Decentralized finance (DeFi) protocols built for crypto assets are increasingly being retooled for Wall Street, and VanEck’s tokenized Treasury fund coming to lending platform Euler is the latest example of that shift.
Securitize (CEPT), the issuer and tokenization specialist behind VanEck’s VBILL Treasury fund, said Thursday that the product is now available on Euler lending markets.
The move allows investors to use tokenized US Treasuries as collateral to borrow and deploy liquidity elsewhere on the chain, while maintaining compliance limits tied to the asset.
The move highlights how DeFi protocols are evolving as institutional investors delve into tokenized finance. Platforms that once focused on permissionless cryptoassets are beginning to redesign their architecture for regulated products like tokenized money market funds and private credit.
Tokenized US Treasuries have become one of the fastest growing crypto sectors, surpassing $15 billion in assets, increasing 150% in one year, according to data from RWA.xyz. Global asset managers including BlackRock, Franklin Templeton and Janus Henderson have launched blockchain-based Treasury and money market products aimed at institutions seeking yield-generating on-chain collateral.
But that is still a fraction of the potential that asset tokenization could achieve. Standard Chartered projected $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 bring trillions of dollars into DeFi, says StanChart
“What’s really exciting is that there are now protocols that are excited to integrate permissioned assets,” Graham Ferguson, head of the Securitize ecosystem, told CoinDesk. “This is something that hasn’t happened before.”
Euler, which currently has more than $320 million in assets on its platform, pivoted earlier this year toward institutional use cases after originally operating 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 lending markets while preserving investor eligibility requirements and transfer restrictions. VBILL price data is provided through RedStone oracles.
The challenge for DeFi protocols, according to Securitize’s Ferguson, is balancing the open infrastructure of cryptocurrencies with the compliance expectations of traditional financial companies.
“As more serious institutional investors explore the space, they need to have certain protections and permissions that they are accustomed to in traditional finance,” 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.
