Uniform Labs, a blockchain infrastructure firm established by former Standard Chartered veterans, has introduced a new protocol aimed at mitigating ongoing liquidity challenges in the growing tokenization sector.
On Wednesday, Uniform Labs revealed Multiliquid, a protocol that facilitates continuous conversions between tokenized money market funds and major stablecoins such as USDC (USDC) and USDt (USDT).
At its inception, Multiliquid is compatible with tokenized Treasury assets from Wellington Management and other asset managers, enabling institutional holders to tap into immediate liquidity instead of depending on redemption windows controlled by issuers.
This launch coincides with the continued growth of tokenized real-world assets (RWAs), with the market valued at approximately $20 billion, based on industry reports. Although this is below the $30 billion peak earlier this year, growth remains consistent, especially in tokenized Treasury products.
Uniform Labs indicated that the protocol was created in response to the GENIUS Act, recent US legislation on stablecoins that establishes a regulatory framework for payment-related stablecoins while forbidding issuers from directly providing yield to holders.
Within this regulatory context, the firm stated that Multiliquid aims to maintain stablecoins as purely transactional instruments while allowing yield generation through regulated tokenized money market funds and additional RWAs connected via its swap layer.
Related: US banks may soon issue stablecoins under FDIC plan for GENIUS Act implementation
Liquidity risks loom over the swift growth of tokenized money market funds
Tokenized money market funds have risen as one of the quickest expanding sectors within the RWA domain, alongside private credit and tokenized US Treasury bonds. Yet, their rapid advancement has revealed a significant vulnerability: liquidity is often hindered by traditional redemption processes, hampering their effectiveness in 24/7 on-chain markets.
The Bank for International Settlements (BIS) recently pointed out this issue, noting the remarkable growth of tokenized money market funds — from $770 million to nearly $9 billion in assets over about two years — while cautioning that the sector is confronted with substantial liquidity risks.
As these funds increasingly function as collateral in crypto markets, the BIS warned that they could pose operational and liquidity risks if on-chain redemption requests exceed off-chain liquidity availability, especially during market stress periods.
The potential for these funds to be used as collateral could grow as more financial organizations start to regard tokenized funds as a type of “cash as an asset,” which may counterbalance the growth of stablecoins, according to JPMorgan strategist Teresa Ho.
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