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Vertically integrated DeFi chain Katana focuses on real yield generation for institutions by deploying bridged assets like ETH and USDC on Ethereum and redirecting sequencer fees back into the network

July 3, 2025 //  by Finnovate

Katana, a vertically integrated DeFi chain, has launched its mainnet with over $240 million in “productive TVL,” capital that is actively deployed into lending and trading strategies. Incubated by Polygon Labs and GSR, Katana is designed to concentrate liquidity, generate real yield, and route value back to users. The blockchain functions more like a coordinated financial venue than an open playground, avoiding liquidity fragmentation that has plagued DeFi for years. Katana is positioning itself to solve structural liquidity challenges that have long limited institutional participation in DeFi. By concentrating liquidity across chains and protocols into fewer, more accessible pools, Katana can support high-volume, capital-efficient transactions. Institutional appeal is central to Katana’s strategy, with features like real-time rewards, transparent APY breakdowns, and sequencer fee recycling designed to meet the demands of firms that need yield, efficiency, and accountability. At the core of this system is VaultBridge, a mechanism that deploys bridged assets like ETH, USDC, and wBTC into yield-generating strategies on Ethereum. Alongside VaultBridge, Katana introduces chain-owned liquidity, a system that redirects sequencer fees back into the network. This creates a self-reinforcing loop: as activity on the chain increases, so does the pool of capital available to users, which in turn improves trading execution, reduces slippage, and boosts overall yield. Katana’s token design reflects a broader shift in how DeFi infrastructure is being built. It is centered on turning every layer of infrastructure into a yield engine, focusing on transparency yield sources, sustainable incentives, and a clear link between usage and revenue. Katana is built using Polygon’s CDK framework and the OP Stack, with finality provided by Succinct’s SP1 zk prover. However, the long-term test will be whether the ecosystem can continue delivering competitive yields without overrelying on emissions.

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Category: Crypto & Blockchain, Innovation Topics

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