When an earn program is presented to a risk committee, a familiar objection often arises: the capital is "mercenary," meaning deposits will vanish as soon as yields decline. Critics argue that platforms merely buy temporary surges in deposits while taking on permanent support obligations.
This skepticism stems from history: during the 2020–2021 incentive boom, capital flooded on-chain markets for yield farming and departed immediately when rewards dried up. Today, most executives evaluating earn products still hold that cautious mindset.
Yet, this assumption has rarely been put to the test. Mainstream consumer earn programs are barely two years old, leaving little historical evidence to draw from. But unlike traditional banking, public blockchains offer unprecedented clarity: every single deposit and withdrawal carries a precise timestamp and wallet address. This allows us to track true capital retention directly, rather than relying on net aggregate balances that obscure the real flow of funds.
Measuring on-chain retention relies on a familiar banking concept: cohort analysis. Grouping depositors by their start month allows platforms to track how many hold balances over 30, 60, and 90 days to reveal true drop-off rates. Sentora applies this exact method to the USDC vaults within Kraken DeFi Earn, leveraging fully auditable, public blockchain records.
As the strategy and risk curator for these vaults, Sentora publishes these metrics on a live public dashboard and details the complete data in Fintech Onchain: 2026 Report.
The vault data reveals three key insights that challenge the mercenary-money objection: balances persist for months, the highest-risk tier retains capital best, and returns are borrower-funded rather than subsidized.
Together, these findings highlight a retention driver beyond yield. The following sections explain why this mechanism works and address the limits of the data.
The Balances Behave Like Deposits
The mercenary-money claim is fundamentally about duration, so establishing baseline holding times is essential. Address-level data shows that median holding duration exceeded 100 days across all USDC vaults: 107 days in Advanced, 103 days in Boosted, and 144 days in Balanced. While critics expected capital to leave within weeks, deposits consistently remained for quarters.
Position sizes clarify who these holders are, which is key to sizing the addressable market. The Advanced vault held $241.5 million across 45,495 addresses, with a median position of $23.60 compared to an average of $5,308. This gap between the median and average reflects a large base of small retail balances alongside a smaller group of larger accounts, characteristic of a consumer deposit product rather than a corporate treasury position. Both metrics are relevant to the business case: the median shows the product's reach, while the average highlights the source of its funding.
The Riskiest Tier Held Capital Best
Cohort retention data directly challenges common assumptions about risk tolerance.
When grouped by arrival date, 86.9% of depositors in the Advanced tier remained after 7 days, 76.0% after 30 days, and 66.6% after 90 days. In comparison, the conservative Balanced tier retained 48.5% of address balances at 90 days, while the Boosted tier retained 44.0%.
Weighing retention by capital rather than addresses makes the gap even wider: at 90 days, eligible Advanced cohorts kept 47.6% of cumulative deposited funds, compared to 19.2% for Boosted and just 10.3% for Balanced.
Tier | Median holding duration | Addresses retained at 90 days | Capital retained at 90 days |
|---|---|---|---|
Advanced | 107 days | 66.6% | 47.6% |
Boosted | 103 days | 44.0% | 19.2% |
Balanced | 144 days | 48.5% | 10.3% |
Source: Sentora address-level measurement of the USDC vaults inside Kraken DeFi Earn, as set out in Fintech Onchain: 2026 Report.
If customers prioritized risk aversion, greater safety should lead to higher retention. And yet, the conservative tier performed worst on both metrics.
There is, however, a notable tension in the table: the Balanced tier recorded the longest median duration alongside the lowest capital retention. This is likely explained by a long tail of small, steady positions maintaining the median, while a few large depositors withdrew their capital and dragged down total retention. This serves as a caution: a strong duration figure can easily mask significant capital outflows.
What a Deliberate Choice Does to a Balance
Why did the more demanding product achieve higher retention? The answer likely lies at the point of entry.
To choose the Advanced tier, customers must actively accept a leveraged strategy, a specific risk mandate, and a one-day deallocation window. This requires deliberate effort. Customers who review and accept these terms are invested in their choice, whereas those who simply select a default option are far more likely to leave when a higher yield appears elsewhere.
While this explanation is a plausible theory rather than a proven fact, the underlying product takeaway remains clear: deliberate choices like tier design, transparent disclosures, and redemption terms directly influence 90-day capital retention.
Competing solely on interest rates offers only a temporary edge that rivals can easily match.
Tiering Is a Retention Instrument
Deposit businesses have long recognized that customer retention depends more on the ongoing relationship than on interest rates alone. On-chain products are now providing the data to demonstrate this same dynamic. Every transaction is timestamped, so platforms can evaluate within a single quarter whether a design change effectively retains capital.
Programs competing strictly on headline rates will likely continue attracting the least durable capital, whereas long-term retention naturally flows to platforms that present their offerings clearly enough for users to make deliberate choices. Thoughtful disclosure and structured tiers offer a far more cost-effective strategy than endless rate wars, and the analytics to prove their impact are already available.
Sentora designs and manages the risk mandates behind earn programs at consumer platforms, including the USDC vault strategies inside Kraken DeFi Earn.
Read the full analysis. The retention methodology, the full cohort tables and the vault construction are in Fintech Onchain: 2026 Report.
