Introduction

Securitize and Ethena Labs, collaborating with BlackRock’s money market token BUIDL, have developed Converge, an Ethereum-compatible blockchain for tokenized assets aimed at institutional investors.

Features of Converge

Ethena offers the yield-bearing USDe token and BUIDL-backed USDtb stablecoin, migrating its $6 billion DeFi ecosystem to Converge. Securitize will bring tokenized real-world assets (RWAs) such as the Apollo credit fund token.

The Push for Tokenization

Since the early days of DeFi, there has been an effort to move traditional assets on-chain as collateral. Financial firms are eager to enter the tokenization race, making the creation of an institutional-friendly DeFi path vital.

Expert Opinions

Securitize CEO Carlos Domingo states, “Tokenization is about placing securities on a different ledger, leading to cost savings, but it doesn’t change asset utility significantly.” He emphasizes the potential of integrating DeFi innovations into RWAs.

Partnerships and Support

Converge has secured initial partners, including Pendle, Avara (Aave Labs), Ethereal, Morpho, and Maple Finance. Custodial services are provided by Copper, Fireblocks, Komainu, and Zodia. Interoperability will leverage LayerZero, Wormhole, and RedStone.

Future Prospects

Ethena founder Guy Young highlighted the potential for new products on Converge, including tailored money markets and trading of traditionally off-chain assets.

Technical Specifications

Converge will be compatible with the Ethereum Virtual Machine (EVM), allowing it to run Ethereum-based smart contracts and applications seamlessly. Its performance aims to match leading blockchains.

Governance and Security

Ethena’s governance token, ENA, will be stakeable (through sENA) for network security, supported by traditional finance entities and centralized exchanges. USDe and USDtb will act as gas tokens.

Compliance Considerations

Converge functions as a public open chain with an enhanced know-your-customer (KYC) wrapper, reflecting the need for regulation in DeFi systems that handle real-world collateral.

Carlos Domingo notes, “DeFi today caters to anonymous market participants; integrating regulated instruments necessitates more than just wallet whitelisting and KYC procedures.”