Key Takeaways:
- Plume has introduced nBND, a tokenized vault with a primary asset of Fidelity Total Bond ETF (FBND).
- FBND is managing a whopping $28 billion but it hasn’t been tokenized or onchained.
- Plume is aiming for a wider, connected onchain fixed income market, besides short-term U.S. Treasury products.
Plume’s new vault nBND is taking the tokenized financial world deeper into traditional fixed income, pairing blockchain investors back to exposure under the primary backing of Fidelity’s Total Bond ETF.
The launch expands the real-world asset market beyond tokenized Treasury bills and money-market products, bringing an actively managed bond portfolio into an onchain structure.
Plume Brings Fidelity Bond Exposure Onchain
At the heart of nBND is a long-standing exchange-traded fund (ETF) called Fidelity Total Bond ETF (FBND), which has assets worth about $28 billion.
Instead of tokenizing the ETF, Plume’s design is to simply have its structure as the primary reserve asset backed by an onchain vault, which is held by the FBND. With the representation of the vault being done through a tokenized network, the actual ETF certificates exist in the traditional financial world.
That distinction matters. Fidelity hasn’t tokenized $28 billion of bonds, nor is nBND the same as FBND tokenizing its entire portfolio. Rather it establishes a connection between an existing bond portfolio and financial applications that run on blockchain.
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Active Bond Management Enters the RWA Market
Unlike currently available Treasury-themed products which are heavily concentrated on fixed-income, FBND offers exposure to a broader range of fixed income.
The fund contains government, corporate and mortgage-backed bonds and other fixed-income securities, which provide nBND with a more diversified bond strategy.
Institutional investors are not interested in short-duration Treasuries and crave duration and on-chain active management, according to Plume CEO and co-founder Chris Yin.
That transition might expand the range of on-chain assets in the real world throughout decentralized finance.
Tokenized Treasuries Have Already Reached $15 Billion
As tokenized U.S. Treasury assets grow, so does Plume. Based on the data from the company, the segment increased from approximately $12 billion to $15 billion in two months, from April to June.
But while the fixed-income market is small by global standards, it’d be shy of $100 trillion more than that.
The reluctance to use tokens on the platforms is a significant opportunity for platforms that are seeking a tokenization solution. If this trend is continued with the introduction of Treasury backed tokens, then corporate credit, diversified bond portfolios and actively managed strategies might infiltrate the blockchain market.
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nBND Targets Programmable Fixed-Income Assets
Plume is marketing nBND as more of a yield product. Potential interactions with onchain applications with tokenized vault positions, the possibility to make financial exposure programmable with possibly meaningful collateral onchain markets.
Like a major driver in the adoption of blockchain, programmability, portfolio construction and collateral utility are also themes where Fidelity’s investment product leadership will ignite the potential of traditional investment products on blockchain.
The key test now is adoption. While nBND is connecting a big traditional bond fund to the blockchain infrastructure, the volume of cap that enters the vault will dictate the product’s onchain success.
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