VanEck's tokenized fund lands on Euler as DeFi courts Wall Street institutions

DeFi protocols are increasingly adapting to host regulated, tokenized assets as tokenization is projected to bring trillions of dollars onchain.

What to know:

• VanEck's tokenized fund, issued by Securitize, is now live on DeFi lending platform Euler, allowing investors to use tokenized U.S. Treasuries as onchain collateral.
• The move underscores how DeFi protocols are redesigning their platforms to accommodate institutions and regulated assets, Graham Ferguson, Securitize's head of ecosystem, said.
• Standard Chartered, BCG and Ripple suggest the tokenized asset market could scale into trillions of dollars over the next decade, pushing DeFi to balance openness with traditional compliance demands.

Decentralized finance (DeFi) protocols built for crypto assets are increasingly retooling themselves for Wall Street, and VanEck's tokenized Treasury fund arriving on lending platform Euler is the latest example of that shift.

Securitize (CEPT), issuer and tokenization specialist behind VanEck's VBILL Treasury fund, said Thursday that the product is now live on Euler lending markets.

The move allows investors to use tokenized U.S. Treasuries as collateral to borrow and deploy liquidity elsewhere onchain while maintaining compliance limits tied to the asset.

The move highlights how DeFi protocols are evolving as institutional investors push deeper into tokenized finance. Platforms that once centered around permissionless crypto assets are beginning to redesign their architecture for regulated products such as tokenized money market funds and private credit.

Tokenized U.S. Treasuries have become one of the fastest-growing sectors in crypto, topping $15 billion in assets swelling 150% in a year, according to RWA.xyz data. Global asset managers including BlackRock, Franklin Templeton and Janus Henderson have all launched blockchain-based Treasury and money-market products aimed at institutions seeking yield-bearing onchain collateral.

But that's still a fraction of the potential how big asset tokenization could become. Standard Chartered projected $2 trillion in tokenized assets by 2028, while BCG and Ripple forecasted a $18.9 trillion market size by 2033.

Read more: Tokenization push could pull trillions of dollars into DeFi, StanChart says

"The really exciting thing is that there are protocols now that are excited to integrate permissioned assets," Graham Ferguson, Securitize's head of ecosystem, told CoinDesk. "This is something that previously had not been the case."

Euler, which currently has over $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. Pricing data for VBILL is supplied through RedStone oracles.

The challenge for DeFi protocols, according to Securitize's Ferguson, is balancing crypto’s open infrastructure with the compliance expectations of traditional finance firms.

"As more serious institutional investors are exploring the space, they need to have certain protections and permissions that they’re used to in traditional finance," Ferguson said.

"DeFi Protocols are finally waking up to the fact that if they want to welcome in this capital, they’re going to have to change their ways," he added.

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