Ship or Die at Accelerate 2025: Tokenizing Trust

In a groundbreaking move for both traditional finance and the Solana ecosystem, Apollo Global Management has tokenized its flagship credit fund on Solana, offering enhanced yields through integration with Drift protocol. This marks a significant milestone in the convergence of TradFi and DeFi, potentially revolutionizing how investors access and leverage institutional-grade assets.

Summary

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Apollo, a $750 billion asset manager, has partnered with Securitize and Drift to bring its flagship credit fund to the Solana blockchain. This tokenized fund, known as Acret, offers investors exposure to Apollo's diversified credit strategies, which have historically generated stable yields uncorrelated to crypto markets.

The collaboration goes beyond simple tokenization, leveraging Solana's DeFi ecosystem to enhance returns. Through integration with Drift's platform, investors can potentially boost yields from 9% to 17% using leverage strategies common in DeFi but previously unavailable for traditional private credit funds.

This launch represents a significant step forward in bringing real-world assets (RWAs) on-chain, offering crypto-native investors access to institutional-grade credit products. It also demonstrates the potential for DeFi to add value to traditional financial products, potentially reshaping how both retail and institutional investors approach yield generation and portfolio diversification.

Key Points:

Apollo's Credit Fund Tokenization

Apollo Global Management, a titan in the asset management world with $750 billion under management, has taken the revolutionary step of tokenizing its flagship credit fund on the Solana blockchain. This move brings $550 billion worth of credit assets into the crypto ecosystem, offering a new class of yield-generating assets to DeFi users.

The tokenized fund, called Acret, is issued through Securitize and provides investors with exposure to Apollo's diverse credit strategies. These include aviation leases, fleet leasing, mid-cap and large-cap company lending, and even consumer financing. By tokenizing this fund, Apollo is effectively bridging the gap between traditional finance and the crypto world, allowing a new generation of investors to access institutional-grade credit products.

Yield Enhancement through DeFi Integration

One of the most exciting aspects of this launch is the integration with Drift protocol, a Solana-based DeFi platform. Through this collaboration, investors can potentially boost the yield on their Acret tokens from 9% to 17%. This is achieved using leverage strategies that are common in DeFi but have been previously unavailable for traditional private credit funds.

This yield enhancement demonstrates the power of combining traditional financial products with DeFi capabilities. It showcases how blockchain technology and decentralized protocols can add significant value to real-world assets, potentially offering returns that are difficult to achieve in traditional finance without taking on excessive risk.

Securitize's S-Token Technology

Securitize has developed a crucial piece of technology to enable the seamless integration of tokenized securities into DeFi protocols. Their S-token vaulting technology allows the Acret tokens to exist compliantly within the permissionless DeFi ecosystem while retaining the necessary regulatory compliance for securities.

This technology mints what's called an S-token (in this case, sAcret) that represents ownership of the underlying security. The S-token can be used as collateral in DeFi protocols, allowing for lending and other DeFi activities, while the actual security remains locked in a vault. This innovation bridges the gap between the permissioned world of regulated securities and the permissionless nature of DeFi.

Implications for the Future of Finance

The tokenization of Apollo's credit fund on Solana and its integration with DeFi protocols represents a significant milestone in the convergence of traditional finance and crypto. It demonstrates how blockchain technology can democratize access to sophisticated financial products that were previously available only to large institutions.

Moreover, this development showcases the potential for DeFi to enhance traditional financial products. By leveraging the composability and capital efficiency of DeFi protocols, traditional assets can potentially generate higher yields and offer greater utility to investors. This could lead to a new paradigm in asset management, where the lines between TradFi and DeFi become increasingly blurred.

Facts + Figures

• Apollo Global Management has $750 billion in assets under management
• $550 billion of Apollo's assets are in yield-generating credit products
• The tokenized Acret fund offers a base yield of approximately 9%
• Through integration with Drift protocol, yields can potentially be boosted to 17%
• Apollo indicates that 90% of the assets in the tokenized fund are also invested in by Apollo's own balance sheet
• The minimum investment in the Acret fund is $50,000
• Securitize has been working on bringing real-world assets to crypto for about two and a half years
• Christine Moy, partner at Apollo, spent over a decade focused on tokenizing real-world assets
• Apollo recently lent $11 billion to Intel for AI chip development
• The speakers predict DeFi TVL could reach $15 trillion in 5 years

Top quotes

1. "Today is actually a very historic moment. Today is the day that Apollo's flagship credit fund is now live and tokenized on Solana via Securitize." - Cindy Leow

2. "Apollo is in the business of generating excess spread per unit of risk. What this means is we're in the business of generating alpha." - Christine Moy

3. "We don't think everything needs to be tokenized. But we want to tokenize things if there's a way that we can add incremental utility or increase yield." - Reid Simon

4. "In crypto and DeFi, it's turned around on its head a little bit. It's a little bit scary, but it's effective in that you have multiple teams that have independent thought, a diversity of experience and background, all trying to work together on the same operating system." - Christine Moy

5. "My mission is to democratize access to excess spread per unit of risk to this alpha, right? Historically, the domain of large sovereigns and institutions and retirement systems, I want to make sure you have access to that." - Christine Moy

Questions Answered

What is Acret and how does it work?

Acret is a tokenized version of Apollo's flagship credit fund, now available on the Solana blockchain. It allows investors to gain exposure to Apollo's diverse credit strategies, which include aviation leases, fleet leasing, and corporate lending. By purchasing Acret tokens, investors can earn yields from these credit investments without directly managing the underlying assets.

How does the yield enhancement through Drift protocol work?

The yield enhancement works by leveraging Drift's DeFi platform to apply strategies common in crypto to the Acret tokens. While the base yield of the Acret fund is around 9%, Drift's platform allows investors to use leverage and other DeFi techniques to potentially boost this yield up to 17%. This demonstrates how DeFi can add value to traditional financial products.

What is Securitize's role in this tokenization process?

Securitize acts as the issuer of the Acret tokens and provides the technology to bridge the gap between regulated securities and DeFi. Their S-token vaulting technology allows the Acret tokens to be used in DeFi protocols while remaining compliant with securities regulations. This enables the tokens to be used as collateral or in other DeFi applications without compromising their regulatory status.

Why is Apollo interested in tokenizing their credit fund?

Apollo sees tokenization as a way to democratize access to their investment strategies and tap into the growing crypto-native investor base. By bringing their credit fund on-chain, they can offer a new class of yield-generating assets to DeFi users, potentially expanding their investor base and showcasing the benefits of their credit strategies to a new audience.

How does this development impact the broader DeFi ecosystem?

This tokenization represents a significant step in bringing real-world assets (RWAs) into the DeFi ecosystem. It demonstrates how traditional financial products can be enhanced through DeFi integration, potentially leading to more institutional involvement in crypto. This could increase the total value locked (TVL) in DeFi protocols and bring more stability and diversity to the ecosystem.