I. Introduction: In a high-interest-rate environment, capital has already shifted its allocation logic. Over the past two years, global interest rates have remained high, and this situation has not ended as quickly as the market expected. Although expectations of interest rate cuts have appeared multiple times in the market, institutional funds have already adjusted their actual allocations since 2026. This change is becoming increasingly evident in global asset allocation. In 2024, BlackRock launched BUIDL, a tokenized US Treasury bond fund, which rapidly grew in size shortly after its launch, becoming one of the largest on-chain real asset funds by 2025. Its underlying structure is not complex—essentially short-term US Treasury bonds—but it represents a very direct change: capital is beginning to reassess the relationship between "certainty of return" and "risk exposure." During the same period, Franklin Templeton's on-chain money market fund also continued to expand. The characteristic of this type of product is not its high returns, but rather its clear return path and well-defined risk boundaries. In an environment of persistently high interest rates, these assets have become an important source of institutional funds for reallocation. This trend has not weakened since 2026. US money market fund sizes remain at historically high levels, and short-term US Treasury yields remain attractive. A significant amount of capital hasn't completely left risky markets; instead, it's reducing exposure to single directions and increasing allocations to low-drawdown, verifiable return structures. Similar changes are occurring simultaneously at the strategy level. In the past, some strategies focused on a single direction or a single logic experienced significant drawdowns during periods of increased volatility. More and more institutions are proactively reducing such exposures, diversifying their funds across different return sources, such as arbitrage strategies, hedging structures, market-neutral portfolios, and low-volatility return modules. This is no longer a short-term change caused by a single market fluctuation, but a new consensus gradually forming in a persistently high-interest-rate environment: capital is leaving behind "uncontrollable volatility," not volatility itself. Secondly, capital choices are becoming more specific: from expected returns to verifiable returns. A significant change in the past two years is that many funds are becoming unwilling to bear "volatility risk lacking structural protection." In the years when liquidity was relatively abundant, many funds focused more on growth potential itself. Even with longer return cycles and relatively significant volatility, as long as expectations remained, funds were generally willing to continue allocating. However, with persistently high interest rates, investors began to recalculate the relationship between risk and return. In 2025, the size of US money market funds surpassed $8 trillion, setting a new historical record.A significant amount of capital hasn't completely exited risky assets; instead, it's reducing its reliance on a single direction and shifting more towards structured strategies with clearer return paths and more controllable drawdowns. This is because there's now a very realistic benchmark: the near 5% yield on short-term US Treasury bonds, which itself constitutes a sustainable, low-risk source of return. In this environment, the question capital needs to answer is no longer simply "how much higher can it go," but rather: after absorbing volatility, can it still consistently outperform risk-free returns? The changes in the digital asset market are equally evident. BlackRock's tokenized money market fund, BUIDL, launched in 2024 and grew rapidly, reaching approximately $1.7 billion by 2025. Franklin Templeton's FOBXX is also continuously expanding. These products themselves are not aggressive, with underlying assets still consisting of US Treasury bonds and cash-like assets, yet capital continues to flow in. This means the market isn't lacking in risk appetite, but rather redefining: what risks are worth taking, and what returns have long-term investment value. Factors such as return stability, drawdown control, and the time required for recovery after volatility are becoming more important than "theoretical return potential." III. Behind the Changes: A Re-constraint on the Cost and Return Structure of Funds. The shift in capital flows is not a simple adjustment of preferences, but rather a change in the constraints. With interest rates remaining high, funds themselves begin to offer "yields." This means that any allocation needs to face a more direct comparison: can it consistently outperform risk-free returns before taking on risk? This has formed a clear benchmark over the past two years. Taking US short-term Treasury bonds as an example, the yield on 3-month Treasury bonds remained around 5% for a long period from 2024 to 2025. This level makes "holding cash or cash-like assets" a viable return option. For funds, this is no longer just a conservative allocation, but a clear benchmark. Based on this benchmark, the pricing logic of risky assets is re-constrained. First, the reliance on "trading time for space" is compressed. In the previous phase of ample liquidity, some allocations could tolerate short-term fluctuations, waiting for prices to materialize by extending the timeframe. However, with funds themselves offering returns, time itself becomes a cost. Strategies that occupy funds for extended periods without providing a certain return are beginning to see a proactive reduction in their allocation proportion. The second change is in the way revenue sources are broken down.Institutions are no longer solely focused on final returns, but are breaking down returns themselves: which returns come from price increases, which from interest rate spreads, which from arbitrage, and which can persist across different market environments. This shift is crucial because it signifies a shift from "directional returns" to "structural returns." In this phase, volatility itself is redefined. Previously, volatility was primarily viewed as risk; now, it's simultaneously becoming a source of returns that can be priced, broken down, and managed. For strategies with structural capabilities, market volatility, interest rate spread changes, and mismatches between different markets can continuously generate tradable opportunities. The real question is no longer whether volatility exists in the market, but rather: whether there is the ability to handle volatility. Therefore, what the market truly eliminates is not volatility, but rather single risk exposures lacking structural protection. IV. From Outcome Differences to Capability Differences: Structure Begins to Determine Outcomes. In a phase where funding costs and return constraints tighten simultaneously, the differences between assets are no longer merely reflected in outcomes, but are beginning to shift towards capabilities themselves. The preceding changes already demonstrate a shift in the focus of capital allocation. In the past, it was easier to rely on judgments based on a single logic, such as predicting price direction or concentrating on a particular asset class. However, in the current environment, this approach is increasingly unable to support stable results. On the one hand, a single direction is prone to repeated drawdowns in a volatile environment; on the other hand, relying solely on low-risk, high-return allocations is insufficient to meet the overall return requirements of funds. Under these constraints, allocation methods are beginning to change. Portfolios are no longer built around a single judgment but are broken down into different parts: one part serves to obtain stable returns, while another part is used to absorb volatility and obtain additional returns. The final result no longer depends on whether a single logic holds true, but on whether these parts can form a stable cooperative relationship. Correspondingly, risk management has also become more specific. Risk is no longer just passively controlled but needs to be pre-defined within the structure. Different funds correspond to different risk tolerance levels, and isolation through portfolio diversification limits volatility to a localized range rather than spreading throughout the overall portfolio. This becomes even more direct during periods of high interest rates—once funds themselves incur costs, drawdowns not only affect net asset value but also prolong the recovery period; without structural diversification, this impact is often amplified. The changes in how funds are used are equally evident.Which parts can be held long-term, which need to maintain liquidity, which are used for stable returns, and which bear risks—these arrangements need to be determined during the allocation phase, rather than adjusted after the outcome. Allocation is gradually shifting from outcome-oriented to process-oriented. Therefore, the core of market competition is also shifting from "who bets in the right direction" to "who can operate stably and sustainably." What truly matters is no longer just the level of returns, but whether returns are sustainable, volatility can be controlled, and the structure can be maintained long-term. V. Manifestation of Structural Capability: Taking Deutsche Bank as an Example. When interest rates remain high and return constraints tighten, a more realistic problem begins to emerge: it's not a lack of assets or opportunities, but how to ensure these elements continue to operate under given conditions. This type of problem cannot be solved by a single strategy but requires design at the structural level. Taking Deutsche Bank's Singularity Technology as an example, its asset management does not revolve around a specific direction, but first determines the structure and then decides on the allocation. Assets are not simply held but reorganized to ensure they have viable paths in different environments. Price fluctuations no longer directly determine the outcome but are decomposed and redistributed through structure. The way returns are handled has also changed. For strategies with structured capabilities, market volatility, interest rate spread changes, and mismatches between different markets can actually generate continuous tradable profit opportunities. Portfolio returns no longer depend on a single source but are broken down into different parts: one part serves as a stable source of income to cover the basic return, while another part bears volatility to generate additional profit. These different sources work together, making the overall result independent of a single judgment. Risk is no longer passively suppressed but is clearly defined. Different risks are placed in different structures, operating independently and isolated from each other. Volatility is confined to a localized range, rather than amplified within the portfolio. In an environment where funding costs exist, this division becomes more direct—drawdowns not only mean changes in net asset value but also an extension of time costs. At the same time, how funds are used is planned in advance. Which parts are used for stable returns, which parts bear risk, which need to maintain liquidity, and which can operate long-term—these arrangements are made during the allocation phase, rather than being passively corrected after market problems arise.Therefore, the true capability of this type of structure is not reflected in the level of returns at a particular stage, but rather in: whether the portfolio can still operate stably when market volatility occurs; whether the risk remains within a controllable range when drawdowns occur; and whether the return structure can still be valid when the environment continues to change. VI. Conclusion. This change will continue for some time before interest rates show a significant shift. Capital constraints will not disappear, and allocation methods will not return to the past. The same type of asset, under different structures, has begun to show divergent results, and this gap will not be easily erased by short-term fluctuations. For asset management, this is more like a screening process. What determines the outcome is no longer a single opportunity, but the ability to maintain stable performance in different environments. The standards for allocation are also changing. Whether the source of returns is clear, whether drawdowns are controllable, and whether the portfolio can operate stably are gradually replacing a single level of return as the new allocation standards. The final difference depends on how the portfolio is allocated, the range of drawdown control, and who can survive stably and generate returns in an environment of continuous volatility.