Tokenized ETFs backed by Tokenized Collateral on Canton
The protocol for ETFs implemented using distributed ledger technology, backed by tokenized collateral. Tokenized Collateral enables direct onchain access to treasuries, equities, and bonds with instant settlement, serving as the building block for Tokenized ETFs that operate natively onchain with full transparency and interoperability.
Use cases
Two core products and key workflows that enable atomic settlement and onchain fund operations for regulated finance.
Tokenized Collateral
A scalable regulatory compliant solution connecting custodian banks with privacy-preserving distributed ledger technology. Enables direct onchain access to treasuries, equities, and bonds with instant settlement.
Tokenized ETF
ETF issuance, redemption, and settlement workflows implemented in DAML. Using Canton's interoperability and Denote protocol, institutional stakeholders use directly custodied securities for institutional-scale asset management onchain.
Delivery vs Payment (DvP)
Atomic coordination of operations on Canton Network ensuring assets and cash are exchanged simultaneously, reducing settlement risks. Enabled by the protocol's interoperability and privacy controls.
Delivery vs Delivery (DvD)
For Tokenized ETFs, exchange collateralized tokens for ETF shares atomically on Canton Network. Enables seamless creation and redemption of ETF shares using tokenized collateral as the underlying asset.
Collateral Mobility
Collateral holders can easily move and transfer their tokenized collateral between different institutions and venues more efficiently than traditional methods, enabling better capital utilization.
Technology
Built on Canton Network with DAML smart contracts, enabling privacy-preserving, atomic cross-institution workflows for regulated finance.
DAML smart contracts
The Digital Asset Modeling Language enforces fine-grained permissions on who can see and change each contract, enabling multi-party workflows with precise authorization controls for regulated markets.
Canton Network
A public, privacy-enabled blockchain network built for regulated finance. Connects many separated ledgers through a shared synchronization layer, enabling atomic, cross-institution workflows while keeping sensitive data private.
Architecture
Tokenized ETFs backed by tokenized collateral: treasuries, equities, and bonds
Tokenized ETF Lifecycle
The complete workflow for creating and managing ETFs on Canton Network with atomic settlement and full transparency.
ETF Initialization
The ETF Manager creates an ETF on Canton Network with the identifier, custodian, and reference index.
PCF Publication
The ETF Manager publishes a Portfolio Composition File (PCF) on a recurring basis (e.g., daily), defining the underlying assets required to issue a standard Creation Unit (typically 50,000 shares).
Custodial Deposit by APs
An Authorized Participant deposits the required TradFi assets (equities, bonds) to a regulated custodian. The custodian then issues tokenized collateral that can be used with other Canton applications.
Onchain Creation via DvD
The AP transfers assets matching PCF requirements to the ETF contract. ETF shares are issued in return, settled atomically via Delivery-versus-Delivery (DvD). This operation is also done in reverse to redeem ETF shares.
Key Guarantees
Market context
The market opportunity for tokenized financial assets and institutional-scale onchain asset management.
Tokenized financial assets by 2030 (upside: $4T)
Broader tokenization TAM by 2030
Larry Fink, BlackRock CEO
Meet the Team
Building the future of programmable onchain ETFs.
Kevin El Sayed
Full-Stack Engineer
Former tech founder with 2+ years full-stack experience. UCLA graduate.
Build on Tokenized Collateraland Tokenized ETFs
Enable institutional-scale asset management onchain with DvP and DvD settlement, and ETF create/redeem workflows on Canton Network.
Or email us directly at leo@denotecapital.com