Securitize and Gauntlet Bring Tokenized Version of Apollo's Credit Fund to DeFi

DeFi is known for its innovative money-making potential, but most strategies revolve around stablecoins due to regulatory constraints on using other tokens. Now, Securitize and Gauntlet are introducing a leveraged-yield strategy offering on Polygon (CRYPTO: POLYGON) that combines the benefits of both worlds.

The two firms are unveiling Wednesday a new offering centered on the Apollo Diversified Credit Securitize Fund (ACRED), a tokenized feeder fund that debuted in January and invests in Apollo’s (NYSE:APOLLO) $1 billion Diversified Credit Fund. The strategy will run on Compound Blue, a lending protocol powered by Morpho,

The offering, called Levered RWA Strategy, will be first available on Polygon. It is expected to expand to the Ethereum mainnet and other blockchains after a pilot phase.

"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, said in an interview with CoinDesk.

The introduction comes as tokenized real-world assets (RWAs) — funds, bonds, credit products — are gaining traction among traditional finance giants. BlackRock (NYSE:BLK), HSBC (LON:HSBA) and Franklin Templeton (NYSE:AJLI) are among the firms exploring blockchain-based asset issuance and settlement. Tokenized U.S. Treasuries alone have pulled in over $6 billion, according to data from RWA.xyz.

While institutions are experimenting with tokenization, the next challenge is making these assets usable across DeFi applications. That includes enabling their use as collateral for loans, margin trading or building investment strategies not possible on legacy rails.

The strategy employs a DeFi-native yield-optimization technique called "looping", in which ACRED tokens deposited into a vault are used as collateral to borrow USDC, which is then used to purchase more ACRED. The process repeats recursively to enhance 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 is expected to deliver the institutional-grade DeFi that our industry has promised for years," Morpho CEO and cofounder Paul Frambot said. "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.”

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.

"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," Securitize CEO Carlos Domingo said in a statement.