Introducing Converge: Bridging Traditional Finance and Decentralized Finance
Securitize and Ethena Labs, two innovative firms collaborating with BlackRock’s money market token, BUIDL, have announced the launch of Converge, an Ethereum-compatible blockchain explicitly designed to accommodate tokenized assets. This new platform aims to provide institutional investors with the dynamic innovations derived from decentralized finance (DeFi).
Ethena, known for its yield-bearing USDe token and the BUIDL-backed USDtb stablecoin, is set to migrate its impressive $6 billion DeFi ecosystem to Converge. Meanwhile, Securitize, acting as the transfer agent for BlackRock’s BUIDL token, will integrate its comprehensive suite of tokenized real-world assets (RWAs), including the recently launched Apollo credit fund token, onto this new blockchain.
Since the inception of DeFi, there has been a deliberate push to transition beyond mere cryptocurrencies and to incorporate traditional assets as collateral on-chain. Today, as conventional financial firms rush to participate in the tokenization wave, it is only logical for entities like Securitize and Ethena to pave a path that is friendly to institutional investors venturing into DeFi.
“Tokenization, in essence, is merely the process of placing your securities on a different ledger, leading to cost savings and operational efficiencies,” stated Securitize CEO Carlos Domingo in a recent interview. “However, it doesn’t inherently create significant new opportunities regarding how these assets can be utilized.” He continued to highlight that “the crypto space has been innovating in remarkable ways to utilize digital assets. If we can successfully integrate that DeFi creativity into the RWA sector, it could catalyze unprecedented growth.”
Securitize and Ethena have established a robust coalition of initial partners for Converge, which includes notable names such as Pendle, Avara (the parent company of Aave Labs), Ethereal, Morpho, and Maple Finance. Custodial services will be provided by reputable entities like Copper, Fireblocks, Komainu, and Zodia, while interoperability will be facilitated through LayerZero, Wormhole, and oracle support from RedStone.
Looking ahead, Ethena’s founder Guy Young expressed enthusiasm about the potential applications that can be constructed on the Converge blockchain. He mentioned, “New products developed by Securitize will find a home on this chain, creating a multitude of new use cases.” He elaborated, “This could involve utilizing these assets as collateral within bespoke money markets or enabling the trading of various assets that currently lack significant on-chain representation, such as equities.” Young believes that there is a significant opportunity in creating a platform specifically designed for the convergence of traditional finance and DeFi.
Converge is built to be compatible with the Ethereum Virtual Machine (EVM), allowing it to seamlessly run Ethereum-based smart contracts, decentralized applications (dApps), and tools without requiring any modifications. According to a press release, the platform is expected to deliver performance that rivals leading blockchains in the industry.
Ethena’s native governance token, ENA, will act as a stakeable asset (via sENA) for Converge, thereby securing the network through a permissioned validator set composed of traditional finance entities and centralized exchanges. Both USDe and USDtb will serve as the gas tokens for transactions on the network.
Converge is designed as a public open chain featuring a sophisticated know-your-customer (KYC) wrapper, which extends beyond simple wallet whitelisting. Domingo commented, “DeFi, as it stands today, is tailored for permissionless and anonymous market participants and freely transactable assets.” He emphasized that in order to incorporate this innovation within a framework where the collateral and assets being pledged in the protocol are regulated instruments, several measures must be implemented that go beyond merely whitelisting wallets and enforcing KYC protocols.
