Original Title: “Crypto’s Distribution Playbook: Or, the Decentralized Finance Mullet”
Compiled by: Luiza, ChainCatcher
Every few years, cryptocurrencies always welcome their shining moments. For most of its life, these moments follow a predictable four-year cycle: prices soar (usually to outrageous levels), people flock in, the majority lose everything, and a few persist. This is how cryptocurrencies grow through the cycle of “boom and bust,” and what remains after each fluctuation are the true believers.
Traditional institutions seem to be participating in the same game — they allocate Bitcoin to their balance sheets, launch ETF funds, or allow clients to trade cryptocurrencies. Every time such moves occur, people call it a turning point. However, the entry of institutions often marks the peak of the market, rather than the beginning of a new growth cycle. “Institutions are here” has even become a meme. They have never brought in a billion new users because they have never truly embraced cryptocurrencies, merely dipping their toes in.
But this time it's different, because institutions are no longer just testing the waters. They need cryptocurrencies. This is their first time going all in, because it is the choice that best aligns with their interests.
This is quite ironic. The initial birth of cryptocurrencies was a form of “rebellion” against traditional institutions. Its core intention was to build a brand new system outside the existing financial framework. However, since I entered the crypto space, I have always seen a desire to gain recognition from established authorities—despite the fact that these authorities are precisely what it intended to “rebel” against. Where does this desire come from? Perhaps it stems from the gradual realization that replacing the entire financial system is unrealistic. The current system is built on decades of accumulated trust, and regardless of its flaws, most people still believe it can serve them.
Therefore, a more realistic goal is not to replace, but to penetrate. Let traditional institutions gradually abandon those outdated models—those inefficient black-box operations that are incompatible with a highly interconnected and natively internet-driven globalized world.
Until recently, this seemed like wishful thinking. However, in this cycle, the transformation is no longer coming from peripheral startups, but from top-level design.
The rhetoric of the U.S. government today surprisingly aligns with the claims of the cryptocurrency industry over the years. To maintain the dollar's position as the world's reserve currency, all levers must be utilized, and cryptocurrencies are one of the most powerful levers among them. Dollar-pegged stablecoins (such as USDT and USDC) have already taken a dominant position on-chain. The U.S. government has not resisted this trend; instead, it has gone with the flow—stablecoins have transformed from an initial “novelty” into a policy tool, becoming a core part of economic strategy during the Trump administration.
The “GENIUS Act” (Note: full name “Cryptocurrency Asset Transparency and Regulatory Certainty Act”, aims to regulate the issuance of stablecoins) requires stablecoin issuers to purchase U.S. Treasury bonds, creating a new category of buyers for U.S. debt financing. Why is this important? Because buying Treasury bonds is not only about “funding the government,” but also the cornerstone of the entire financial system. U.S. Treasury bonds are considered the safest assets globally: for the government, stable demand for Treasury bonds can maintain low interest rates and a strong dollar; for institutions, Treasury bonds can provide predictable returns backed by the credit of the U.S. government — undoubtedly the most reliable borrowing entity in contemporary history.
This creates a win-win-win situation: the stablecoin issuers obtain scalable, interest-generating high liquidity assets to back their tokens; institutions gain access to a safe and large market; and the U.S. government acquires new capital channels to finance expenditures without raising interest rates. To this day, this has become a national strategy.
The incentivizing effect among these is even more astonishing: large banks, which hold trillions in customer deposits, now have reason to convert reserves into stablecoins, as the latter are essentially more efficient. Arthur Hayes (Note: former CEO of BitMEX) estimates that this will bring over $10 trillion in new purchasing power to U.S. government debt.
Where will this liquidity flow? Not all will be trapped in the treasury market. Some funds will spill over into risk assets, flowing into the cryptocurrency space, thus forming a cycle: stablecoin growth → treasury receiving funds → liquidity spillover → crypto market rise → stablecoin growth again.
For this reason, institutions are no longer just skimming the surface, but are deeply bound.
This is the reason why this highlight moment may truly become a turning point: not because cryptocurrencies persuade the world to betray traditional institutions, but because traditional institutions are starting to turn to cryptocurrencies.
We have never encountered such a situation: the government’s attitude is warming up, institutions are actively intervening, the regulatory framework is clear, infrastructure is完善, and cross-chain interoperability solutions are in place. Now that we have welcomed the long-awaited breakthrough, how should the crypto team seize the opportunity? The answer lies in: Decentralized Finance 鲻鱼头模式.
The DeFi Fish Head
All successful new technologies achieve popularity by hiding complexity. The internet is a prime example: early on, it required dial-up modems, obscure commands, and patience to endure slow connections; even in the 90s and early 2000s, going online still meant expensive computers, clunky browsers, or trips to internet cafes. For residents of third-world countries like me, these were still luxuries until the early 2010s. Over nearly three decades, the internet has been practical but difficult to popularize, with the core issue being the limitations of distribution channels.
Until the advent of smartphones, the Internet transformed from a place that required “going to” into a portable tool—ranging from full-keyboard BlackBerrys and durable Nokias to the smoothly touchscreen iPhone and Android phones, the web became an always-online, readily available existence. This shift not only broke down access barriers but also created a whole new demand: billions of people who had never thought they needed the Internet suddenly became reliant on it. Without smartphones, the Internet might have remained at a scale of millions of users.
Artificial intelligence also welcomed its “ChatGPT moment” a few years ago. Prior to this, AI mainly existed in research papers, GitHub code repositories, and APIs called by developers. When a user-friendly chat interface emerged, generative AI instantly reached millions of users, and people began using it to write emails and code for daily tasks. This marks the mainstream leap of AI: from a niche tool to a global phenomenon.
Two pieces of data are enough to explain everything:
-
Record-breaking user adoption speed. ChatGPT reached over 100 million monthly active users just two months after its launch at the end of 2022, while TikTok took nine months to achieve this milestone and Instagram over two years.
-
Viral user engagement: OpenAI's website traffic surged from 152.7 million visits in November 2022 to 1.6 billion visits in March 2023, growing more than tenfold within four months.
Image source: similarweb Blog
Cryptocurrency is also waiting for its own “ChatGPT moment.” The technology is already mature, the infrastructure is in place, but what is lacking is a popularization channel. The internet needed smartphones, AI needs ChatGPT, and cryptocurrency needs its own interactive interface revolution.
You can't expect billions of people to use decentralized exchanges or manage self-custody wallets—my parents will never learn. But if their banking app suddenly offers stablecoin payments or crypto yield features, they would give it a try. This is the most realistic path to achieving a scale of a billion users.
I call it the “Grandma Test.” Cryptocurrency has not passed this test: you cannot get Grandma to operate a DeFi interface to handle wallets, Gas fees, or slippage issues. But if PayPal supports it in the background with an on-chain yield mechanism, and the front end only shows her a “5% yield savings account,” she just needs to click confirm to participate—this method she can completely accept.
This is the “Zifish Head Model”: the front end is traditional fintech, and the back end is Decentralized Finance. Smartphones have completed this transformation for the internet, ChatGPT has achieved this breakthrough for AI, and the Zifish Head Strategy will undoubtedly bring change to cryptocurrency.
To users, what they see are just loan or yield products offered by banks, PayPal, or Coinbase; however, underneath, transactions are executed on-chain through censorship-resistant protocols. Users do not need to see the complexity or understand the intricacies involved.
Trojan Horse in the Castle of Traditional Finance
Decentralized Finance 鲻鱼头策略已不再是理论，它已成为攻入传统金融城堡的特洛伊木马。
The most typical case is the collaboration between Coinbase and Morpho. From the user's perspective, this is just a standard feature of Coinbase: a clear button providing Bitcoin collateral loan services. However, after pressing the button, the loan actually comes from Morpho's on-chain lending market. The user does not see DeFi, only the two characters “loan”.
This completely disrupts the traditional operating model of cryptocurrencies. In the past, we always expected users to actively adapt to the crypto world—learning to use wallets, cross-chain, paying Gas fees, bridging assets, and operating decentralized exchanges. We stubbornly believed that “the product is good enough,” “the returns are attractive enough,” and “self-custody is crucial,” so knowledgeable users would naturally embrace DeFi! While this mindset reflects a commitment to the spirit of crypto punk, it naively assumes that the whole world is willing to follow the same set of rules. Claiming “we don't need those users” seems to uphold principles, but in reality, it's drawing a line in the sand—like losing business opportunities simply because of a refusal to improve packaging.
The DeFi mullet head model completely reverses the narrative and puts us back on the right track: providing services in the context of what users already have (exchanges, banking portals, consumer finance applications). We deliver a consistent core product – borrow, exchange, earn, but hide the technical details that users simply don't care about, removing the cognitive thresholds we've forced them to cross.
Taking Coinbase and Morpho as examples, the only core action presented to users is: staking Bitcoin to earn USD. All other complex processes are pushed to the background, returning to where they should exist.
Early data provides sufficient evidence that the Zifish strategy is indeed viable.
(Data source: X platform @maxbranzburg)
The path to scaling cryptocurrency is clearly visible: encountering it in familiar scenarios for users. Nowadays, cases adopting the “Zhi Yu Tou model” are continuously increasing.
•Kraken x Ink x Aave: Institutional-grade on-chain Decentralized Finance loans distributed through retail channels
•Coinbase x Velodrome: On-chain liquidity behind the consumer interface
•ZeroHash x Mastercard x Chainlink: Credit card supported tokens + DEX crypto payment
•SharpLinkGaming x Ethereum: Nasdaq-listed company obtains DeFi yields through Digital Asset Tokens (DAT)
If the DeFi fish head model continues to be effective, a billion users will unknowingly use DeFi in the future.
Skeptics dismiss it as “hollow narrative,” but that is precisely where its power lies—narratives are how humans understand new technologies. “Bitcoin as a store of value” is also a narrative. Wall Street is not concerned with the Bitcoin network or blockchain technology; they only want to buy BTC assets as a hedge against inflation and a store of value. The whale head model follows the same logic: compressing difficult-to-explain technical details into perceivable simple concepts.
More importantly, the zipping head model represents a paradigm shift in product construction and distribution. Developing products for DeFi users familiar with crypto technology is one thing, but the vast majority of people outside the circle only care about the results: dollars, returns, credit, tokens.
The Zhi Yu Tou model provides a new approach for entrepreneurs, investors, and regulatory agencies in product development and promotion: you don't need to pull a billion users into Decentralized Finance, you just need to quietly embed Decentralized Finance into the applications they are already using.
Now is a historic moment.
Traditional finance is no longer just scratching the surface. The previous pilot projects and tentative collaborations have been fully embraced by strategic initiatives. Institutions like Robinhood, Stripe, Coinbase, and Circle are building on blockchain, acquiring companies, and integrating crypto technology into their core architectures. Asset management giants like Franklin Templeton and BlackRock are moving their core money markets onto the blockchain. These traditional financial behemoths are investing real capital into their cryptocurrency businesses, formulating specialized strategies, and establishing distribution channels. What’s even more noteworthy is that even the “Project Crypto” launched by the U.S. Securities and Exchange Commission (SEC) hints at an entry signal of “opening on-chain business channels for the entire financial industry.”
For banks and fintech companies, the “Zihui Head Model” is the optimal solution. Building DeFi underlying infrastructure in-house is both time-consuming and expensive, requiring the formation of a mature team proficient in the cryptocurrency market and technology. Instead of spending years developing infrastructure from scratch, it is better to connect to existing ecosystems—time is the biggest cost in a fast-paced market. Embracing the DeFi Zihui Head Model is clearly more economical, agile, and wise.
It is far from enough to simply call for “institutions should use the technology we have developed.” It's like telling others in 1995 that “businesses should operate on the internet because the TCP/IP protocol is mature”—the maturity of technology does not equate to users actively adopting it. The DeFi team must actively reach out to institutions. This does not mean abandoning decentralization or self-custody principles, but rather packaging existing technology into a form that institutions can use directly.
Institutions focus on three core aspects:
•Compliance: Never touch the regulatory red line. If the DeFi team does not establish a complete KYC, reporting, and risk management interface, institutions will not consider connecting at all;
•Reliability: For experienced cryptocurrency users who “will seek solutions on Discord when issues arise”, occasional fluctuations in the protocol may be acceptable; however, institutions require “certainty guarantees”. This includes service availability (Uptime) agreements, penetration testing reports, and clear problem-solving processes. For DeFi developers, wrappers, software development kits (SDKs), and service agreements may seem “not cool enough”, but it is precisely these tools that allow institutions to use them with peace of mind.
Looking at the big picture, most obstacles are not the protocols themselves, but rather the last mile problem. This may be tedious grunt work for some DeFi users and builders, but it is now necessary to let go of obsessions and develop tools that can truly bring cryptocurrencies to the masses.
Today, the “DeFi Mullet Model” is well known, but what is the “Cross-Chain Interoperability Mullet Model” (Interop Mullet)? As you may know, the “cross-chain interoperability” issue in cryptocurrency has been resolved, and the related tools are ready — this means that fintech companies and institutions can smoothly enter the on-chain world, fully unleashing the potential of the crypto internet capital markets.
The core of the DeFi zombie fish head model is “abstracting the application layer of cryptocurrencies” (for example, hiding the Morpho protocol under a button on Coinbase);
The cross-chain interoperability sturgeon head model focuses on the “abstract cryptocurrency infrastructure layer”—for example, hiding the cross-chain bridges, blockchain networks, decentralized exchanges that the LI.FI protocol relies on when executing transactions, or hiding the cross-chain interoperability protocols and the stablecoin issuance technologies supported by their proprietary token standards. It is like “another layer of sturgeon head under the sturgeon head model”, serving as the underlying technical support.
Interoperability: Fish under the fish
If we regard DeFi whales as the ultimate solution to the problems of crypto applications, it is akin to believing that improving the comfort of cars can solve traffic congestion. The real issue lies beneath the vehicles—the roads themselves are the key.
The beauty of the crypto ecosystem lies in the fact that it is not a unified value internet, but a multiverse composed of hundreds of chains, each of which embodies the builders' unique insights into scalable blockchain. This fragmentation is both the source of its charm and a barrier to widespread use, while interoperability is the key to breaking through.
Interoperability whales, like DeFi whales, can accelerate the process of institutions launching crypto products. The following two cases are highly representative:
•Stablecoin Issuance: Nowadays, various parties are eager to launch their own stablecoins, including cryptocurrency companies, fintech firms, banks, and even local governments. By 2025, the question of whether to issue stablecoins will no longer be an issue; rather, the key will be “when to issue”. As countries like the United States “accelerate the promotion of cryptocurrency adoption to facilitate the circulation of their national currency through cryptocurrency infrastructure”, everyone is eager to join this “stablecoin gold rush”. In the current cryptocurrency ecosystem, the best (and perhaps the only legal) way to launch a “future-adaptive” stablecoin is to adopt a “cross-chain interoperability token standard”. Such standards not only significantly shorten the time for stablecoin issuance but also greatly reduce the technical and operational costs involved in the issuance process. Meanwhile, issuers can still retain control over the token contract, ensure security, and collect related fees, achieving a “win-win for all parties”.
• Asset Exchange (Same Chain, Cross-Chain, Cross-Chain Bridge Exchange)
In the cryptocurrency field, the demand for asset exchange has never disappeared. This means that exchanges, wallets, deposit channels, custodians, and other businesses always need to provide “asset exchange” services for themselves or their users.
Final Chapter
The core challenges in the cryptocurrency field for a long time have been technological breakthroughs: scalability, consensus mechanisms, and interoperability. The top talents have basically solved these problems, and the infrastructure is already in place.
The core challenge has now shifted: it is no longer about building the engine, but rather about creating a car that people truly want to drive. The 'Zhi Yu Tou' model is precisely the design blueprint for this car.
With the idealistic optimism of building a better world, the cryptocurrency industry has created an economic scale of $40 trillion; in the next phase of the journey, pragmatism will become the winning key. The “Zhi Yu Tou” model is precisely this pragmatism in action—it acknowledges that the traditional financial world possesses what cryptocurrencies need most: distribution channels. This is the most direct path for cryptocurrencies to reach everyone. Builders who understand this will ultimately shape the future.
