AlloyX has unveiled a new tokenized money market fund on the Polygon blockchain, aiming to integrate traditional bank-held assets with decentralized finance (DeFi) approaches, reflecting a rising demand for real-world assets in the crypto space.
About the Fund
The fund, named the Real Yield Token (RYT), provides shares in a traditional money market fund, with assets managed securely by Standard Chartered Bank in Hong Kong, under strict regulatory oversight.
Unlike standard money market funds, which typically invest in low-risk, short-term instruments like U.S. Treasuries and commercial paper, RYT’s tokenization allows for on-chain trading. This enables holders to engage with DeFi ecosystems while maintaining their investments.
RYT can function as collateral across various DeFi services, allowing users to borrow against their token holdings and reinvest to enhance yields, a practice known in the DeFi world as looping.
Polygon was selected as the platform for deployment due to its low transaction fees, rapid processing times, and thriving DeFi community.
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Source: Sandeep Nailwal
Market Trends
AlloyX’s introduction comes amidst a notable upswing in tokenized money market funds, with institutions increasingly seeking blockchain solutions for cash management. A significant player in this field is BlackRock’s USD Institutional Digital Liquidity Fund, which offers institutional clients tokenized access to U.S. dollar yield through Treasury bills and repurchase agreements.
Furthermore, financial giants like Goldman Sachs and BNY Mellon are planning to set up tokenized money market funds, though these may not offer the same DeFi-centric features such as looping and versatility as RYT.
A Growing Demand
The interest in tokenized money market funds is growing as asset managers strive to integrate traditional finance into digital markets. A recent report from Moody’s indicated that the tokenized money market fund market is rapidly expanding, having been valued at an estimated $5.7 billion in 2021. In the U.S., these funds are becoming an attractive option as regulations evolve and stablecoin adoption rises.
Teresa Ho, a strategist from JPMorgan, mentioned, “Instead of posting cash, or posting Treasurys, you can post money-market shares and not lose interest along the way. It speaks to the versatility of money funds.”
