Lynq and ZeroBeta enable yield-bearing Treasury collateral on Avalanche

What happened

Lynq Network and ZeroBeta have connected their institutional platforms on Avalanche, letting tokenized U.S. Treasuries back secured loans and digital asset trades while still earning interest. The integration, announced on October 27, links ZeroBeta's BlueShift risk platform with Lynq's settlement network. Eligible assets can be pledged without leaving the network.

Lynq's collateral lock holds assets in escrow while they accrue interest. BlueShift monitors margin and instructs Lynq when to add or release collateral. For secured borrowing, BlueShift tells Lynq to pledge a Treasury holding to a lender and tracks its value against agreed thresholds. For trading, BlueShift calculates margin for open positions and new orders, and eligible Treasuries can be pledged against those requirements. Lynq executes the instructions on its network.

Interest is calculated and distributed in real time through Lynq's Yield-in-Transit technology. Lynq CEO Jerald David argued that collateral use and yield should not be mutually exclusive for institutions, according to the reports. ZeroBeta CEO Varuna Wijesundera said the partnership places risk-management tools inside an interest-bearing settlement environment. The platform is operated by tZERO Securities, an SEC-registered broker-dealer and member of FINRA and SIPC; Avalanche provides the blockchain infrastructure.

Why it matters

The integration addresses a common obstacle in institutional finance: pledged assets often stop earning or must move between systems. Keeping eligible Treasuries on Lynq's Avalanche-based network while BlueShift manages margin could make tokenized holdings more useful for financing and trading, not just holding or transfer. Citi reported in September that 77% of surveyed financial institutions expected to use some form of tokenized collateral in 2026, while about 25% of collateral sat idle or unremunerated because of operational barriers. The Lynq-ZeroBeta link is a narrow attempt to reduce that friction.

What the data shows

Lynq reports more than $89 million in platform assets and over 40 institutional digital asset firms onboarded. Its collateral lock feature dates to March 2026. Citi's survey put expected tokenized-collateral use at 77% of surveyed institutions for 2026 and estimated that about a quarter of collateral sits idle. For this integration, the companies did not provide borrowing rates, collateral thresholds or the value of Treasury holdings pledged so far. They also did not name the first institutions using it.

Background

Lynq was developed by Arca Labs, Tassat Group and tZERO Group. Its collateral lock feature launched in March 2026, and Lynq says platform assets have passed $89 million with more than 40 institutional digital asset firms onboarded. ZeroBeta is based in Canada, with delivery centers in North America, the U.K. and Sri Lanka. BlueShift serves investors, trading firms and market infrastructure providers, including clearing houses and depositories, across market risk, collateral, liquidity and settlement.

Other firms are building similar systems. Earlier in October, BNY and Citadel Securities completed a Treasury financing transaction using a tokenized U.S. government security as collateral; Blockonomi reported it was a two-year Treasury note, settled within minutes and was pledged in an overnight triparty repurchase agreement. On Avalanche, Aave announced in September a credit hub intended to let eligible institutions borrow Tether's USA₮ stablecoin against approved tokenized assets, subject to governance and risk reviews. VanEck's tokenized Treasury fund VBILL became available as collateral on Euler lending markets in May, with RedStone providing pricing data, Crypto.news reported.

What is still unclear

Key commercial details remain undisclosed: what rates lenders will offer, how thresholds are set, how much Treasury supply has been pledged through the link and which institutions are using it first. The reports also do not say whether the arrangement will extend beyond eligible Treasury holdings to other tokenized assets. Those gaps make near-term adoption difficult to gauge.

What to watch

Usage data will be the test. Watch for disclosed pledged values, rates or thresholds, and for adoption by clearing houses and depositories that BlueShift already serves. Also watch how Aave's Avalanche credit hub moves through governance and risk reviews, and whether other tokenized Treasury products follow VBILL into collateral markets. The companies have presented the integration as infrastructure; evidence of use would show whether it changes institutional behavior.

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