Converge, the institutional blockchain by Ethena and Securitize

Context

Real World Assets (RWAs) have become one of the hottest topics in crypto in recent months. Numerous protocols have seized the opportunity to offer yield-generating products based on traditional financial instruments such as U.S. Treasury bonds, equities, or real estate, bringing the two financial worlds closer together.

Within this rapidly growing ecosystem, Securitize has established itself as a central (if not leading) player, thanks in part to its partnership with BlackRock and the launch of the tokenized BUIDL fund, which now holds over $2 billion in assets. This development is pushing institutions to reconsider their stance on blockchain and decentralized finance.

Yet despite the growth of RWAs, the integration between traditional finance (TradFi) and decentralized finance (DeFi) remains largely incomplete. No real convergence initiative has yet emerged. The new initiative led by Ethena Labs and Securitize aims to change that.

This analysis takes a detailed look at Converge, a blockchain specifically designed to enable this connection between TradFi and DeFi.

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What is Converge?

Converge is a blockchain recently announced by Ethena Labs and Securitize, with a planned launch in Q2 2025. The goal isn’t to become yet another Layer 1 competitor, but to offer a hybrid architecture, designed to reconcile the needs of crypto-native users with the compliance standards expected by institutional actors.

On one hand, Converge is permissionless. This means any developer can deploy smart contracts without prior authorization, and anyone can use the chain without restrictions. This aligns with the usual standards of the DeFi ecosystem, ensuring openness, transparency, and composability.

On the other hand, Converge integrates a “permissioned” layer. This optional feature allows applications to meet regulatory requirements that are often essential for institutional users: KYC, KYB, traceability, and more. Each integration can be configured based on the specific needs of a project or user, without imposing global constraints on the rest of the network.

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Converge’s Thesis

Over the past few years, it's become undeniable that institutional players are increasingly drawn to on-chain finance and its value proposition: reduced intermediaries and costs, access to more efficient and higher-yield strategies, and the benefits of security and immutability.

However, one major limitation still holds them back: the lack of a regulatory framework, insufficient control over counterparty identity, and the absence of legal accountability. Converge addresses this issue by enabling the issuance of regulated financial products on a performant blockchain infrastructure.

By combining Ethena’s expertise in decentralized finance products with Securitize’s regulatory know-how in asset tokenization, Converge aims to become the go-to infrastructure for unifying traditional and on-chain financial markets.

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The Convergence Between Ethena and Securitize

Ethena is a protocol built on Ethereum, best known for launching USDe, a synthetic dollar (often perceived as a stablecoin), whose price stability is maintained through a delta-neutral strategy on high-cap digital assets.

In just one year, USDe has become the 4th largest stablecoin by market cap, reaching $4.8 billion in TVL at the time of writing and even peaking at $6 billion.

Securitize, for its part, is one of the pioneers in tokenizing real-world assets. Registered with the SEC and backed by close ties with major financial institutions, it provides tokenization products that meet regulatory standards.

By partnering with BlackRock to launch the tokenized BUIDL fund, Securitize proved that it’s possible to combine regulatory rigor with the benefits of blockchain infrastructure. Today, the fund manages over $2.5 billion in assets.

Ethena and Securitize had previously collaborated on the launch of USDtb, a stablecoin backed by tokenized Treasuries via the BUIDL fund. But Converge marks a new step by expanding the partnership to the scale of an entire blockchain.

→ We have published a comprehensive report on the various stablecoins issued by Ethena, which you can view here:

Ethena (ENA): A myriad of stablecoins and what they really do

In the landscape of digital finance, stablecoins have emerged as essential infrastructure for both DeFi and TradFi participants. Ethena has been at the forefront of this sector with a myriad of stablecoins : USDe, sUSDe, USDtb and iUSDe. This report dives into how these work as well as their core features.

Together, Ethena and Securitize represent nearly $10 billion in tokenized assets under management and Converge could benefit from a significant initial influx of assets held by these entities upon its launch.

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The Converge Validator Network (CVN)

What is the CVN?

To ensure a high level of security in case of critical incidents, Converge relies on the Converge Validator Network (CVN), a group of validators tasked with monitoring system integrity, responding to major anomalies, and guaranteeing operational continuity under all circumstances.

Unlike traditional validators, the CVN acts as a security council. In the event of a major failure (hack, critical bug, MEV attack, large-scale exploit), its members can trigger emergency mechanisms to halt the blockchain entirely. In extreme cases, they could even agree to temporarily suspend block production, reject transaction finality, or coordinate a network fork.

This power cuts both ways: while it challenges core principles of on-chain finance, it also serves as a realistic safety net in an environment where billions of dollars may be at stake.

The CVN also plays a key role in the governance of the blockchain. With a smaller but highly specialized structure, it ensures fast and informed decision-making for upgrades, while incorporating feedback from key ecosystem players.

This semi-centralized but transparent governance model is designed to meet the expectations of institutional users, for whom fund protection and network stability are non-negotiable. In a sector still exposed to frequent exploits, hacks and vulnerabilities, this architecture positions operational resilience as a core competitive advantage.

At the launch of Converge, the CVN will have between 10 and 20 validators, according to the CEO’s most recent statement.

It is important to note that the CVN will only act in the event of major issues on the blockchain and will not be involved in transaction validation or in ensuring the network’s day-to-day security.

One example of CVN intervention would be the freezing of funds on Converge before hackers manage to transfer them to the Ethereum blockchain in an attempt to launder them.

The Role of the ENA Token

The ENA token, native to the Ethena protocol, plays a central role in the economic security of Converge through its integration into the CVN.

Validators in the Converge Validator Network must stake ENA in order to participate in block validation and earn rewards. Users can also delegate their ENA to these validators in exchange for a share of the rewards generated.

This mechanism creates a direct link between network security, economic activity, and the token’s value. The launch of Converge transforms ENA from a simple governance token into a productive asset, one that provides access to a portion of the blockchain’s revenues, hence reinforcing its legitimacy within the broader protocol architecture.

Until now, it was only possible to stake ENA within Ethena in order to receive rewards from the Ethena protocol. With the launch of Converge, the role of the token will be expanded within the ecosystem and could generate buying pressure from entities seeking to become validators on the newly launched blockchain.

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An Already Structured Ecosystem

Converge is launching with strong backing from major DeFi and tokenization players, bringing together some of the most robust protocols in the space.

• On the DeFi and RWA side, Converge is supported by protocols such as Aave Horizon, Pendle, Morpho, and Maple - together representing over $37 billion in TVL.
• For interoperability, Converge integrates LayerZero for messaging, and Wormhole for bridging, while Pyth and Redstone will provide oracle infrastructure.
• The permissioned layer will be supported by key institutional infrastructure providers like Anchorage Digital and Fireblocks.

From the beginning, Converge acknowledges the need for protocols to reach a wider audience, including institutional actors, by offering products with KYC, compliance, and a user experience aligned with traditional finance standards, while maintaining blockchain-level efficiency through high-performance architecture.

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Technical Features of Converge

The Layer 2 Choice

For the founder of Ethena, building a Layer 1 no longer makes sense. In his view, the “premium” once associated with L1 chains is fading, and the real question now is: where can you build a profitable business that reaches the most users?

In this logic, opting for a Layer 2 architecture became obvious. L2s offer superior scalability without compromising economic security, and remain natively interoperable with the Ethereum ecosystem where Ethena was born.

Unlike other projects such as Plume Network, which shifted from L2 to L1 due to perceived lack of investor interest, Converge is taking the opposite stance: adopting L2 technology not for hype, but to fully leverage its performance benefits.

A Validium Architecture

At launch, Converge will use Celestia for data availability, making it a Validium, which is a type of rollup where data is not posted on Ethereum mainnet.

This distinction is key: a Validium offers more scalability but also exposes users to additional risk in case of censorship or off-chain data compromise.

A High-Performance Technical Stack

Converge’s infrastructure is built to offer blazing-fast execution, with 100ms block times and 100 MGas/s throughput, thanks to the following components:

• Orbit Stack (Arbitrum): enables ultra-fast block generation (as low as 100ms), providing a near-instant user experience.
• Conduit G2 Sequencer: the most powerful on the market, capable of 100 MGas/s, supports parallel execution and mini-blocks (similar to Uniswap’s Flashblock), optimizing transaction throughput.
• Celestia (Data Availability): with its upcoming MAMO-1 update (currently on testnet), Celestia reaches 21 MB/s bandwidth - the highest DA performance on the market.
• Stylus (WASM): Converge also plans to integrate Stylus, the WASM runtime by Arbitrum, enabling developers to write smart contracts in Rust, C, or C++ with performance up to 100x higher than standard EVM.

The ambition is clear: deliver a Web2-like experience for both retail and institutional users. With this stack, transactions are near-instant, costs are minimized, and the architecture is ready for future ultra-fast L3s.

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The Founder’s Vision

For Guy Young, founder of Ethena, Converge is meant to be a meeting point (hence the name) between two worlds: that of permissionless DeFi-where innovation is fast and experimentation constant-and that of institutional finance, which is shaped by strict compliance and governance standards.

In this context, the roles of USDe and USDtb become clear:

• USDe, Ethena’s synthetic digital dollar, represents a kind of tokenized volatility: it targets crypto-native users who are willing to take on risk in exchange for high yields (up to 18% APY in 2024), at the cost of some instability. It is censorship-resistant and unbacked by traditional markets, making it a truly DeFi-native product.
• USDtb, on the other hand, is designed for more conservative profiles. This stablecoin is backed by tokenized U.S. Treasuries through BlackRock’s BUIDL fund, offering more modest but predictable returns (3–5% per year). It’s the ideal transitional tool for institutions seeking exposure to DeFi within a regulated framework.

Both stablecoins will be natively integrated into the Converge ecosystem, notably for gas fee payments, alongside ETH through Paymaster-style solutions. Each user will be able to choose the level of risk, yield, and compliance that best fits their profile, without compromising the user experience.

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Ethereal: Ethena’s response to Hyperliquid’s rise

Thanks to Converge’s advanced performance, the team saw an opportunity to offer an additional solution requiring reliable infrastructure and near-instant execution, targeting a new market: decentralized perpetual exchange.

Ethereal is a decentralized exchange application for perpetuals and spot trading, built on top of Converge (therefore making it a Layer 3), aiming to reach 1 million orders per second - five times more than what Hyperliquid currently handles. Ethereal will have its own execution environment, but will post its proofs on Converge, improving its scalability.

Essentially, Ethereal will be built on top of Converge to guarantee its own dedicated order execution environment, avoiding dependency on the performance of Converge or Ethereum. The goal is to create an Appchain that is independent from the rest of the ecosystem, ensuring unmatched execution capabilities.

Ethereal perfectly aligns with the broader vision of its founder, continuously expanding the use cases for Ethena’s stablecoins within a rapidly growing range of products.

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Conclusion

Converge is a new high-performance Layer 2 blockchain, inheriting Ethereum's security while integrating part of its broader ecosystem. But with Converge, Ethena and Securitize are offering more than just another blockchain - they are redrawing the boundaries of on-chain finance.

The objective is for Converge to become a central hub for both DeFi and real-world assets (RWA), akin to what Binance represents for trading. A platform where both retail and institutional users can access competitive, transparent, and high-performing financial products, with no compromises on security or compliance.

In the long term, Converge will also provide an environment that allows for an added layer of privacy protection for certain institutions, helping them avoid exposing the full range of their transactions on the blockchain.

With this initiative, Ethena is stepping into a new dimension: evolving from a stablecoin issuer to the architect of a broader ecosystem, significantly expanding the use cases for its stablecoins and its ENA token.