DUBAI, UAE — Tokenization firm Securitize and decentralized finance (DeFi) specialist Gauntlet are set to revolutionize the crypto landscape by introducing a tokenized version of Apollo’s credit fund to the DeFi space. This initiative marks a significant move towards integrating real-world assets within the crypto ecosystem.
On Wednesday, the two firms will unveil a leveraged-yield strategy centered around the Apollo Diversified Credit Securitize Fund (ACRED), a tokenized feeder fund that launched in January and channels investments into Apollo’s $1 billion Diversified Credit Fund. This innovative strategy will be deployed on Compound Blue, a lending protocol developed by Morpho.
The offering, aptly named the Levered RWA Strategy, will initially be accessible on Polygon (POL) and is anticipated to extend to the Ethereum mainnet and additional blockchains following a successful pilot phase.
Reid Simon, head of DeFi and credit solutions at Securitize, explained, “The idea behind the product is we want our securities to be plug and play competitive with stablecoin strategies writ large,” during an interview with CoinDesk.
DeFi Strategy Built on Tokenized Assets
The launch of this product comes at a time when tokenized real-world assets (RWAs) — including funds, bonds, and credit products — are increasingly gaining traction among established finance institutions. Industry leaders such as BlackRock, HSBC, and Franklin Templeton are exploring blockchain-based asset issuance and settlement, with tokenized U.S. Treasuries alone attracting over $6 billion in investments, according to data from RWA.xyz.
While various financial institutions are engaging with tokenization, the pressing challenge lies in the seamless integration of these assets within DeFi applications. This encompasses their utility as collateral in loans, margin trading, and the development of investment strategies that are unattainable through traditional financial channels.
The strategy utilizes a DeFi-native yield-optimization technique known as “looping.” In this innovative process, ACRED tokens deposited into a vault serve as collateral to borrow USDC, which is subsequently employed to acquire additional ACRED. This recursive strategy is repeated to enhance yield, with exposure dynamically adjusted based on real-time borrowing and lending rates.
All transactions within this framework are automated through smart contracts, thereby reducing the necessity for manual oversight. Gauntlet’s risk engine actively manages risk by monitoring leverage ratios and can unwind positions during volatile market conditions to safeguard investors.
“This is expected to deliver the institutional-grade DeFi that our industry has promised for years,” said Paul Frambot, CEO and co-founder of Morpho. He added, “This use case uniquely demonstrates how DeFi enables investors in funds like ACRED to access financial composability that is simply not possible on traditional rails.”
The vault also represents one of the inaugural applications of Securitize’s new sToken tool, which allows accredited token holders to maintain compliance and investor protections within decentralized networks. In this context, ACRED investors will first mint sACRED tokens, enabling them to engage in broader DeFi strategies without contravening regulatory standards.
“This is a strong example of the institutional-grade DeFi we’ve been working to build: making tokenized securities not only accessible but compelling to crypto-native investors seeking strategies that objectively outpace their traditional counterparts,” stated Securitize CEO Carlos Domingo.
