In a monumental step forward for the merger of traditional finance and decentralized assets, investment behemoth Apollo has unveiled a tokenized version of its $1.2 billion private credit fund. Partnering with digital securities leader Securitize, the new on-chain offering marks Apollo’s first major foray into blockchain-based investment vehicles open to accredited investors.
The Apollo Diversified Credit Fund, which delivered an impressive 11.7% return in 2024, will now be accessible via blockchain tokens on a whopping six networks right out of the gate – Solana, Ink, Ethereum, Aptos, Avalanche, and Polygon. This multichain approach, enabled by Securitize’s integration with the Wormhole cross-chain protocol, provides unparalleled flexibility and reach for the nascent realm of tokenized real-world assets.
Bridging TradFi and DeFi with Tokenized Credit
The blockchain-based shares in the Apollo credit fund, dubbed ACRED, open the doors for decentralized finance (DeFi) enthusiasts to gain exposure to the typically walled garden of private credit. The underlying fund deploys capital across an array of attractive traditional lending markets:
- Corporate direct lending
- Asset-backed financing
- Dislocated credit opportunities
- Structured credit products
For yield-hungry crypto natives, ACRED offers a tantalizing prospect – the sky-high returns of private debt (the fund posted 11.7% last year) with the liquidity and composability of digital assets. According to Apollo’s crypto lead Christine Moy, the daily subscription and NAV structure of the credit fund is “well suited for seamless and efficient blockchain-based markets.”
“For those trying to build a diversified portfolio on-chain, it serves as a higher yielding complement to stablecoins, tokenized treasuries and money market funds, but also a diversifier to the more volatile crypto native yield products out there.”
– Christine Moy, Apollo
Securitize Spearheads Tokenized Credit Revolution
For Securitize, the Apollo partnership is the latest in a string of high-profile deals to port traditional assets onto blockchains. The digital securities specialist also powers the on-chain shares of BlackRock’s BUIDL money market fund and has previously tokenized an elite private credit vehicle with Hamilton Lane.
CEO Carlos Domingo emphasized the explosive growth of private credit, which surged 4x over the past decade to over $2 trillion in assets, as a prime market for the wonders of tokenization. The higher yields of these funds are “a good complement to treasuries especially in a scenario with interest rates coming down,” he noted, giving credence to the notion of a 60/40 portfolio for the web3 age.
Apollo All-In on Institutional DeFi
The ACRED launch is a bold leap for Apollo into the realm of on-chain investing, but it’s unlikely to be the last. The firm has already dabbled in blockchain experiments like a tokenized collateral POC with JPMorgan under the auspices of Singapore’s Project Guardian.
A glimpse at the future roadmap from Apollo’s Christine Moy will be music to the ears of DeFi diehards. She hinted at initiatives to “design modern treasury management, automatically rebalancing investment portfolios at scale, smart contract-driven collateral management, and the enablement of secondary liquidity for alternative assets” – a veritable institutional DeFi bingo card.
The writing is on the wall (or perhaps inscribed immutably on-chain). As the walls between traditional and decentralized finance continue to crumble, the very notion of what constitutes an “asset” is being reforged in real-time. For the intrepid investor seeking to straddle the old world and the new, the expanding universe of blockchain-based securities, led by innovators like Apollo and Securitize, beckons with open arms.
