Backed Finance launch of a tokenized government bond on the layer-2 network Base.
The tokenization protocol has effectively converted BlackRock's iShares bond ETF UCITS, which tracks a blend of short-term U.S. Treasury bills. The tokenized version takes the ticker of blBO1.
But that's just the beginning, Backed co-founder Adam Levi told Decrypt.
BlackRock ETF? There's a Token For That
Decrypting DeFi is Decrypt's DeFi email newsletter. (art: Grant Kempster) The integration of real-world assets, or RWAs, into the world of DeFi has been one of the hottest narratives so far in 2023. And emerging just in time to meet that red-hot trend head on is a crypto startup looking to soak up the interest. This week, Switzerland-based Backed Finance launched a tokenized version of a BlackRock ETF (CSPX) that includes tons of big names like Apple, Microsoft, Amazon, Alphabet, and 496 other l...
"We can tokenize anything held in a bank account–and we look forward to expanding our product offering," he said. "Organizations benefit from not having to interface with TradFi or develop their own legal process by working with Backed for RWA tokenization."
RWA stands for real-world assets, like equities, commodities, art, or collectibles. Base is the Coinbase-incubated layer-2 network built using Optimism's OP stack–it's yet another rollup of the optimistic variety aimed at lowering costs and easing congestion on Ethereum.
Levi told Decrypt that the work with Base kicked off in February this year, adding that Backed was particularly interested in working with the network because of its "promised support for builders and developers."
The addition of RWAs, is a first for the speedy blockchain network, but it comes at a time when the asset class and tokenization movement has taken center stage of late.
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Despite dropping off some this morning, MakerDAO’s native governance token has enjoyed hefty growth this week even amid the latest rate hikes from the Fed. Maker enables the minting of U.S. dollar-pegged DAI against over-collateralized deposits of other cryptocurrencies, like Ethereum or Uniswap’s UNI token. The U.S. Federal Reserve opted to lift rates again on Wednesday as part of its ongoing battle to quell inflation. The latest 25-basis-point hike now brings the federal funds rate to a range...
With interest rates high and crypto prices low, various decentralized finance protocols, namely Aave and Maker, have turned to RWAs to generate revenue for the protocols. Maker, for example, has already integrated U.S. treasuries to generate yield on its native stablecoin called DAI.
"Right now, fixed-income products seem to be in the most demand, and recently protocols and users have shown specific interest in non-USD denominated short-term bonds," said Levi.
As for when a tokenized Google or Tesla will hit the blockchain, he said his team is still waiting on interest in the market. "If there is demand, we are happy to tokenized any security that is requested."
Perhaps by then American investors will also be able to participate. For now, U.S. investors are intentionally blocked from trading any of Backed's tokenized offerings.
