TradFi Is Quietly Moving Into DeFi Tokens

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Good Morning,

The latest most impactful development was the $17B day one launch of ProShares’ stablecoin aligned ETF, IQMM. An ETF built around stablecoin reserve requirements pulling that volume signals institutional scale adoption. This is stablecoin infrastructure moving directly into traditional capital markets.

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In Today's Email:

• What Matters: TradFi Is Quietly Moving Into DeFi Tokens 👀 

• Product of the Week: BNP Paribas’s Tokenized MM Fund on Ethereum 🚀 

• Charts: IoTeX Bridge Exploit, ProShares Stablecoin ETF Hits $17B in Day One 📊 

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WHAT MATTERS

TradFi Is Quietly Moving Into DeFi Tokens

State of play: Big names in traditional finance like BlackRock, Citadel Securities, and Apollo are now buying DeFi governance tokens.

• For years, institutions stuck to equity deals or venture investments. Direct token exposure was rare.

• This is not a broad bet on DeFi going vertical. These firms are bringing products onchain and need the protocols to distribute them.

• Buying tokens creates alignment with the infrastructure they plan to use.

The timing also makes sense. Custody solutions are stronger, operational controls are tighter, and regulatory pressure has eased compared to previous years. Holding tokens is no longer as operationally awkward for regulated firms.

• The positions are small relative to institutional balance sheets, and most governance tokens still do not offer clear economic rights like equity.

• Prices barely reacted because fundamentals did not change overnight. Until tokens capture real cash flow in a transparent and durable way, large investors will stay selective.

• More institutions will likely follow, but only where it fits their product strategy.

Why it matters: Institutions will push for cleaner token economics, tighter governance, and clearer regulatory footing. That pressure can change how DeFi evolves.

Our take: TradFi is securing access to distribution rails for tokenized products. The allocations are small and strategic. The real test is whether tokens start capturing durable cash flow.

For builders and investors: Clear value accrual and credible governance will matter more than narratives.

PRODUCT OF THE WEEK

BNP Paribas Pilots Tokenized Money Market Fund on Ethereum

BNP Paribas Asset Management has launched a pilot issuing a tokenized share class of a French domiciled money market fund on Ethereum. The product was issued through its AssetFoundry platform using a permissioned access model.

• Holdings and transfers are restricted to authorized participants, ensuring compliance with regulatory requirements while operating on public blockchain infrastructure.

• The initiative was structured as a limited intra group experiment to test the full lifecycle of a tokenized fund.

• This included issuance, transfer agency functions, and connectivity to Ethereum within a controlled environment.

• BNP Paribas Asset Management acted as issuer, while BNP Paribas Securities Services handled transfer agency and dealer functions.

• This marks the bank’s second tokenized money market fund experiment and builds on previous efforts involving Allfunds Blockchain and other institutional blockchain initiatives.

Other cool products:

• Cybro, a smart hub for LP.

• OWN, a DeFi mortgages protocol.

• KOI, a liquidity hub for all projects on zkSync.

• Idle Finance, a DeFi yield automation protocol.

• Oku Trade, a non-custodial DEX trading platform and bridge aggregator.

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CHARTS OF THE WEEK

IoTeX Bridge Exploit Leads to $2M Estimated Loss

State of play: IoTeX suffered a private key compromise affecting its cross chain bridge infrastructure, allowing an attacker to drain assets from TokenSafe and MinterPool contracts.

• Initial onchain estimates suggested losses as high as $8.8M, with ~$4.3M in tokens including USDC, USDT, IOTX, WBTC, and BUSD withdrawn and swapped into ETH.

• The attacker also minted large amounts of CIOTX and CCS tokens.

• However, IoTeX co founder Raullen Chai said the current estimated loss is closer to $2M.

• Stolen funds were moved through decentralized exchanges and partially bridged to bitcoin via THORChain.

• Centralized exchanges have been notified to freeze related addresses.

• IoTeX temporarily halted its blockchain and expects it to resume within 24 to 48 hours.

• The team stated that deprecated tokens have little value and that CIOTX has been largely frozen to prevent further movement.

Our take: Even if losses are contained, it reinforces the need for stronger key management and reduced admin control going forward.

ProShares Stablecoin ETF Hits $17B in Day One

State of play: ProShares’ GENIUS Money Market ETF, trading under IQMM, generated a record $17B in first day trading volume, setting a new benchmark for ETF launches.

• IQMM is designed to hold assets that meet US legal reserve requirements for dollar backed stablecoins, aligning with the GENIUS Act.

• The law requires stablecoin issuers to maintain 1:1 backing with highly liquid assets such as US Treasury bills.

• The $17B debut far exceeded previous ETF records, including BlackRock’s spot bitcoin ETF, which saw $1B in day one volume.

• Analysts suggest the surge may reflect large institutional allocations, potentially tied to major stablecoin issuers such as Circle.

Our take: The $17B volume signals that stablecoin infrastructure is moving deeper into traditional markets.

QUICK BITES

• TradFi is quietly moving into DeFi tokens.

• BitGo named issuer for FYUSD stablecoin.

• CryptoQuant says BTC whale deposit activity grows.

• Spot bitcoin ETFs notch five straight weeks of outflows.

• Five crypto exchanges are helping Russia evade sanctions.

• SEC allows broker-dealers to take 2% ‘haircut’ on stablecoins.

• Missouri lawmakers advance new Bitcoin strategic reserve bill.

• BNP Paribas taps Ethereum for new money market fund tokenization pilot.

• IoTeX hit by private key exploit draining around $2M from bridge contracts.

NOTEWORTHY READS & MEME

• Stani’s read on Funding Abundance.

• Goshawk Trades’s read on The Math Needed for Trading.

• Meltem Demirors’s read on The End State of Institutional Adoption.

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Disclaimer: All the information presented in this publication and its affiliates is strictly for educational purposes only. It should not be construed or taken as financial, legal, investment, or any other form of advice.