Introduction to Converge: A New Era for Tokenized Assets
Securitize and Ethena Labs, two pioneering companies collaborating with BlackRock’s money market token BUIDL, have introduced a groundbreaking Ethereum-compatible blockchain named Converge. This platform is designed specifically to accommodate tokenized assets and facilitate the revolutionary potential of decentralized finance (DeFi) for institutional investors.
Migration of DeFi Ecosystem to Converge
Ethena, which has developed the yield-bearing USDe token and the BUIDL-backed USDtb stablecoin, plans to transition its impressive $6 billion DeFi ecosystem to the new Converge blockchain. Meanwhile, Securitize, recognized as the transfer agent for BlackRock’s BUIDL token, will migrate its suite of tokenized real-world assets (RWAs) to this innovative chain. Notably, this includes the recently launched Apollo credit fund token.
Expanding DeFi Beyond Cryptocurrencies
The journey of DeFi has always involved a commitment to integrating traditional assets into the blockchain space. As financial institutions increasingly seek to participate in the tokenization race, it becomes essential for companies like Securitize and Ethena to cultivate an institutional-friendly pathway to DeFi.
Insights from Industry Leaders
Securitize CEO Carlos Domingo articulated the significance of tokenization. He explained, “Tokenization, per se, is just putting your securities on a different ledger, producing cost savings and efficiencies. However, it doesn’t necessarily lead to groundbreaking innovations regarding asset utilization.” He emphasized that the unique developments in the crypto space could potentially revolutionize the RWA sector if integrated effectively.
Building a Robust Network of Partners
Converge has attracted a formidable group of initial partners, including Pendle, Avara (the parent company of Aave Labs), Ethereal, Morpho, and Maple Finance. To ensure secure custodial services, they will collaborate with industry leaders like Copper, Fireblocks, Komainu, and Zodia. Furthermore, the blockchain will enhance interoperability through LayerZero, Wormhole, and oracle support from RedStone.
Future Innovations and Use Cases
Looking ahead, Ethena founder Guy Young hinted at the exciting possibilities that Converge will unlock. He stated that Securitize is set to introduce new products on the blockchain, paving the way for innovative applications. “This could involve utilizing these assets as collateral within customized money markets or trading equities and other assets that currently lack a significant on-chain presence,” Young noted. He believes that creating a platform specifically designed for the intersection of traditional finance (TradFi) and DeFi presents one of the most substantial opportunities in the coming years.
Technical Features and Network Security
Converge will be fully compatible with the Ethereum Virtual Machine (EVM), allowing it to execute Ethereum-based smart contracts, decentralized applications (dApps), and tools without any modifications. According to a recent press release, the platform will deliver performance on par with leading blockchains.
Ethena’s governance token, ENA, will function as a stakeable asset (via sENA) on Converge. This will help secure the network with a permissioned validator set made up of traditional finance entities and centralized exchanges. The USDe and USDtb tokens will also serve as the gas tokens for transactions on the network.
A Unique Approach to Compliance in DeFi
Converge is designed as a public open chain with an advanced know-your-customer (KYC) framework that extends beyond simple wallet whitelisting. Domingo explained, “DeFi today is tailored for permissionless and anonymous market participants with freely transactable assets. To incorporate this innovation where the collateral and assets pledged into the protocol are regulated instruments, we must go beyond standard wallet whitelisting and KYC processes.”
Conclusion
The launch of Converge marks a significant step forward in the evolution of DeFi, particularly for institutional investors. With its robust infrastructure, strategic partnerships, and commitment to compliance, Converge is poised to redefine how tokenized assets interact within the decentralized finance landscape.
