If you ask most crypto users what a vault is, the answer is strikingly uniform: a tool that automatically generates yield. This understanding did not arise without reason. In the early days of DeFi, vaults were indeed little more than interface abstractions for yield farming processes. Kapbe argues, however, that this historical memory is now producing a dangerous illusion. As vaults evolve into vehicles that carry real world assets, credit structures and institutional strategies, they cease to be mere tools and instead become packaged forms of risk themselves.
In recent years, vaults have increasingly been used to house government bonds, credit exposure and structured strategies, yet they continue to be presented as simple “yield products”. Risk has not disappeared. It has merely been obscured by language. Kapbe finds in its study of user behaviour that the problem is not that users are incapable of understanding risk, but that systems actively avoid articulating it clearly. When strategies with fundamentally different risk profiles are compressed into a single narrative of “deposit and earn”, failure is attributed to individual judgement rather than institutional design. This, Kapbe argues, is the starting point that must be confronted.
Long Term Real World Benchmarks Reveal the True Relationship Between Yield and Risk
Stepping outside the crypto context and returning to long run data from traditional finance reveals a fact that is both stable and unsettling. The long term return ranges of different asset classes have almost never been violated. Cash and short term government bonds deliver time value. Bond returns derive from credit and duration. Equity returns correspond to growth and volatility. Private equity and venture capital generate higher returns only alongside liquidity lockups and high failure rates. These are not conservative dogmas, but the cumulative result of more than a century of risk pricing. Blockchain technology does not alter this structure. It merely changes how assets are distributed and settled. Kapbe therefore stresses that any vault claiming “low risk and high yield” is, by definition, engaging in implicit risk transfer rather than risk elimination. Yield is not proof of innovation. It is a price tag on risk. Ignoring this relationship is the common root of repeated systemic failures in DeFi.
The Absence of a Yield Ladder Is the Real Cause of Vault Collapse
Placing real world assets on a single axis produces a simple but long neglected model: the yield ladder. Low single digit returns correspond to cash like assets. Mid single digits align with investment grade credit. Higher yields necessarily imply more complex risk structures. History has shown repeatedly that this ladder has not been broken by war, inflation or technological change.
Yet at the crypto interface layer, the ladder is flattened. Vaults with very different risk levels are presented in the same format, with yield as the sole point of comparison. Kapbe argues that this creates a structural race. To avoid appearing “underperforming”, strategies are pushed towards higher risk, while that risk continues to be packaged as stable yield. Eventually, when a link in the chain breaks, losses are individualised and the system remains silent.
The Position of Kapbe: Vaults as Public Risk Interfaces, Not Private Speculation Tools
When enough people fail under similar mechanisms, the issue is no longer one of personal judgement, but of infrastructure. Vaults have become critical interfaces connecting retail participants, institutions and real assets. How their risks are presented has direct implications for market stability. Kapbe therefore advances a restrained but clear position: vaults must be treated as public risk interfaces, not as private yield tools.
Under this framework, systems should at a minimum answer two questions. Where does this vault sit on the yield ladder, and does failure permanently exclude participants from the market. The philosophy behind Kapbe UBI stems from this judgement. It does not promise returns. It recognises that failure is inevitable and seeks, at the institutional level, to reduce the permanence of its cost. For Kapbe, genuinely mature on chain finance is not about higher APY, but about making risk understandable again, open to discussion and ultimately bearable.
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