Converge, a New Blockchain Designed to Integrate TradFi with DeFi, Will Launch in Q2 2025

The current total value locked (TVL) in the DeFi market is approximately $100 billion, while the fixed income market has reached a size of $190 trillion.

Author: 0xLayman, ChainCatcher

Editor: TB, ChainCatcher

The current total value locked (TVL) in the decentralized finance (DeFi) market is about $100 billion, while the fixed income market has reached a size of $190 trillion. This disparity highlights that although the DeFi market is quite large, it is just a drop in the ocean compared to traditional financial markets, which are full of potential.

According to official information, Converge is being developed by Ethena Labs and Securitize, with the aim of launching in the second quarter of 2025. The blockchain is designed to integrate traditional finance (TradFi) with DeFi and will be compatible with Ethereum.

Despite Converge currently having only a website seeking development cooperation, no white paper, and just two tweets on its official Twitter, the collaboration between Ethena and Securitize has garnered attention from the market.

A product of cooperation between a crypto-native protocol and traditional financial license holders, Converge is expected to inherit the core resources and technological advantages of Ethena and Securitize. Its core concept is to combine stablecoins with compliant real-world assets (RWAs) to provide a suitable way for institutional funds to enter the crypto market.

Thus, the DeFi protocol Ethena, boasting a nearly $6 billion market capitalization, plans to migrate its existing ecosystem business to Converge, making it the core DeFi infrastructure for Ethena.

Moreover, Securitize has already created nearly $2 billion in RWA assets across multiple blockchains (such as BlackRock's BUIDL, Apollo, KKR, etc.) and will also issue existing and future tokenized assets on Converge, promoting interoperability among multiple protocols.

Unlike the existing DeFi ecosystem, Converge adopts a model of paying gas fees with stablecoins USDe and USDtb, ensuring the stability of transaction costs and attempting to alleviate some institutional investors' concerns about adopting systems with volatile fee structures.

Additionally, Ethena's native governance token ENA will serve as a stakeable asset (sENA) for Converge, rendering the network more secure through a permissioned validator set composed of traditional financial institutions and centralized exchanges.

DeFi Ecosystem

Converge is structured around a three-layer framework consisting of Ethena's native USDe, USDtb supported by BlackRock's BUIDL fund, and iUSDe designed specifically for asset management institutions to meet different user needs:

In terms of performance, Converge will be compatible with the Ethereum Virtual Machine (EVM), enabling it to run Ethereum-based smart contracts, dApps, and tools without modification, and its performance will be in line with industry-leading blockchains.

Partners

Currently, Converge has secured support from multiple DeFi projects and plans to launch a dedicated market for tokenized assets and iUSDe in collaboration with Aave Labs' Horizon, partner with Morpho Labs to build a money market supporting Ethena and Securitize assets, work with Maple Finance to construct on-chain yield and credit products, collaborate with EtherealDEX to provide high-performance derivatives and spot trading, and partner with Pendle to focus on interest rate speculation for institutional assets.

Furthermore, institutional custodians such as Anchorage, Copper, Fireblocks, Komainu, and Zodia will provide asset custody and compliance support. On the technical side, Converge will achieve cross-chain integration through LayerZero and Wormhole protocols, and leverage RedStone and Pyth oracles for real-time data support.

Opportunities and Challenges

The compliant solutions provided by Converge are expected to attract more traditional institutional investors into the DeFi market, thereby enhancing market liquidity, solidifying market foundations, and promoting the appreciation of related crypto assets.

However, the differences in compliance requirements across various countries and institutions mean that the platform will need to continuously adjust and adapt its issuance and trading rules for RWAs.

Moreover, in the early stages of the ecosystem, demonstrating the advantages of on-chain finance over traditional finance in terms of capital efficiency and investment costs, and attracting more active participation from institutions and investors, will be crucial to the project's success.

This article does not constitute investment advice and is for reference only.