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Securitize and Gauntlet are set to introduce a tokenized version of Apollo's credit fund to the decentralized finance (DeFi) ecosystem, marking a significant development in integrating real-world assets with the crypto world. The collaboration aims to offer a leveraged-yield strategy centered around the Apollo Diversified Credit Securitize Fund (ACRED), a tokenized feeder fund that was launched in January and invests in Apollo’s $1 billion Diversified Credit Fund. This strategy will operate on Compound Blue, a lending protocol powered by Morpho.

The new offering, named Levered RWA Strategy, will initially be available on Polygon (POL) and is expected to expand to the Ethereum mainnet and other blockchains following a pilot phase. The goal is to make these securities competitive with stablecoin strategies, ensuring they are plug-and-play within the DeFi ecosystem. Reid Simon, head of DeFi and credit solutions at Securitize, highlighted the product's aim to integrate seamlessly with existing DeFi applications, enhancing their usability and accessibility.

This move comes as tokenized real-world assets (RWAs) gain traction among traditional financial institutions. Major firms such as BlackRock, HSBC, and Franklin Templeton are exploring blockchain-based asset issuance and settlement. The challenge now is to make these tokenized assets usable across various DeFi applications, enabling their use as collateral for loans, margin trading, and building investment strategies that are not possible on traditional financial rails.

The strategy employs a DeFi-native yield-optimization technique called "looping." In this process, ACRED tokens deposited into a vault are used as collateral to borrow USDC, which is then used to purchase more ACRED. This recursive process enhances yield, with exposure adjusted dynamically based on real-time borrowing and lending rates. All trades are automated using smart contracts, reducing the need for manual oversight. Risk is actively managed by Gauntlet’s risk engine, which monitors leverage ratios and can unwind positions in volatile market conditions to protect users.

This initiative is expected to deliver institutional-grade DeFi, demonstrating how DeFi enables investors in funds like ACRED to access financial composability that is not possible on traditional financial systems. The vault is also one of the first uses of Securitize’s new sToken tool, which allows accredited token holders to maintain compliance and investor protections within decentralized networks. In this case, ACRED investors first mint sACRED that they can use for broader DeFi strategies without breaking regulatory rules.

Carlos Domingo, CEO of Securitize, emphasized that this development is a strong example of the institutional-grade DeFi they have been working to build, making tokenized securities not only accessible but also compelling to crypto-native investors seeking strategies that objectively outpace their traditional counterparts. This collaboration between Securitize and Gauntlet represents a significant step forward in the integration of real-world assets with the DeFi ecosystem, offering new opportunities for investors and enhancing the usability of tokenized assets.