The tokenization infrastructure provider AlloyX has introduced a tokenized money market fund on Polygon, aimed at integrating bank-custodied assets with DeFi-native strategies — a significant move that underscores the rapid expansion of real-world assets (RWAs) on the blockchain.
The fund, named the Real Yield Token (RYT), represents shares in a conventional money market fund, with its underlying assets held in custody by Standard Chartered Bank in Hong Kong and adhering to regulatory compliance and audits, according to the company’s announcement.
Similar to a traditional money market fund, RYT invests in short-term, low-risk instruments such as US Treasurys and commercial paper. Tokenization allows these shares to be traded on-chain, enabling holders to utilize them within decentralized finance ecosystems.
Importantly, RYT can serve as collateral across DeFi protocols — allowing users to borrow against their holdings and reinvest the proceeds to enhance yields, a strategy referred to in DeFi as looping.
The product is launched on Polygon, an Ethereum scaling network chosen for its low fees, quick transactions, and a vibrant DeFi ecosystem.
AlloyX’s rollout occurs alongside a wave of tokenized money market funds as institutions delve into blockchain-based cash management. Notably, BlackRock’s USD Institutional Digital Liquidity Fund (BUIDL) provides institutional investors tokenized exposure to US dollar yields through Treasury bills and repurchase agreements.
Goldman Sachs and BNY Mellon have also unveiled plans for tokenized MMFs that allow 24/7 settlement, although these offerings typically lack DeFi-native features like looping and composability across decentralized protocols — a crucial differentiator for RYT.
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Increasing demand for tokenized money market funds
Money market funds have emerged as a key target for tokenization, as asset managers seek to connect traditional finance with digital markets and provide investors with on-chain access to familiar instruments.
A June report from Moody’s characterized tokenized short-term liquidity funds as “a small but rapidly growing product,” highlighting a notable increase in offerings since 2021. At that time, Moody’s estimated the tokenized money market fund market to be valued at $5.7 billion.
In the United States, the popularity of tokenized money market funds is rising as a method to maintain the attractiveness of cash-like assets, particularly with the recent passage of the GENIUS Act and the growing adoption of stablecoins.
“Instead of depositing cash or Treasurys, you can present money-market shares and retain interest along the way. It illustrates the flexibility of money funds,” stated JPMorgan strategist Teresa Ho in an interview with Bloomberg.
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