Lynq and ZeroBeta have connected institutional borrowing and trading margin to tokenized U.S. Treasuries on Avalanche, allowing eligible pledged holdings to keep earning interest.
Summary
- Institutions can use eligible Treasury holdings for secured borrowing and digital asset trading margin.
- BlueShift monitors collateral requirements and instructs Lynq to pledge, top up or release assets.
- Lynq reports more than $89 million in platform assets and over 40 institutional firms onboarded.
- The announcement does not identify initial integration users or disclose the value of pledged collateral.
Lynq’s announcement, published Oct. 27, describes an integration between its settlement network and ZeroBeta’s BlueShift risk platform, built around a newly released feature that locks assets as collateral.
Lynq collateral locks preserve interest during borrowing
Through the new collateral lock function, clients can place eligible holdings in escrow while the underlying asset continues accruing interest, the companies said. Collateral stays on Lynq’s Avalanche settlement network from the initial pledge until its release.
For secured borrowing, BlueShift instructs the network to pledge a tokenized Treasury asset in favor of a lender. As collateral values cross agreed thresholds, the risk platform sends instructions to provide more collateral or release part of the existing pledge, according to the announcement.
The companies describe a separate workflow for digital asset trading. BlueShift calculates the margin needed for open positions and new orders, accepting the Treasury asset as margin and directing pledges or releases through the same threshold-based process.
In both arrangements, the announcement assigns risk calculations and collateral instructions to BlueShift, while Lynq holds the assets and carries out the resulting movements. The published description does not give numerical margin thresholds, borrowing rates or collateral haircuts.
Lynq CEO Jerald David said institutions should be able to retain interest income while using their assets to support financing and trading. Eligible holdings can remain on the settlement network while backing either type of position, he said in the release.
“Institutions shouldn’t have to choose between using an asset as collateral and continuing to earn interest on it,” David said.
BlueShift handles risk while Lynq executes collateral instructions
ZeroBeta’s own platform description says BlueShift can recalculate margins, exposures and concentrations in real time using valuation and risk models. Its software supports market, liquidity and credit risk across traditional and digital assets.
The company lists pre-trade calculations, margin-call processing and settlement workflows among its services. It says stress testing, backtesting and scenario analysis can run without interrupting real-time processing.
For the Lynq integration, the joint release says BlueShift recently certified connectivity to the settlement and collateral platform. Neither company names an exchange, lender or trading desk that has completed a transaction through the connection.
ZeroBeta CEO Varuna Wijesundera described collateral as a practical use for tokenized holdings in institutions’ daily operations. In his statement, he said the partnership brings the company’s risk and collateral management tools onto an interest-bearing settlement network.
Lynq reports $89 million across its institutional network
In its company description, Lynq reports that platform assets have passed $89 million and that more than 40 institutional digital asset firms have been onboarded. The release presents those figures as network totals, without separating assets pledged through ZeroBeta or clients using the new connection.
Lynq identifies tZERO Securities as its operator and describes the firm as an SEC-registered broker-dealer and a member of FINRA and SIPC. Arca Labs, Tassat Group and tZERO Group developed the network, according to the announcement.
The platform says its Yield-in-Transit technology calculates and distributes interest in real time. Its institutional settlement infrastructure is built on Avalanche.
In August, crypto.news covered David’s comments on moving cash and collateral across separate payment systems. He said institutions may have sufficient capital but be unable to access it in the right form or location when settlement is required.
David’s earlier comments addressed stablecoins, tokenized deposits, tokenized money market funds, central bank digital currencies and traditional bank money. He said the different instruments would likely serve different counterparties, jurisdictions and transactions.
Tokenized Treasury collateral appears in lending and repo markets
On Sep. 16, Aave announced plans for an Avalanche RWA credit hub where eligible institutions could borrow USAâ‚® against approved tokenized financial assets. At the time, Aave had not named the first collateral assets or supplied a launch date.
Aave’s stated design separates collateral terms and borrowing limits across specialized markets connected to shared liquidity. Its announcement identified tokenized Treasuries and money market funds among possible collateral categories, subject to governance and risk review.
In U.S. institutional financing, BNY described a completed tokenized Treasury repo transaction with Citadel Securities in an Oct. 13 announcement. Citadel purchased a two-year Treasury note through BNY on Tradeweb, after which a tokenized representation settled within minutes on the bank’s private ledger.
BNY said Citadel then pledged the security in an overnight triparty repurchase agreement, receiving cash from the bank. The bank’s release did not disclose the transaction value or financing rate.
BNY plans to introduce digital cash and tokenized deposit capabilities for institutional settlement and financing. Its announcement said it expects to expand traditional settlement operating hours for Fed-eligible securities and U.S. triparty transactions into European and Asian trading hours during 2027.
