Decentralized finance (DeFi) protocols built for crypto assets are increasingly adapting for Wall Street, and VanEck’s tokenized Treasury fund arriving on lending platform Euler is the latest example of that shift.
Securitize (CEPT), issuer and tokenization specialist behind VanEck’s VBILL Treasury fund, said Thursday that the product is now live on the Euler loan markets.
This move allows investors to use tokenized US Treasuries as collateral to borrow and deploy liquidity elsewhere in the chain, while maintaining the compliance limits associated with the asset.
This move highlights how DeFi protocols are evolving as institutional investors dive deeper into tokenized finance. Platforms that once focused on permissionless crypto assets are beginning to redesign their architecture for regulated products such as tokenized money market funds and private credit.
Tokenized U.S. Treasuries have become one of the fastest-growing sectors in crypto, with $15 billion in assets rising 150% in a year, according to data from RWA.xyz. Global asset managers including BlackRock, Franklin Templeton and Janus Henderson have all launched blockchain-based treasury and money market products, aimed at institutions seeking yield-bearing onchain collateral.
But that’s still a fraction of the potential size of asset tokenization. Standard Chartered predicted $2 trillion in tokenized assets by 2028, while BCG and Ripple predicted a market size of $18.9 trillion by 2033.
Read more: Tokenization push could attract trillions of dollars into DeFi, says StanChart
“The really exciting thing is that there are now protocols that are excited to integrate authorized assets,” Graham Ferguson, Securitize’s head of ecosystem, told CoinDesk. “This is something that wasn’t the case before.”
Euler, which currently has more than $320 million in assets on its platform, focused on institutional use cases earlier this year after originally functioning as a fully permissionless lending protocol. Rival platform Aave also launched Horizon, its real-world asset platform focused on institutional borrowers and tokenized collateral.
Euler integrated Securitize’s DS Protocol earlier this year, allowing tokenized securities to interact with the credit markets while maintaining investor eligibility requirements and transfer restrictions. Pricing data for VBILL is provided via RedStone oracles.
The challenge for DeFi protocols, according to Securitize’s Ferguson, is balancing crypto’s open infrastructure with the compliance expectations of traditional financial firms.
“As more serious institutional investors explore the space, they will need certain protections and permissions that they have come to expect in the traditional financial world,” Ferguson said.
“DeFi Protocols are finally waking up to the fact that if they want to welcome this capital, they will have to change their ways,” he added.