What to know:
- Securitize and Gauntlet are launching a DeFi yield strategy based on a tokenized version of Apollo’s credit fund.
- The Levered RWA Strategy will debut on Polygon and plans to extend to Ethereum Mainnet in the future.
- This strategy employs a technique known as looping to boost yield generation and exemplifies the increasing integration of tokenized assets into cryptocurrency applications.
Summary:
DUBAI, UAE — Securitize along with decentralized finance expert Gauntlet are set to launch a tokenized version of Apollo’s credit fund, marking a significant advancement in incorporating real-world assets into the crypto ecosystem. The firms are presenting a leveraged-yield strategy based on the Apollo Diversified Credit Securitize Fund (ACRED), which debuted in January and draws investments from Apollo’s $1 billion Diversified Credit Fund. This strategy will operate on Compound Blue, a lending protocol leveraging Morpho technology.
The Levered RWA Strategy is initially available on Polygon (POL) and aims to grow into the Ethereum mainnet and other blockchains following a pilot.
“We want our securities to compete alongside stablecoin strategies broadly,” said Reid Simon, who leads DeFi and credit solutions at Securitize.
“Christian Credit Fund’s integration into DeFi offers unprecedented earning strategies for investors.” (Translated).
Unique Approach to DeFi:
This launch coincides with the rising popularity of tokenized real-world assets (RWAs) - bonds, funds, and credit products - among major finance companies. Notable firms such as BlackRock and HSBC are delving into blockchain-based asset issuance. Yet the challenge remains to make these tokenized assets functional within DeFi platforms, such as utilizing them for collateral in lending and trading strategies that traditional frameworks do not support.
The strategy utilizes a method called looping, where tokens deposited are used as collateral to borrow USDC, which is then reinvested to buy more tokens. This process continues to build yield over time, with positions adjusted on the fly based on current market conditions.
All transactions will be automated using smart contracts, minimizing the need for manual intervention. Risk management strategies will be implemented via Gauntlet’s risk engine, which ensures that leverage ratios are monitored and can liquidate positions if necessary during market volatility.
“This endeavor aims to authenticate the institutional-grade DeFi vision we have promised for years,” highlighted Morpho CEO Paul Frambot.
The vault will feature Securitize’s sToken tool, allowing compliant transactions within decentralized networks, enabling ACRED investors to mint sACRED for expanded DeFi opportunities while adhering to regulatory standards.
Carlos Domingo, CEO of Securitize, stated:
“This serves as a prime example of the institutional-level DeFi we are striving to create: offering tokenized securities that are not only accessible but appealing to crypto-focused investors seeking enhanced strategic opportunities.” (Translated)
