Securitize and Ethena Launch Institutional DeFi Blockchain Converge

Securitize and Ethena Labs, two innovative firms collaborating with BlackRock’s money market token, have unveiled a groundbreaking Ethereum-compatible blockchain named Converge. This new platform is specifically designed to accommodate tokenized assets and provide institutional investors with the cutting-edge advantages of decentralized finance (DeFi). The Converge blockchain will support a yield-bearing USDe token and a BUIDL-backed USDtb stablecoin, facilitating the migration of its DeFi ecosystem to this new chain. Securitize, recognized as the transfer agent for BlackRock’s BUIDL token, is set to integrate its comprehensive suite of tokenized real-world assets (RWAs), including recently issued assets, into the Converge blockchain.

Tokenization and Its Impact on Traditional Finance

Since the inception of blockchain technology, there has been a concerted effort to expand beyond mere cryptocurrencies and bring traditional assets on-chain as collateral. In recent years, traditional financial firms have been eager to join the tokenization race, prompting companies like Securitize and Ethena to create an institutional-friendly pathway to DeFi. “Tokenization, per se, is just putting your securities on a different ledger, and it produces cost savings and efficiencies, but it doesn’t necessarily lead to anything significantly different in terms of what you can do with these assets,” explained Securitize CEO Carlos Domingo in a recent interview.

He further elaborated, “On the other hand, crypto has been developing very novel ways of using digital assets. If you could actually bring that DeFi innovation back into the RWA space, it could make it explode.” This statement underscores the potential for significant transformation within the financial landscape as traditional assets are integrated into the DeFi ecosystem.

Initial Partners and Support Services

Securitize and Ethena have assembled a robust lineup of initial partners for the Converge blockchain, including notable names such as Pendle, Avara (the parent company of Aave Labs), Ethereal, Morpho, and Maple Finance. To ensure the security and integrity of the blockchain, custodial services will be provided by reputable firms like Copper, Fireblocks, Komainu, and Zodia. Furthermore, interoperability will be facilitated through technologies such as LayerZero and Wormhole, with oracle support from RedStone.

Future Innovations on the Converge Blockchain

Looking ahead, Ethena founder Guy Young expressed optimism about the new products that Securitize will introduce on the Converge blockchain, which will open up a myriad of new use cases. “That might be using this stuff as collateral within tailor-made money markets, or it could be trading of different assets which don’t exist on-chain now at real scale, so that might be equities or whatever, going forward,” Young stated in an interview. “We think something that’s purpose-built for this intersection of TradFi and DeFi is going to be one of the largest opportunities over the next few years.”

Technical Specifications and Features

The Converge blockchain is designed to be fully compatible with the Ethereum Virtual Machine (EVM), allowing it to execute Ethereum-based smart contracts, decentralized applications (dApps), and tools without requiring any modifications. According to a press release, the performance of Converge is expected to align with that of industry-leading blockchains, ensuring a seamless experience for users and developers alike.

Ethena’s native governance token, ENA, will function as a stakeable asset (via sENA) for the Converge network, securing it with a permissioned validator set composed of traditional finance entities and centralized exchanges. Both USDe and USDtb will serve as gas tokens for the network, facilitating transactions and interactions within the ecosystem.

Bridging Traditional Finance and DeFi

“DeFi today is designed specifically for permissionless and anonymous market participants and freely transactable assets,” Domingo remarked. “To bring that innovation in a context where the collateral and the asset that you’re pledging into the protocol is actually a regulated instrument, there are a bunch of things beyond just the technology that need to be considered.” This highlights the unique challenges and opportunities that arise when merging traditional finance with decentralized finance.

Conclusion: A New Era for Institutional Investors

The launch of the Converge blockchain by Securitize and Ethena marks a significant milestone in the evolution of institutional DeFi. By providing a platform that accommodates tokenized assets and integrates traditional financial instruments, these firms are paving the way for a new era of financial innovation. As the landscape of finance continues to evolve, the potential for growth and transformation within the DeFi space is immense, and Converge is poised to be at the forefront of this revolution.

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