Securitize and Gauntlet Launch Tokenized Real-World Asset Initiative

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Dubai-based Securitize and DeFi specialist Gauntlet plan to launch a tokenized version of Apollo’s credit fund. This initiative aims to integrate real-world assets into the crypto ecosystem, fostering the development of new strategies. The product, based on the Apollo Diversified Credit Securitize Fund (ACRED), aims to invest in Apollo’s $1 billion Diversified Credit Fund.

Tokenization and DeFi Strategy

The two firms will offer a leveraged yield strategy on Compound Blue, a Morpho-backed lending protocol. The product will initially launch on Polygon and is expected to expand to the Ethereum mainnet and other platforms after the trial phase. The strategy involves designing securities to compete with fixed asset strategies.

The new strategy focuses on the use of tokenized assets in DeFi applications. After being used as collateral in a vault, ACRED tokens are employed for USDC borrowing, and the USDC is used to purchase additional ACRED, aiming to increase yield. The transactions are executed via automated smart contracts.

Institutional Investments and Market Developments

Interest in tokenized real-world assets has been rising recently. Leading financial institutions like BlackRock, HSBC, and Franklin Templeton are exploring blockchain-based asset issuance and trading. Significant volumes have been achieved in transactions involving products like US Treasury Securities, indicating market evolution.

The strategy utilizes the “looping” technique, which includes borrowing against collateral and reinvesting cycles. Through this method, investors aim to enhance their returns. Automation of all transactions reduces the probability of manual intervention, easing risk management.

Securitize’s sToken mechanism allows authorized token holders to transact in compliance with regulatory guidelines. This technology is considered a significant step in integrating tokenized assets into DeFi strategies.

The developed approach can offer flexible solutions to investors through features like automation and dynamic risk control. All transactions conducted via smart contracts allow real-time intervention against market fluctuations. This development can be considered a significant innovation for both traditional finance and DeFi platforms.

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