DeFi
Arbitrum seeks performance. BlackRock has come knocking – DL News
- Arbitrum DAO wants exposure to real-world assets.
- Some TradFi companies have offered their services.
Digital cooperatives that run much of the crypto economy tend to hire crypto-native companies when they need a security audit, help managing their finances, and other services.
But two Wall Street-linked companies entered the complicated world of DAO governance last weekend when they offered to help Arbitrum DAO diversify its holdings.
The year-old DAO – short for decentralized autonomous organization, an ostensibly leaderless organization run by token holders – wants to invest 35 million ARB tokens, worth around $37 million, in stable assets and liquids that “provide an uncorrelated return to crypto markets that is at least commensurate with the so-called “risk-free rate of return” on U.S. Treasuries.
In an open call that ended Sunday, more than two dozen companies spear their own products. The list includes DeFi protocol Frax and real-world asset companies Ondo and Centrifuge.
But it also had two surprises: Franklin Templeton, the billion-dollar Wall Street-born asset manager, and Securitize, a seven-year-old company that helps the world’s largest asset manager, BlackRock , in its efforts to tokenize assets. like stocks and bonds by placing them on a blockchain.
This is just the latest example of more traditional financial institutions – “TradFi” for crypto industry shorthand – pushing deeper into the crypto economy.
New to DAOs
While some have experimented with bespoke private blockchains or proposed Bitcoin exchange-traded funds, few engage directly with DAOs, cooperatives whose public and sometimes controversial decision-making often makes headlines.
“Incredible effort from @arbitrum DAO and the @OffchainLabs team to make institutions feel comfortable with submitting a proposal in a public forum,” Ryan de Souza, who focuses on partnerships within Arbitrum’s parent company, Offchain Labs, wrote on X.
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“What started as a brainstorming session around providing support to RWA teams, turned into an incredible governance proposal and participation from DeFi and TradFi teams looking to bring RWAs to Arbitrum,” he added, using the acronym for real-world assets.
Dubbed the Arbitrum Stable Treasury Endowment Program, or STEP for short, the initiative grew out of conversations with protocols on the Arbitrum blockchain, according to the DAO. request for applications.
“Our conversations with RWA Protocols on Arbitrum indicate that they do not want subsidies so much as legitimate customers of their product,” the request states. “Another way to look at STEP is to think of it as an ecosystem growth program for the RWA vertical on Arbitrum.”
Tokenization of real-world assets was one of the most talked about uses of blockchain technology in 2023, although it contracted this year with the return of the crypto bull market and high-risk, high-value transactions. reward.
Nevertheless, he continues to have his supporters, including Larry Fink, CEO of BlackRock.
“The next generation of markets, the next generation of securities, will be the tokenization of securities,” Fink said at a DealBook event in 2022.
Crypto experience
In its STEP application, Securitize presented BUILDBlackRock’s $381 million Ethereum-based tokenized fund, which recently surpassed Franklin Templeton’s FOBXX as the largest in the sector, according to data Since RWA.xyz.
Securitize said it’s not really foreign to DAOs.
“As a top 10 transfer agent, Securitize has worked with a considerable list of native crypto companies, including what [know-your-customer] the processes and requirements resemble those of DAOs,” Jonathan Espinosa, the company’s chief investment officer, wrote in the application.
Franklin Templeton launched FOBXX, whose BENJI the tokens live on the Stellar and Polygon blockchains.
The company, which had already submitted a similar request proposal on the MakerDAO forum, also touted its crypto experience.
“We have been operating nodes on the Provenance and Stellar blockchains since 2019,” Franklin Templeton wrote in his application. “In 2021, we began operating node validators and leveraging four additional proof-of-stake blockchain networks: Ethereum, Cardano, Solana, and Polkadot. In 2023, we started supporting Polygon, Aptos, Avalanche and Arbitrum.
A committee made up of several organizations with deep experience in DAO governance will review the applications and is expected to make a decision in June.
Aleks Gilbert is DL News‘ DeFi correspondent based in New York. You can reach him at aleks@dlnews.com.