Why Stable Yield Requires Stability First: Lessons From the Insurance World

By Henry Zhang, Founder & Group CEO, DigiFT

Over the last few years, the search for “risk-free yield” in Web3 has produced remarkable innovation — but also painful lessons. Across multiple market cycles, yield structures built on incentives, leverage, or opaque mechanisms have shown how quickly they can unravel when liquidity tightens or confidence weakens. Recent episodes in both DeFi and CeFi illustrate how fragile these models can become under stress. This pattern—attractive returns in benign markets, followed by sudden instability—is neither new nor surprising.

If Web3 is to mature, its approach to yield must evolve. The question isn’t how to engineer ever-higher returns, but how to build sustainability into the foundations of on-chain yield. For that, there is a great deal we can learn from the world of insurance.

Insurance balance sheets represent some of the most durable capital in the global financial system. They are managed with a single priority: capital preservation across decades and through all market environments. Large insurers rely heavily on short-duration cash instruments, high-quality liquid assets, and highly regulated governance frameworks to ensure predictable liquidity and steady returns. Their objective is not yield maximization—it’s yield integrity.

It’s a mindset that stands in contrast to much of on-chain finance today, where speed is often prioritized over prudence, and complexity can obscure the true nature of underlying risks. Yet the challenges Web3 faces are not unfamiliar. Traditional markets have long struggled with issues such as liquidity mismatches, leverage, and interconnected risks—and have spent decades building regulatory frameworks to manage them.

Tokenization now makes it possible to bring those proven disciplines into digital-native formats. We are already seeing this shift. Short-duration and conservative strategies that historically could only be accessed through traditional channels are now being represented on-chain through regulated infrastructure. Our recent work with TKStable is one example of how these real-world cash management approaches can be made accessible within a blockchain-native operating model, without compromising the principles that make them stable to begin with.

Importantly, this does not simply add “more yield” to Web3. It strengthens the quality of the yield available on-chain. Money-market-style instruments and deposit-backed strategies have long served as reliable building blocks for institutional treasuries and corporate cash management. Their purpose is not to outperform markets, but to provide liquidity, low volatility, and resilience—characteristics that become increasingly essential as the digital asset ecosystem grows and professionalizes.

The last cycle showed how quickly complex, opaque, or leveraged structures can destabilize markets. Moving forward, I believe Web3 must shift toward a model where stability is designed in from the outset:

Stability before yield. Governance before incentives. Transparency before scale.

These are not constraints on innovation. In my experience, they are what allow innovation to endure.

If Web3 is to become a meaningful part of global capital markets, it must adopt—and adapt—the principles that underpin the world’s most resilient financial systems. As more real-world, conservatively managed strategies enter tokenized form, we move closer to a market structure where on-chain yield is not only attractive, but also dependable.

Stable yield requires stability first. And that, in the long run, is how on-chain finance will grow.

About Henry Zhang

Henry Zhang has over two decades of senior leadership experience across global financial institutions and fintech innovation. Before founding DigiFT, he held key executive roles including Deputy CEO of China at Citibank and Standard Chartered, and CEO of Greater China at East West Bank. During his banking career, he led several industry firsts in China’s financial technology landscape, including the world’s first cross-border cash concentration system and the country’s first bilingual online banking platform.

In 2022, Henry founded DigiFT in Singapore to build a next-generation platform for the tokenization, trading, and distribution of institutional-grade real-world assets (RWAs). Under his leadership, DigiFT became the first on-chain exchange licensed by the Monetary Authority of Singapore (MAS), with its Hong Kong entity approved by the Securities and Futures Commission (SFC) for Type 1 and Type 4 regulated activities. Today, Henry works closely with regulators, financial institutions, and the Web3 ecosystem to advance compliant, institutional-grade tokenized finance.

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