Ideas
DeFi bottomed; long-term comeback ahead.
The recent DeFi hacks resemble the post-FTX CeFi blowup. CeFi bottomed after FTX and then thrived, and Myles expects DeFi to follow: it has likely reached a bottom and, after a tough year or two, will come back massively with new protocols, primitives, and security innovation.
LayerZero centralization creates persistent security risk.
LayerZero was clearly the most centralized interop network and the most at risk of being compromised, with 97% of DVN setups being one-of-one or two-of-two. The industry swept this under the rug because LayerZero worked best and had the best UX, and the Kelp DAO exploit exposed that risk.
Hyperliquid remains at risk of compromise.
Many of crypto's best products, including Hyperliquid, remain at massive risk of being compromised because the industry has prioritized speed and UX over security. The security pendulum is now swinging back toward hardening chains and smart contracts.
RWAs drive the next DeFi cycle.
The composition of deposits and lending activity shows users are more interested in RWAs than crypto-native assets. Mike sees real-world assets and RWA looping as a big part of the next cycle, with higher-quality yield-bearing RWAs available on-chain to hold, borrow against, or loop.
Aave trust damaged by collateral risk.
Aave was seen as the safest blue-chip DeFi protocol, but ETH depositors were unknowingly exposed to Kelp DAO and LayerZero multisig risk. With withdrawals blocked or utilization spiking, the trust damage will be hard to recover, supporting the bear case for Aave.
Morpho strong moat, near-term muted.
Morpho has a strong moat in modular, curator-led lending, and long-term it can grow. However, the next 12 months are likely challenging for DeFi demand and growth, so Morpho's near-term growth may be muted.
Stablecoin adoption and yield help DeFi.
Stablecoin adoption is likely to accelerate after GENIUS implementation rules arrive in November, with Meta reviving stablecoin efforts and Stripe pursuing the space because of yield economics. If issuers cannot pass yield directly to holders, users will seek yield in DeFi lending, driving incremental deposits.
Vertical integration favors Solana ecosystem.
In DeFi, each layer has dependencies outside its control, so vertical integration and consolidation could become more important, similar to Apple controlling its ecosystem to solve viruses. Mike says this leads him to a Solana-centric view of the world.
Aave brand remains valuable long-term.
Despite the recent Aave problems, Aave remains a strong human trust brand and blue-chip lending protocol. Xavier argues Aave and Morpho have a massive opportunity as DeFi targets agents and institutional users, provided they harden security and own distribution, though Aave is not yet working on agent support.
Morpho well positioned for agentic DeFi.
Morpho has been building agent-supporting infrastructure so agents can execute directly via its backend, while Aave has not. As agents become primary DeFi users, protocols that own agent distribution, reliability, and workflow on top of human distribution could capture significant value, and Morpho could be well positioned.
Spark gains deposits from Aave troubles.
Spark was a big beneficiary on Ethereum as deposits almost doubled amid Aave's troubles, and Spark moved some of its own assets away from Aave. Spark Lend is gaining share on the ETH side.
Kamino resilient with RWA success.
Kamino has been basically untouched by the Aave/Kelp crisis on Solana, and Mike notes it is doing well with strong success in RWAs. This makes it a relative beneficiary and a protocol to monitor in Solana DeFi.
Solana bull with USDC onboarding catalyst.
Myles is a massive Solana bull because of its speed and UX, but notes it has less history and past downtime. The key catalyst would be getting more funds to receive USDC on Solana and deploy it into Solana DeFi; currently most funds receive USDC on Ethereum, so Solana receiving stablecoin flows is the alpha.
Ethereum preferred for secure DeFi capital.
Large capital and DeFi use cases remain sticky to Ethereum because it has not gone down, has better security, a larger EVM developer ecosystem, and is where most funds receive USDC. Ethereum still has the RWA game to lose, though Solana could gain if it changes stablecoin funding flows.
This Bell Curve video, published April 26, 2026,
features Myles O'Neil, Mike Ippolito, Xavier
discussing DEFI, ZRO, HYPE, RWA, AAVE, MORPHO, STABLECOINS, SOL, SPK, KMNO, ETH.
14 trade ideas extracted by AI with direction and confidence scoring.
Speakers:
Myles O'Neil,
Mike Ippolito,
Xavier
· Tickers:
DEFI,
ZRO,
HYPE,
RWA,
AAVE,
MORPHO,
STABLECOINS,
SOL,
SPK,
KMNO,
ETH
