Tokenization protocol Midas introduces 'liquid yield tokens' with risk managers MEV Capital, Edge Capital and RE7 Capital
FEB 13, 2025
Tokenization protocol Midas is launching liquid yield tokens — a new “onchain hedge fund” architecture — that will track risk strategies from asset managers MEV Capital, Edge Capital and RE7 Capital. The LYT token architecture is designed to overcome some of the risks and limitations of current “onchain hedge funds,” which typically contain a stablecoin component.
Tokenization protocol Midas has launched Liquid Yield Tokens (LYTs), a new product category designed to tokenize actively managed DeFi trading strategies — with Re7 Capital among the first fund managers featured alongside Edge Capital and MEV Capital. Unlike existing yield-bearing instruments such as Ethena's USDe or BlackRock's BUIDL, LYTs carry a floating reference value rather than a dollar peg, allowing the token's value to track the actual performance of the underlying strategy.
The distinction matters: Midas argues that pegged "synthetic dollars" introduce systemic risks including de-pegs, misaligned incentives, and regulatory uncertainty by disguising investment products as stablecoins. By treating an onchain hedge fund as an onchain hedge fund, LYTs aim to unlock better risk-adjusted returns and broader asset flexibility beyond short-term government debt. Each LYT is issued as an ERC-20 token, making it composable across DeFi, with a shared liquidity pool enabling atomic redemption.
For the full article, read here: The Block
