risk.

In 2025, Morpho further solidified its institutional footprint. Regulated banks like Société Générale integrated its technology, while Morpho Vaults V2 introduced enhanced noncustodial guarantees, access controls, and risk management features. These upgrades make Morpho a critical infrastructure for on-chain asset management, enabling programmable and transparent financial products. For example, Morpho Vaults V2 allows institutions to deploy capital with granular risk parameters, blending the liquidity of DeFi with the governance of traditional finance.

Synergies and Market Implications

The synergy between Ethena and Morpho ETPs lies in their complementary roles: Ethena provides a yield-bearing stablecoin layer, while Morpho offers programmable lending infrastructure. Together, they create a seamless pipeline for institutional capital to flow into DeFi. For instance, Ethena's sUSDe is now being used as collateral in Morpho's lending markets, amplifying its utility beyond payments and savings. This integration not only boosts TVL but also reinforces the interoperability of DeFi protocols.

Moreover, the adoption of these ETPs by traditional financial entities signals a broader shift. By offering products like iUSDe and MORPH ETPs, Ethena and Morpho are addressing the "last-mile" problem of DeFi-how to onboard institutions without compromising security or regulatory compliance. As noted in Ethena's October 2025 governance update, the project's TVL growth on Aave and other platforms highlights its role as a critical component in DeFi lending and money markets. Similarly, Morpho's institutional partnerships demonstrate how DeFi infrastructure can be adapted to meet the scalability and risk-management demands of traditional finance.

Conclusion

Ethena and Morpho ETPs represent a paradigm shift in how institutions interact with DeFi. By abstracting on-chain complexity, offering yield-bearing assets, and integrating with major protocols, these ETPs are not merely bridges-they are foundational pillars of a hybrid financial ecosystem. As DeFi matures, the ability to access high-growth protocols through regulated, institutional-grade products will become increasingly critical. For investors, the rise of Ethena and Morpho ETPs underscores a compelling opportunity: to participate in DeFi's innovation while leveraging the stability and infrastructure of traditional finance.