Midas collaborates with MEV Capital, Edge Capital, and RE7 Capital to launch "Yield Tokens"
According to The Block, Dennis Dinkelmeyer, CEO of tokenization protocol Midas, revealed that Midas is launching Liquidity Yield Tokens (LYTs), a new type of "on-chain hedge fund" structure. These products are designed to compete with relatively newer yield tools such as Ethena's USDe and BUIDL tokens from Balancer, which Dinkelmeyer claims are already "outdated".
Like USDe and BUIDL, each Midas LYT will tokenize specific trades or investment strategies to generate returns for holders. However, unlike these "quasi-stablecoins", LYT's will have a floating reference value. Dinkelmeyer argues that while these "synthetic dollars" may maintain their pegging to the dollar like traditional asset-backed stablecoins (including USDT and USDC), they are actually a completely different financial product used more for investing than as means of payment or trading pairs.
LYTs address these risks by treating the hedge fund as an on-chain hedge fund and allowing the token value to track its asset performance. The first batch of Midas LYT’s will tokenize active management trading strategies from decentralized finance (DeFi) asset management companies Edge Capital, RE7 Capital and MEV Capital. In addition, unpegging the on-chain hedge funds aims at promoting investment flexibility and broadening access to assets beyond U.S Treasury bonds. According to the prospectus all Midas LYTs will share a common liquidity pool allowing atomic redemptions at face value. Each LYT is issued as an ERC-20 asset meaning they'll be composable within Ethereum DeFi space.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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