Lynq and ZeroBeta have integrated their institutional platforms on Avalanche to allow tokenized U.S. Treasuries to serve as collateral for secured loans and digital asset trading while continuing to earn interest.
Summary
- Avalanche’s Lynq Network has partnered with ZeroBeta to allow institutions to use tokenized US Treasuries as collateral for secured borrowing and digital asset trading while continuing to earn interest.
- The integration connects ZeroBeta’s BlueShift risk management platform with Lynq’s settlement network, allowing institutions to manage collateral requirements and settle transactions without moving their assets off the network.
- Lynq’s collateral lock feature allows eligible Treasury holdings to remain in escrow while earning interest, with BlueShift monitoring margin requirements and instructing the network when collateral needs to be added or released.
- The partnership builds on Lynq’s existing institutional settlement infrastructure on Avalanche, which supports collateral management, interest payments and settlement through a shared blockchain network.
According to an October 27 announcement, the partnership connects Lynq’s settlement network with ZeroBeta’s BlueShift risk management platform, allowing financial institutions to pledge eligible assets without transferring them away from the network.
The integration uses Lynq’s collateral lock feature, which places assets in escrow while they continue to accrue interest. BlueShift manages collateral requirements and monitors margin, while Lynq handles the actual pledging and release of assets.
The companies said the arrangement would allow institutions to access financing and support trading positions using assets they already hold, without having to give up the interest those holdings generate.
How tokenized Treasuries work as collateral on Avalanche
With the new integration, institutions can use tokenized Treasury holdings for two purposes, secured borrowing and margin trading, through the same collateral management system.
For secured borrowing, BlueShift instructs Lynq to pledge the Treasury asset in favor of a lender. The platform then monitors the value of the collateral against agreed thresholds and can request additional collateral or release part of the existing pledge when requirements change.
A similar process applies to digital asset trading, where BlueShift calculates the margin required for existing positions and new orders. Eligible Treasury holdings can be pledged against those requirements, with Lynq executing the instructions directly on its settlement network.
Both processes operate through Lynq’s Avalanche-based infrastructure, meaning pledged assets remain on the same network throughout the transaction.
The underlying holdings continue earning interest through Lynq’s Yield-in-Transit technology, which calculates and distributes interest in real time.
Lynq CEO Jerald David said institutions should not have to choose between using their assets as collateral and continuing to earn returns on them.
He explained that the partnership allows eligible holdings to remain on Lynq while supporting loans or trading positions, connecting settlement, lending and trading activities through a shared network.
ZeroBeta CEO Varuna Wijesundera described collateral management as one of the practical applications of tokenized assets for financial institutions.
He said the partnership brings ZeroBeta’s risk management tools into an interest-bearing settlement environment, allowing institutions to use tokenized holdings in their regular financing and trading operations.
Lynq expands its institutional settlement infrastructure
The integration builds on Lynq’s existing settlement network, which was developed by Arca Labs, Tassat Group and tZERO Group.
The platform is operated by tZERO Securities, an SEC-registered broker-dealer and member of FINRA and SIPC, while Avalanche provides the underlying blockchain infrastructure.
Lynq said assets held on its platform have surpassed $89 million, with more than 40 institutional digital asset firms onboarded.
Its collateral lock functionality was introduced in March 2026, allowing participants to designate assets as collateral for counterparties and exchanges while preventing the same holdings from being used simultaneously for other obligations.
The ZeroBeta partnership connects this existing functionality to BlueShift’s risk management system, which supports real-time calculations across traditional and digital financial assets.
BlueShift serves institutional investors, trading firms and market infrastructure providers, including clearing houses and depositories, with tools covering market risk, collateral, liquidity and settlement.
The integration follows growing institutional interest in using tokenized financial assets for purposes beyond holding and transferring them.
In September, crypto.news reported on Citi’s findings that 77% of surveyed financial institutions expected to use some form of tokenized collateral during 2026.
Citi estimated that roughly 25% of collateral remained idle or unremunerated because of operational barriers that prevent institutions from moving assets efficiently.
Tokenized Treasury collateral gains institutional traction
Other financial institutions have been developing similar systems to support lending and financing against tokenized securities.
Earlier in October, BNY and Citadel Securities completed a Treasury financing transaction using a tokenized U.S. government security as collateral.
Citadel purchased a two-year Treasury note through BNY on Tradeweb before the security was represented on the bank’s private digital ledger and settled within minutes.
The tokenized security was subsequently pledged in an overnight triparty repurchase agreement, with BNY providing cash against the collateral.
Avalanche has seen related developments within its own ecosystem.
In September, Aave announced an Avalanche credit hub designed to allow eligible institutions to borrow Tether’s USA₮ stablecoin against approved tokenized financial assets.
The planned market would support collateral categories such as tokenized Treasuries, money market funds and private credit, subject to the relevant governance and risk reviews.
Separately, VanEck’s tokenized Treasury fund VBILL became available as collateral on Euler lending markets in May, with RedStone providing pricing data for the fund.
The Lynq and ZeroBeta announcement did not name the first institutions using the integration or disclose any completed borrowing or margin transactions. The companies did not provide specific borrowing rates, collateral thresholds or the value of Treasury holdings pledged through the new connection.
