Aave V3 at ~$12.5B TVL, Morpho Blue at ~$7.1B, and Euler V2 at ~$285M means risk isolation is splitting into two games: balance-sheet scale and curator credibility. The second-order effect is a new rating layer where Steakhouse/Gauntlet-style vault managers, oracle choices, and liquidation infra become what institutions actually underwrite. Coinbase-style distribution can hide the protocol logo from users, but it cannot hide a bad collateral gap when the vault is holding the wrong long-tail asset.

Top comment by @Benthic