Alea Research Report: After Large Investors Withdrew, Centrifuge Fund Size Fell 40%, Fee Revenue Rose, but CFG Holders Received Nothing

Author: Alea Research

Compiled by: TechFlow

TechFlow Editor's Note:In the real-world asset (RWA) tokenization sector, assets under management (AUM) is often regarded as the sole gold standard for measuring a protocol's success or failure. However, Centrifuge's striking Q3 performance broke this linear assumption: withdrawals by two institutional whales caused fund size to plunge 40%, while total fee revenue across the protocol's funds rose 2.8% against the trend.

The secret behind this fee-rate paradox lies in a qualitative shift in asset composition. The higher-fee AAA-rated credit fund JAAA replaced the lower-fee Treasury fund JTRSY, lifting Centrifuge to a blended yield of 39 basis points per dollar and ranking it second across the industry. Yet behind this polished unit profitability, governance token CFG holders were trapped in a harsh governance vacuum, receiving nothing.

This article provides an in-depth analysis of Centrifuge's unique fee funnel, the large-scale asset reallocation by institutional whales, and the interest maneuvering behind restructuring proposal CP172, giving investors a view of the institutional divide in how RWA protocols capture real economic value.

In Q3 2026, every dollar of assets in Centrifuge's funds contributed higher fee revenue: although the funds' average total size declined 9%, overall fund fees rose 2.8% against the trend.

Ethena, the issuer of the stablecoin USDe, had previously significantly increased its exposure to JAAA (an AAA-rated collateralized loan obligation (CLO) fund), and that fund's fee rate was exactly twice that of the short-term Treasury fund JTRSY.

However, in September, Grove, the core asset allocator for the Sky stablecoin protocol, redeemed most of its JTRSY, while Ethena also withdrew most of its JAAA. What now will fill the huge gap left by the outflows?

Chart: Q2 to Q3 2026 fund fee bridge breakdown (Source: Alea Research)

The shift of funds toward JAAA added $145,000 in fee revenue for the protocol, and this increase fully offset the $123,000 loss caused by the decline in fund size.

JAAA charges an annual management fee of 0.50%, while JTRSY charges only 0.25%. In Q3, JAAA contributed 22 basis points to the overall fee rate, up from 15 basis points in Q2.

Key Takeaways

Q3 total fund fees rose 2.8% against the trend to $1.35 million, while the funds' average total valuation declined 9% over the same period. These fees accrue entirely to each fund's management team; CFG holders received nothing.

As Grove reduced its Treasury fund holdings and Ethena redeemed most of its JAAA, Centrifuge's fund size plunged 40% to $931 million. By comparison, the median change in size for the other 13 tokenized fund issuers in Q3 was -0.2%.

Excluding Grove and Ethena, holdings by external independent holders grew 45% to $131 million, and addresses holding $1,000 or more increased from 58 to 81. JAAA on Aave Horizon contributed $32.9 million of that increase.

As of October 1, Grove's liquidity pool Basin held $100 million in reserves for immediate redemption of JTRSY holders. Grove's governance vote subsequently approved a $1.5 billion credit line cap.

The community passed governance proposal CP172 with an overwhelming 98.5% approval rate, allowing 1 CFG to be exchanged for 1 share of Centrifuge, Inc. stock. Voter participation reached 10.6% of CFG's total circulating supply.

Measured per dollar of fund AUM, Centrifuge's funds generated revenue that outperformed most of their fund-issuer peers.

Chart: Comparison of seven tokenized fund issuers ranked by revenue per dollar (Source: Alea Research)

In Q3, Centrifuge's funds earned an average of 39 basis points per dollar, ranking second among six revenue-generating fund issuers and well above the median of 23 basis points for the other five.

Its credit funds explain this high fee level: Treasury funds from Spiko, Superstate, and BlackRock BUIDL yield only 16 to 24 basis points. However, with Grove's redemptions and Spiko's aggressive expansion, Centrifuge's share of total AUM across the seven issuers halved from 11.2% to 6.5% in Q3.

Fund management fees accrue to the managers

Anemoy, established specifically to develop Centrifuge's fund business, launched some of the largest funds as investment manager, with Janus Henderson serving as investment adviser for JTRSY and JAAA.

All management fees flow in full to these two entities, the fund terms do not disclose any fee-sharing ratio, and CFG token holders have no access to this revenue.

The CP172 proposal plans to exchange CFG tokens for shares in Centrifuge, Inc., a company intended to wholly own all subsidiaries under the group.

However, no legal document to date confirms that the company has the right to share in fund management fee revenue: the CP162 proposal submitted in August 2025, which proposed that the foundation collect Anemoy fees, was declared invalid on September 18, 2025 for failing to meet the quorum.

Grove rotated out of Treasury funds but retained JAAA

Changes in fee revenue closely tracked Grove's asset rotation. Grove broadly reduced its Treasury fund holdings across all issuers but firmly retained its credit assets.

Figure: Changes in Grove's asset holdings from June 30, 2026 to September 30, 2026 (Source: Grove disclosure data)

Grove retained only 36% of its original JTRSY holdings and 17% of BUIDL, while its JAAA position remained stable at a high level of $394M.

It redirected the withdrawn cash heavily into warehouse lending lines with Galaxy and into Morpho vaults. For Centrifuge, this rotation retained high-fee capital while withdrawing low-fee capital.

However, Ethena's withdrawal directly hit the high-fee funds. Ethena redeemed a cumulative $200M of JAAA on September 21 and 22, after which its holdings have remained at $105M since September 23.

During this period, USDe's issuance scale did not shrink; Ethena simply shifted the funds into institutional lending, and its backing expanded from $508M to $686M between September 14 and October 20.

How to Fill the Fund Gap

Based on ending balances as of September 30, the funds' annualized fee revenue is currently about $3.81M, 29% below the Q3 annualized level of $5.34M.

To close this revenue gap, new subscription inflows are urgently needed. The holder experience for these funds has now improved significantly: JTRSY allows large instant exits through Grove's Basin, and Aave has substantially increased its loan-to-value ratio for JAAA.

Figure: Estimated new capital required to offset outflows (Source: Alea Research)

To restore fee revenue to the Q3 high pace, approximately $307M of new JAAA capital is required (1.2 times Ethena's June allocation), or $614M of new JTRSY subscriptions.

Grove's Basin provides instant redemption and cancels repurchased shares for exiting JTRSY holders, greatly accelerating capital exit efficiency but generating no additional management fees.

On October 17, Aave significantly raised the loan-to-value ratio (LTV) for JAAA on Horizon from 81% to 87%, which can deliver higher returns to holders running leveraged loops as long as JAAA's yield remains above borrowing rates.

The overall assessment remains positive and constructive. Although two core capital providers successively withdrew, the fund's overall income still recorded growth, as the retained capital is anchored in credit assets yielding twice that of government bonds.

The final Q4 fee rate will be determined on December 31: If the weighted average fee rate remains above the 37 basis points recorded in Q3, it will indicate that the strategic shift to high-fee-rate credit assets has fully taken root.

Source: 深潮 TechFlow