Blockchain Trial on Canton Network Examines Collateral Reuse Using Tokenized US Treasurys

Summary:
A recent trial on the Canton Network showcased the potential of real-time collateral reuse with tokenized US Treasurys, marking an important milestone in blockchain financing. This initiative involved various financial institutions and multiple stablecoins, greatly enhancing on-chain liquidity for financial transactions.

Key Takeaways

The Canton Network successfully completed a trial demonstrating real-time collateral reuse with tokenized US Treasurys.
This trial involved several prominent financial institutions and diversified the types of stablecoins used.
Tokenized US Treasurys can now be transferred and reused as collateral on the blockchain without the typical delays of traditional finance.
The trial is a significant step forward in the evolution of institutional finance.

Digital Asset, along with several financial institutions, has wrapped up a second phase of on-chain US Treasury financing on the Canton Network. This latest round has introduced the ability for real-time collateral reuse and has diversified the stablecoins involved in the process.

In this new phase, five transactions were executed, following a pilot in July that first highlighted how US Treasurys can be utilized with the USDC stablecoin to finance and settle transactions on the blockchain. During this most recent trial, a range of stablecoins was employed to finance positions against tokenized US Treasurys, thereby increasing the on-chain liquidity available for these financing operations.

The trial demonstrated that tokenized US Treasurys could be transferred between parties and reused as collateral immediately, avoiding the operational delays normally linked with rehypothecation in traditional financial systems.

This initiative gathered significant participation from key players, including Bank of America, Citadel Securities, Cumberland DRW, Virtu Financial, Société Générale, Tradeweb, Circle, Brale, and M1X Global—all members of the Canton Network’s Industry Working Group.

Kelly Mathieson, the Chief Business Development Officer at Digital Asset, stated that this test is part of a strategic approach towards developing a new market model. Justin Peterson, Chief Technology Officer of Tradeweb, noted that successfully showcasing real-time collateral reuse and increased stablecoin liquidity represents not only a technical accomplishment but also a potential framework for the future of institutional finance.

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Blockchain trial on Canton Network tests collateral reuse with tokenized US Treasurys

Growth of the Canton Network in Tokenized Real-World Assets

The Canton Network, which is a layer-1 blockchain designed for institutional finance, has been making significant strides in the tokenization domain this year. On December 4, Digital Asset secured approximately $50 million in strategic investments from BNY, iCapital, Nasdaq, and S&P Global. This new funding follows an earlier $135 million round raised this year, aimed at helping scale the network further.

In October, Franklin Templeton, an asset manager, announced its plan to transition its Benji Investments platform—responsible for tokenizing shares of its flagship US money market fund—onto the Canton Network.

According to data from RWA.xyz, the Canton Network now significantly leads the market in tokenized real-world assets (RWAs), representing more than $370 billion on-chain. This figure far exceeds that of popular networks such as Ethereum, Polygon, and Solana.

Top blockchains for RWA. Source: RWA.xyz

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