Circle Launches Perimeter Protocol for Tokenized Credit Markets, OpenTrade Embraces the Trend
Circle Internet Financial, a stablecoin issuer, has introduced Perimeter Protocol, a smart contract codebase designed to serve as an open-source foundation for building tokenized credit markets. In a blog post, Circle stated that Perimeter has the flexibility to support various credit use cases, including invoice factoring, payroll advances, instant settlement for merchants, and credit trading for institutional investors.
The white paper for this protocol is publicly accessible, allowing developers to freely use the codebase to create their own products. Additionally, this launch marks the debut of Circle Research, a new division dedicated to open-source development within the company.
This release of circle’s protocol aligns with the growing trend of bringing traditional financial instruments, like credit, into blockchain-based applications, often referred to as the tokenization of real-world assets (RWA).
Tokenization has the potential to revolutionize the existing financial infrastructure by creating a more efficient and transparent system, as noted in a report by Bank of America. Bernstein forecasts that the tokenized assets market could reach $5 trillion within the next five years.
Stablecoins play a crucial role in settling transactions within blockchain-based lending markets. By facilitating tokenization efforts and the development of decentralized finance (DeFi) credit platforms, Circle aims to enhance the utility of its stablecoins, including the $26 billion USDC and the euro-pegged token EURC.
Circle expressed the importance of securely unlocking on-chain credit through safe standards and underwriting, particularly for new entrants looking to participate in these markets.
OpenTrade Launches Tokenized U.S. Treasury Bills on Circle’s Protocol
The inaugural application of Circle Perimeter Protocol came from OpenTrade, an institutional DeFi platform, which introduced a yield-generating tokenized U.S. Treasury pool.
OpenTrade, the blockchain-based lending and yield platform, has unveiled a tokenized pool of U.S. Treasury bills. This offering is open to individual accredited investors, regulated institutions, companies, funds, and decentralized autonomous organizations, as detailed in the company’s press release.
Additionally, third-party distributors have the option to integrate OpenTrade’s pool into their own white-labeled yield offerings. Enigma Securities, WOO X, Resonate, Kyber Network, and Sino Global Capital are among OpenTrade’s initial distribution partners, direct lenders, and liquidity providers. For off-chain operations support, UK-based structured finance firm Five Sigma lends assistance.
This development aligns with the trend of placing traditional financial instruments, such as government bonds, private equity, or credit, onto the blockchain—a phenomenon often referred to as tokenization of real-world assets (RWA). Major banks are exploring ways to harness blockchain technology in this context.
U.S. Treasuries are particularly attractive for tokenization efforts due to their high yield and low-risk nature. According to data from rwa.xyz, the tokenized treasuries market has grown sixfold this year, reaching $668 million in total value, with asset management firm Franklin Templeton as the leading player.
OpenTrade’s tokenized Treasuries pool leverages Circle Perimeter Protocol, an open-source codebase designed for on-chain credit facilitation, and is backed by the USDC stablecoin.
Looking ahead, OpenTrade plans to introduce a range of on-chain yield products, including investment-grade commercial paper and supply chain financing. Co-founders Dave Sutter and Jeff Handler discussed the attractiveness of trade financing using blockchain rails, pointing out a substantial unmet financing demand of $2.5 trillion from market participants, as reported by the Asian Development Bank.
