For most of the history of retail banking, customers had no practical way to learn what their deposit was worth for the bank. The rate on the account was published, while the return that balance generated stayed inside the institution. That arrangement survived online banking, mobile banking and fifteen years of fintech competition, because customers who suspected they were underpaid still had to find the alternative, which was practically very difficult for most consumers.
In January 2026, Kraken opened an onchain earn product. Within seven months it held more than $800 million from over 100,000 depositors, with no incentive distribution attached to any of it. Every one of those balances was somewhere else first, sitting in a deposit book on an administered rate or idle in a wallet. They moved because the platform offered a simple, one-tap way to access yield with full transparency around returns and fees.
Most consumer platforms operate on a standard model: neobanks place customer balances with a sponsor bank, share in the sweep return, pass a portion to the customer, and keep the rest as net interest margin. This model works only while customers lack transparent alternatives. With accessible, higher-yielding options emerging, this traditional framework is rapidly becoming obsolete.
The swift migration of customer balances to onchain yields is driven by three essential factors: a compelling rate difference, an audience eager to act, and a seamless switching process. Furthermore, depositors actually prefer to remain with their existing institutions: a crucial dynamic that determines which providers capture these funds, yet one that many incumbents still overlook.
Below, we examine each of these drivers in detail.
The Deposit Rate Stopped Being Private
Pricing committees set deposit rates with a distinct information advantage. While the committee sees the cost of funds, the sweep return, and the resulting margin, customers see only the final rate. This means banks can maintain below-market rates for quarters before losing deposits.
On-chain markets removed that advantage by making the other side of that rate transparent and accessible. Tokenized Treasury funds holding short-dated government debt report their holdings, their returns and their fee continuously, because the record sits on a public network.
In that context, comparing options takes only a minute: in September 2026, the United States national average savings rate stood at just 0.63%, compared to net yields between 4% and 5.25% after fees on tokenized Treasury funds. For a $20,000 balance, that rate gap translates to earning roughly $126 per year in a standard account versus nearly $900 through an on-chain fund.
Explore the full dataset and in-depth analysis on Sentora’s Fintech Onchain: 2026 Report to gain a competitive, comprehensive view of the changing market landscape →
Substantial rate differences existed long before on-chain markets, with money market funds consistently outperforming savings accounts within a regulated framework. The key shift today is visibility: potential earnings updates in real time on the same device as the lower-yielding account.
As a result, maintaining profitability through customer unawareness is no longer a viable strategy.
The People Who Moved Are Savers
A rate gap triggers movement only when users are ready to act. However, most deposit strategies still depend on an outdated view of digital-asset holders. For years, the prevailing belief was that these customers were exclusively young, speculative traders. Today, adoption has expanded across demographics, attracting older cohorts and driving everyday transactional and savings behaviors.
Approximately 67 million United States adults (nearly one in four) now hold digital assets, signaling a major transition into mainstream usage. This dynamic is accompanied by a broader demographic shift: among new buyers in the year leading up to March 2026, 28% were aged 55 or older. This represents a significant rise compared to the 14% share seen across all participants who entered the market between 2009 and 2024.
How users utilize their balances provides critical insights for a deposit business, highlighting which products are most vulnerable. For instance, four in ten holders use digital assets to transfer funds to family or make everyday purchases: behaviors characteristic of a checking account rather than a trading account.
Additionally, Santander found that nearly eight in ten Gen Z and Millennial customers prioritize saving. These same demographics are set to inherit tens of trillions of dollars over the next two decades. Since savings capital tends to remain in place once deposited, that potential departure represents a significant cost for the institutions where those balances currently stay.
The Alternative Is Just One Screen Away
Even with a rate gap and willing customers, balances won't shift if switching is tedious or requires considerable effort. Friction protected deposit books through past competition: changing primary accounts meant paperwork, managing direct debits, and running dual accounts. Thus, most people gave up mid-process.
That friction has now vanished. Distribution simplified the migration process by integrating earn features directly into popular apps.
Kraken enabled users to earn returns on idle exchange balances, offering a straightforward entry point.
Trust Wallet expanded access by introducing tokenized cash options to millions of users, attracting over $50 million in its first month.
Meanwhile, Coinbase originated between $2.3 billion and $3 billion in credit against digital-asset collateral without maintaining a traditional loan book.
In each case, capital moved within apps users already used. Notably, Kraken achieved this growth without offering promotional incentives, demonstrating genuine product demand rather than temporary subsidies.
Treasury teams easily spot rate gaps, but they often overlook the impact of easier access. Modern apps have made switching seamless, proving that bank deposits remained sticky because of cumbersome paperwork and not necessarily customer loyalty. With migration now effort-free, lagging institutions risk losing customer balances to more innovative competitors.
The Balances Leaving Would Prefer to Stay
While this movement looks like a defection, survey data reveals a more nuanced picture that works to the advantage of incumbent banks:
Three quarters of United States holders want their own bank to let them buy, hold and manage digital assets alongside their regular accounts.
Among all respondents, including four in ten who have never owned any, a majority would consider investing for the first time if they could do it inside their bank account.
Together, these findings highlight a distribution challenge. Customers remain within the regulated financial ecosystem, taking advantage of services their primary institutions failed to offer. This is why funds default to external exchanges and wallets until traditional providers introduce viable alternatives.
United State regulations dictate where these products can legally be offered. The GENIUS Act prevents stablecoin issuers from paying yields directly to holders, but allows third-party platforms to do so through tokenized money market funds and yield-generating vaults. Banks are uniquely positioned to offer these regulated products, leveraging their existing account relationships, trusted interfaces, and compliance frameworks to retain deposits more effectively than non-bank venues.
What Keeps a Balance After Rates Converge
Visible yield spreads inevitably push rates toward parity, so customer retention must rely on trust rather than price alone. When multiple platforms offer similar returns, customers naturally choose the options where terms are clear and capital feels secure.
Data from Sentora’s address-level tracking of Kraken DeFi Earn USDC vaults highlights a clear trend: median holding periods exceed 100 days across all risk tiers. Intriguingly, the most active strategy tier retained the most capital, holding 47.6% of deposits after 90 days, compared to just 10.3% in the most conservative option.
In other words, when depositors choose deliberately with complete transparency into strategies and risks, they stay longer. Ultimately, investing product effort into absolute clarity attracts and retains capital far more effectively than simply chasing basis points.
Transparency must cover aspects that compare unfavorably with traditional deposits. Because these balances represent claims on a fund or deployment vehicle rather than insured deposits, successful programs state this explicitly. Variable returns driven by on-chain lending compress when borrowing demand softens, making fixed yield promises unsafe. Additionally, smart contract execution risk (which audits reduce but cannot eliminate) is managed through venue limits, exposure caps, and clear risk mandates. Finally, programs address liquidity concerns directly by maintaining a buffer above 10% for instant withdrawals and enabling full redemptions within a day.
The Retention Opportunity: From Inertia to Infrastructure
Traditionally, deposit franchises relied on customer inertia: holding funds was lucrative as long as transferring money was difficult and comparing options was nearly impossible. Today, mobile devices have eliminated both barriers for an expanding user base that now spans every demographic, from tech-savvy youth to older adults managing everyday transfers.
Institutions losing these balances risk doing so through inaction rather than price. Third-party platforms with superior yield options and simpler interfaces can convert customers one tap at a time while traditional product cycles lag behind. However, this movement remains reversible, as customers consistently indicate a preference to keep their balances with primary institutions if equivalent options are available.
Sentora designs and manages the risk mandates behind earn programs at consumer platforms, including the vault strategies inside Kraken's DeFi Earn.
Read the full analysis. Sentora’s Fintech Onchain 2026 Report sets out the rate comparison, the holder survey, the deposit-displacement estimates and the architecture behind each program referenced here.
