Decentralized finance (DeFi) protocols built for cryptoassets are increasingly turning to Wall Street, and VanEck’s tokenized financial fund arriving on lending platform Euler is the latest example of this shift.
Securitize (CEPT), the issuer and tokenization specialist behind VanEck’s VBILL Treasury fund, said Thursday that the product is now live on Euler’s lending markets.
The move allows investors to use tokenized US Treasuries as collateral to borrow and apply liquidity elsewhere on the chain while maintaining compliance limits tied to the asset.
The move highlights how DeFi protocols are evolving as institutional investors push deeper into tokenized finance. Platforms once centered around permissionless cryptoassets are beginning to redesign their architecture for regulated products such as tokenized money market funds and private credit.
Tokenized US Treasuries have become one of the fastest growing sectors in crypto, topping $15 billion in assets growing 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 financial and money market products aimed at institutions seeking return-bearing onchain security.
But it is still a fraction of the potential of how big asset tokenization can become. 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 draw trillions of dollars into DeFi, says StanChart
“The really exciting thing is that there are protocols now that are excited about integrating permissioned assets,” Graham Ferguson, Securitize’s head of ecosystem, told CoinDesk. “This is something that had not previously been the case.”
Euler, which currently has over $320 million in assets on its platform, pivoted to institutional use cases earlier this year after initially operating as a fully permissionless lending protocol. Rival platform Aave also launched Horizon, its real asset platform focused on institutional borrowers and tokenized security.
Euler integrated Securitize’s DS protocol earlier this year, allowing tokenized securities to interact with lending markets while preserving investor eligibility requirements and transfer restrictions. Pricing data for VBILL is provided through RedStone oracles.
The challenge for DeFi protocols, according to Securitize’s Ferguson, is to balance crypto’s open infrastructure with the compliance expectations of traditional financial firms.
“As more serious institutional investors explore the space, they need to have certain protections and permissions that they’re used to in traditional finance,” Ferguson said.
“The DeFi protocols are finally waking up to the fact that if they want to be welcomed in this capital, they will have to change their ways,” he added.
