Curation is asset management. A curator takes pooled capital from people who did not choose the underlying positions, decides which markets that capital enters and in what size, is paid a share of the return, and bears none of the loss when the decision is wrong. Change the vocabulary and that description fits a discretionary fund mandate exactly.
The question is not merely semantic. What curation is called determines what standard depositors hold it to, what disclosure they should expect, and eventually how regulators approach it. Treating curation as a technical configuration task invites people to evaluate a vault by its yield. Treating it as asset management invites them to evaluate the manager.
The functional test
Asset management, stripped of its legal packaging, has four features. Capital is pooled from multiple people. Someone other than those people decides where it goes. That someone is compensated as a function of the assets or the returns. And the economic outcome, gain or loss, accrues to the capital providers rather than to the decision-maker.
Curation has all four. Vault deposits are pooled and fungible. The curator selects the markets and sets the caps, which the depositor did not choose and in most cases could not name. Compensation is a performance fee on generated yield, capped on Morpho at 50 percent of interest, with newer vaults permitted a management fee of up to 5 percent of assets annually. Losses fall entirely on depositors, and prior fees are not clawed back.
The fourth point deserves emphasis because it is where the analogy is strongest rather than weakest. A performance fee with no symmetric downside is the defining economic feature of discretionary management, and it produces the same incentive in a vault that it produces in a fund: the manager captures a share of the upside from taking more risk and does not fund the downside.
The strongest case against
The serious counterargument, put most clearly in research published by DefiLlama in February 2026, is that curation differs from delegation in kind rather than in degree. Traditional discretionary management relies on a manager's real-time judgment, exercised opaquely and revealed to clients afterward through a monthly statement. Curation encodes the boundaries first: which markets are permitted, what the caps are, which oracles are acceptable, and what liquidity must be retained are all written into the vault before a single deposit arrives.
That research cites a liquidity episode in which yield-maximizing vaults became practically unwithdrawable while remaining technically solvent, and curated vaults with pre-set liquidity buffers reallocated automatically without any emergency intervention. The argument is that bounded, pre-committed, publicly readable authority is a different governance object from open-ended discretion, and that calling both asset management obscures the improvement.
The observation is accurate and the improvement is real. On-chain vaults publish holdings continuously rather than quarterly, permission structures are readable, and timelocks give depositors an exit window that no fund redemption notice period matches. A curator genuinely cannot do certain things a fund manager can, including custody the assets or send them somewhere unapproved.
Why the counterargument constrains discretion without removing it
The bounded-authority case establishes that curation is well-governed asset management. It does not establish that curation is something other than asset management. The boundaries are themselves chosen by the curator, and choosing them is the portfolio decision.
Consider what setting a vault's configuration involves. Selecting which of hundreds of isolated markets are eligible is security selection. Setting a cap on each is position sizing. Accepting a market whose oracle reports a redemption rate rather than a market price is a judgment about which risk the vault will bear. Retaining a liquidity buffer instead of deploying it is a decision to trade yield for redeemability. Encoding those choices in advance changes when the discretion is exercised, not whether it is.
A comparison makes the point. A systematic fund that publishes its rules, commits to them in advance and cannot deviate is still a fund, and its manager is still an asset manager. Pre-commitment is a governance feature that good managers adopt. It has never been the thing that determines whether an activity is management.
The evidence from failures
Two independent sources point the same way. Academic work published in December 2025 examining six lending systems and eight large curators concluded that the main locus of risk in DeFi lending has migrated upward from base protocols to a permissionless curator layer, and recommended standardized disclosure of asset composition, liquidity coverage and parameter change timelines, explicitly modeled on money market fund reporting norms. That is a recommendation to regulate curation the way pooled investment vehicles are regulated.
The November 2025 Stream Finance collapse supplied the practical demonstration. Stream disclosed a loss of roughly $93 million attributed to an external fund manager, its xUSD token fell from $1.00 to about $0.26 within a day, and research groups estimated roughly $285 million of interconnected exposure across lending protocols. Individual curator exposures were reported at $123.6 million, $68 million and $25.4 million. Around $160 million of user deposits were frozen.
The protocols worked. Isolated markets confined the bad debt to the markets holding the exposure, exactly as designed. What determined whether a depositor lost money was which curator's vault they had chosen, and that outcome had been set by an allocation decision made before they deposited. When the variable that explains depositor returns is the manager's selection, the activity being performed is management.
What follows if this is right
Three things follow, none of which require a regulator to act first.
- Depositors should run manager due diligence. Track record through a drawdown, concentration in the largest position, oracle choices, timelock length and the published risk framework matter more than the advertised yield.
- Curators should disclose like managers. Consistent, comparable reporting on composition, liquidity coverage and parameter changes would let depositors compare curators rather than compare rates.
- Fee structures deserve scrutiny. An uncapped performance fee with no downside participation produces a known incentive problem, and the fixes tried in fund management, including hurdle rates and high-water marks, translate directly.
Whether any of this becomes a regulatory question is unresolved. Neither MiCA nor US rulemaking currently addresses vault curators as a defined category, and the sector's own framing will influence how that gap is eventually filled. Describing curation accurately in the meantime costs nothing and improves how depositors choose.
Curation is asset management performed with better tooling, faster settlement and far more transparency than the traditional version, and with less accountability. Both halves of that sentence are true, and the second is the one depositors currently underweight.