DeFi can’t grow without institutional adoption, Securitize CEO says

This is a segment from the Empire newsletter. To read full editions, subscribe.

---

Securitize and Ethena have announced Converge, an EVM blockchain focused on supporting and advancing both DeFi and tokenized assets. 

Here’s my TLDR: Converge wants to build products and apps with partners catered to institutional investors, giving them access to DeFi. Securitize will issue both future and existing tokenized assets on the blockchain. 

Partners include Maple, Morpho, Pendle, Aave Labs’ Horizon, and then you have custodial support from the likes of Copper, Fireblocks and Komainu. 

The two plan to launch Converge within the next three months, Securitize CEO Carlos Domingo told me, and they’ll start sending out updates on it every two weeks up until launch. The testnet isn’t live yet, but the two have built some prototypes, he added. 

So, no time is being wasted — probably for the best given the momentum behind institutional adoption at this stage.

I asked Domingo when the two started working on the vision for Converge and he told me that the Ethena team came to Securitize during the time period when it was raising $100 million for its own chain.

“They basically approached us to see whether we want to be part of it because they felt very strongly that the power of this will be not just that institutional DeFi … but that we can bring our RWA’s,” Domingo explained. 

Ethena’s Guy Young said that the blockchain fills a “clear gap in the market” as the settlement layer. 

But the announcement wasn’t without some criticism — which should come as no surprise in crypto. 

When I brought up the criticism from David Hoffman, Domingo clarified that Converge isn’t a private blockchain, which is also why the two aren’t looking to just build a database. 

However, if it were a private blockchain, Domingo said a database would make complete sense. 

“Look, the world is multichain. There are going to be many chains. They’re all going to be connected. We have people like Wormhole that facilitate the crosschain connectivity,” he said. “I don’t think we can rely on one chain…Ethereum is great, and we support Ethereum and our largest assets are on [there]. But, at the same time, it has a lot of problems in terms of flexibility.”

“You have to introduce new features there, as we know, extremely slow. You also have the cost of transaction, the time of finality, etc. So I think there’s a space for alternatives,” Domingo added.

Not to mention, institutions love exposure. Domingo said they plan to continue supporting other chains as well. 

At the end of the day, Domingo noted, DeFi “has been stuck.” He argued that it hasn’t really grown since DeFi summer in 2021, and it’s acting as a potential barrier for a full-on bull market (one of a few if you ask me). 

“There’s clearly a problem with DeFi growth unless there’s institutional adoption,” Domingo believes. 

It’s hard to make a judgment on a press release, so this is a scenario where I, yet again, will have to wait and see how it plays out.

If Converge can take down the DeFi barrier — and there’s real institutional adoption taking place — then I agree: it seems pretty bullish.

---

Get the news in your inbox. Explore Blockworks newsletters:

• The Breakdown: Decoding crypto and the markets. Daily.
• 0xResearch: Alpha in your inbox. Think like an analyst.