The convergence of traditional and decentralised finance is no longer theoretical and blockchain enables investors to get exposure to the new financial infrastructure.
Defining hybrid finance
Hybrid finance describes the convergence of traditional financial infrastructure with blockchain-based systems. It is not a replacement of one by the other. It is the integration of both: regulated institutions adopting on-chain settlement, tokenised assets flowing through decentralised protocols, and stablecoins bridging fiat and crypto economies.
CoinShares frames hybrid finance through three pillars: infrastructure and settlement layers (the blockchains themselves), tokenised real-world assets (RWAs moving on-chain), and revenue-generating on-chain applications (DeFi protocols that deliver measurable financial services). Each pillar is now generating billions in verifiable economic activity.
Where TradFi meets on-chain rails
The evidence is no longer anecdotal. BlackRock’s BUIDL fund tokenised US Treasuries on Ethereum. Franklin Templeton’s OnChain US Government Money Fund operates natively on blockchain. Visa has begun testing stablecoins for cross-border settlement. Banks in Brazil and India are integrating Bitcoin’s Lightning Network for payments through Lightspark, David Marcus’s company.
Stablecoin daily transaction volumes now routinely exceed $200 billion, with a total market capitalisation approaching $300 billion. These are not speculative figures. They represent actual settlement activity — the kind of throughput that legacy payment rails have spent decades building.
What this means for portfolio construction
For advisors, hybrid finance reframes digital-asset exposure. Clients are not just buying “crypto.” They are gaining exposure to the infrastructure layer of a financial system that is being rebuilt in real time.
The blockchains that settle tokenised assets earn fees. The protocols that facilitate lending and borrowing generate yield. The stablecoins that enable cross-border payments create velocity. Each of these revenue streams is measurable — and investable through regulated ETFs.
CoinShares’ 5% allocation model captures this dynamic. The mix of digital assets portfolio, which includes exposure to the assets powering hybrid finance (Ethereum, Solana, XRP…), delivered a Sharpe ratio of 0.75 over the 2020–2025 period — nearly double the base portfolio’s 0.39. This kind of exposure is facilitated by products such as DIME ETF, which includes high performance networks.
The investment implications
Hybrid finance creates a new category of investable assets: blockchain infrastructure with cash-flow characteristics. For advisors accustomed to evaluating assets through earnings, fees, and yields, this is familiar territory in an unfamiliar wrapper.
The convergence is accelerating. As more traditional assets move on-chain, the networks that settle those transactions — and the protocols that service them — stand to capture an increasing share of global financial activity. Positioning clients for this shift is not speculative. It is forward-looking portfolio construction.
For more news, information, and strategy, visit the CoinShares Crypto ETF Hub.
