AlloyX, a company specializing in tokenization infrastructure, has introduced a tokenized money market fund on Polygon, integrating bank-held assets with DeFi strategies — a sign of the increasing prominence of real-world assets (RWAs) in the blockchain space.
The fund, named the Real Yield Token (RYT), allows shares in a traditional money market fund, with assets securely held by Standard Chartered Bank in Hong Kong, ensuring regulatory compliance and regular audits, as announced by the company.
Similar to conventional money market funds, RYT invests in low-risk, short-term instruments like US Treasurys and commercial paper. The tokenization process enables these shares to be traded on-chain, granting holders the ability to utilize them within decentralized finance ecosystems.
Importantly, RYT can function as collateral across DeFi protocols, allowing users to borrow against their holdings and reinvest proceeds to enhance yields—a technique known in DeFi as looping.
The product is launched on Polygon, an Ethereum scaling solution recognized for its low fees, rapid transactions, and strong DeFi ecosystem.
The launch by AlloyX coincides with a wave of tokenized money market funds as institutions increasingly consider blockchain-based cash management. A notable example is BlackRock’s USD Institutional Digital Liquidity Fund (BUIDL), which provides institutional investors with tokenized access to US dollar yields through Treasury bills and repurchase agreements.
Goldman Sachs and BNY Mellon have also announced intentions to create tokenized MMFs that offer 24/7 settlement, although these products typically do not feature DeFi-native capabilities like looping and composability across decentralized protocols, which distinguish RYT.
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Demand for tokenized money market funds is on the rise
There is growing interest in tokenizing money market funds as asset managers seek to integrate traditional finance with digital markets, providing on-chain access to familiar investment instruments.
A June report by Moody’s termed tokenized short-term liquidity funds as “a small but rapidly growing product,” highlighting a significant rise in offerings since 2021, with the tokenized money market fund market valued at $5.7 billion at that time.
In the United States, the popularity of tokenized money market funds is increasing, particularly in light of the GENIUS Act and greater adoption of stablecoins, serving to sustain the appeal of cash-like assets.
“Instead of posting cash or Treasurys, you can post money-market shares and not lose interest along the way. It speaks to the versatility of money funds,” remarked JPMorgan strategist Teresa Ho in an interview with Bloomberg.
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