In a pioneering move for the decentralized finance (DeFi) landscape, tokenization firm Securitize and DeFi specialist Gauntlet have teamed up to launch a tokenized version of Apollo’s credit fund. This strategic collaboration, which was unveiled on Wednesday, aims to integrate real-world assets into the burgeoning crypto ecosystem. The offering, called the Levered RWA Strategy, is initially available on Polygon (POL), with plans to expand to the Ethereum mainnet and other blockchains following a successful pilot phase.
A New Frontier in DeFi
The Levered RWA Strategy centers around the Apollo Diversified Credit Securitize Fund (ACRED), a tokenized feeder fund that debuted in January and invests in Apollo’s $1 billion Diversified Credit Fund. This innovative strategy leverages Compound Blue, a lending protocol powered by Morpho, to optimize yields using a DeFi-native technique known as “looping.” By employing this method, ACRED tokens deposited into a vault serve as collateral to borrow USDC, which is then used to acquire additional ACRED tokens. This recursive process enhances yield and dynamically adjusts exposure based on real-time borrowing and lending rates.
“The idea behind the product is we want our securities to be plug and play competitive with stablecoin strategies writ large,” Reid Simon, head of DeFi and credit solutions at Securitize, shared in an interview with CoinDesk. His comments reflect a growing trend among traditional finance giants like BlackRock, HSBC, and Franklin Templeton, who are showing increased interest in blockchain-based asset issuance and settlement.
Bridging Traditional and Decentralized Finance
Tokenized real-world assets (RWAs), such as funds, bonds, and credit products, are gaining traction as they offer a bridge between traditional finance and the decentralized world. According to data from RWA.xyz, tokenized U.S. Treasuries alone have attracted over $6 billion. However, making these assets usable across DeFi applications remains a challenge. The goal is to enable their use as collateral for loans, margin trading, or to build investment strategies not viable on traditional financial systems.
“This is expected to deliver the institutional-grade DeFi that our industry has promised for years,” said Morpho CEO and co-founder Paul Frambot. “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.”
Gauntlet’s risk engine plays a crucial role by actively managing risk, monitoring leverage ratios, and unwinding positions in volatile market conditions to safeguard users. This automated approach, relying on smart contracts, minimizes the need for manual oversight.
Regulatory Compliance Meets Innovation
A notable aspect of this venture is its focus on compliance and investor protection, achieved through Securitize’s new sToken tool. This tool allows accredited token holders to maintain compliance within decentralized networks. For ACRED investors, this means minting sACRED tokens that can be utilized for broader DeFi strategies without breaching regulatory frameworks.
“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,” remarked Securitize CEO Carlos Domingo in a statement.
While this development holds promise, it also raises questions about the broader implications for both the crypto and traditional finance sectors. As tokenized assets become more integrated into DeFi, the potential for increased accessibility and efficiency in financial markets grows. Yet, challenges remain in ensuring that these innovations are resilient and sustainable in the face of market fluctuations and regulatory scrutiny.
Looking forward, the success of the Levered RWA Strategy could set a precedent for the integration of real-world assets into the DeFi space. However, whether this trend can be sustained or will face hurdles as it scales remains to be seen. As the DeFi ecosystem continues to evolve, the interplay between traditional and decentralized finance will be a critical area to watch.
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This article is based on: Tokenized Apollo Credit Fund Makes DeFi Debut With Levered-Yield Strategy by Securitize, Gauntlet
Steve Gregory is a lawyer in the United States who specializes in licensing for cryptocurrency companies and products. Steve began his career as an attorney in 2015 but made the switch to working in cryptocurrency full time shortly after joining the original team at Gemini Trust Company, an early cryptocurrency exchange based in New York City. Steve then joined CEX.io and was able to launch their regulated US-based cryptocurrency. Steve then went on to become the CEO at currency.com when he ran for four years and was able to lead currency.com to being fully acquired in 2025.
