Bridging Traditional Finance and DeFi: The Role of Converge

The worlds of traditional finance and decentralized finance (DeFi) are starting to merge—and Converge, a new Layer-1 blockchain, is designed to accelerate that connection.

Built specifically for real-world assets (RWAs), Converge creates a bridge between regulated institutions and on-chain financial markets.

But will it lead to true integration between these two sectors?

That’s the big question.

A Blockchain Built for Institutions—But Open to All

Converge operates as a permissioned blockchain. That means it’s validated by a select group of trusted entities—like financial institutions and centralized exchanges—rather than anyone on the internet. For institutions, this structure feels familiar. They maintain control over their digital keys and domains, which helps ease concerns around regulation and security.

At the same time, Converge remains open to all users, offering both permissionless DeFi apps and permissioned institutional-grade products on a single chain.

What Makes Converge Different?

Developed by Ethena Labs and Securitize, Converge is Ethereum Virtual Machine (EVM)-compatible and tailored for integrating tokenized real-world assets into DeFi. Here’s what makes it stand out:

✅ Layer-1 Architecture

Converge is a standalone blockchain (not built on top of another one), giving it full control over speed, cost, and user experience.

✅ KYC Compliance

To interact with its investment products, users must complete Know Your Customer (KYC) checks—an essential step for regulatory approval.

✅ Custody & Settlement Services

Institutions can manage and settle their digital assets within the platform, addressing another major pain point in DeFi adoption.

✅ Utility Token: $ENA

Converge uses Ethena’s $ENA token for staking and transaction validation. Validators include whitelisted financial institutions and exchanges.

✅ Strong Partnerships

Early partnerships include Avara (Aave Labs), Pendle, Morpho, and Maple Finance, setting the stage for tokenized assets and new regulated financial products.

✅ Built-In Interoperability

With support from LayerZero, Wormhole, and RedStone, Converge can connect with other chains, making cross-chain asset movement simple.

Why Traditional Finance Needs DeFi—and Vice Versa

🔒 Tackling Trust Issues

Many institutions view DeFi as too risky. Converge's KYC and custody systems offer a compliant, secure environment that helps bridge this trust gap.

📈 Unlocking Liquidity

Tokenizing real-world assets like real estate, commodities, and equities opens up new opportunities for liquidity and broader investor access.

🏦 A Gateway for Institutions

By blending regulatory clarity with the flexibility of DeFi, platforms like Converge could encourage institutional players to invest in the space and drive the next wave of growth.

Stablecoins Are Leading the RWA Charge

In the world of RWAs, stablecoins dominate. They’re followed by tokenized US Treasuries and private credit—a trend that shows growing confidence in stablecoins as reliable tools for value storage and transaction efficiency.

Graph: Stablecoin Dominance in the RWA Market

Source: rwa.xyz

The Many Roles of Stablecoins

According to a framework shared by Rob Hadick (General Partner at Dragonfly), stablecoins now provide value across several verticals:

Settlement rails
Stablecoin issuers
Liquidity providers
Value transfer and money services
Aggregated APIs and messaging
Merchant gateways
Stablecoin-powered apps

Graph: Stablecoin Analytics

Source: artemis.xyz – See post

Converge fits squarely into the settlement rails category. If it can deliver the security, compliance, and usability institutions need, it has the potential to become a foundational layer in the next phase of digital finance.

Final Thoughts

Converge is an important experiment in bridging the gap between traditional finance and DeFi. By offering a compliant and efficient way to tokenize and trade real-world assets, it could lower barriers for institutional adoption and unlock entirely new markets.

Whether it becomes the go-to platform for RWA tokenization—or simply one of many stepping stones—remains to be seen. But one thing is clear: the convergence of TradFi and DeFi is no longer just a theory. It’s happening now.