The long-standing divide between traditional finance (TradFi) and decentralized finance (DeFi) is showing signs of breaking. For years, DeFi has operated on the fringes, building innovative financial tools while TradFi held the reins of global capital. But with the launch of Grove, a bold new protocol from Sky, the balance of power may be shifting—bringing institutional-grade credit fully on-chain for the first time.
Grove isn’t just another yield-generating platform. It’s a purpose-built credit infrastructure designed to bridge the gap between traditional asset managers and blockchain-native protocols. Announced on June 5, 2025, Grove aims to become a capital routing layer that enables seamless access to real-world assets (RWAs) for DeFi participants—without forcing them to leave the crypto ecosystem.
A $1 Billion Bet on Institutional-Grade DeFi
Sky Protocol has put its money where its vision is: committing $1 billion to fund Grove’s initial deployment. This substantial allocation targets the tokenized Janus Henderson Anemoy AAA CLO Strategy, a fully on-chain fund developed in collaboration with Centrifuge. The move signals a serious intent to bring high-quality, diversified fixed-income assets into DeFi—a sector historically dominated by volatile crypto-backed lending and speculative yield farms.
What makes this initiative stand out is not just the capital commitment, but the caliber of institutions involved. Sky has assembled a powerhouse advisory and development team, including heavyweights like Citigroup, Deloitte, BlockTower Capital, and Hildene Capital. Their combined expertise in both traditional finance and blockchain innovation positions Grove as one of the most credible attempts yet to merge Wall Street with Web3.
Why Grove Matters: Bridging Two Financial Worlds
Grove’s core value proposition lies in its ability to offer crypto-native protocols a stable, off-chain yield source—completely decoupled from crypto market fluctuations. In an ecosystem where protocol treasuries often sit idle or are exposed to high volatility, Grove provides a safe avenue to deploy capital into AAA-rated, tokenized collateralized loan obligations (CLOs).
This is more than just diversification—it's resilience. By integrating institutional credit products into DeFi, Grove enables protocols to generate sustainable returns even during bear markets, reducing reliance on token emissions or speculative trading strategies.
Anil Sood, Chief Strategy and Growth Officer at Centrifuge, emphasized the growing demand:
"While tokenized treasuries have paved the way, there's a growing demand for more diversified, high-quality assets on-chain."
That demand is backed by data. The tokenized U.S. Treasury market has exploded from $500 million in 2023 to over **$7.3 billion** today. Grove builds on this momentum, expanding the RWA landscape beyond government debt into structured credit products with strong risk-adjusted returns.
Sam Paderewski, another key voice in the ecosystem, noted:
“With the launch of Grove, for the first time, protocols can access liquid, institutional-grade CLOs while maintaining the flexibility to pivot between DeFi and TradFi yield environments.”
Part of a Larger Vision: Sky’s “Endgame” Strategy
Grove isn’t a standalone experiment—it’s a strategic milestone in Sky’s broader “Endgame” plan. This long-term vision involves restructuring Sky into a constellation of independent, self-governing units called “Stars.” Each Star operates autonomously, focusing on specific financial primitives like credit, liquidity, or risk management.
Grove is the latest Star to launch, but it’s far from the last. By decentralizing innovation across specialized modules, Sky aims to create a resilient, open capital network that can scale globally without centralized bottlenecks.
Rune Christensen, co-founder of Sky, sees Grove as a critical step toward that mission:
“Grove advances our goal of building an open decentralized capital network—one that serves both traditional institutions and crypto-native builders.”
This modular architecture allows for faster iteration, better risk isolation, and deeper integration with external partners—all essential traits for a system aiming to handle institutional-scale capital.
The Rise of Tokenized Real-World Assets
The success of Grove hinges on the continued growth of tokenized real-world assets (RWAs). These digital representations of physical or financial assets—such as bonds, loans, or real estate—unlock liquidity, transparency, and programmability in ways traditional systems cannot match.
Tokenization reduces settlement times, lowers counterparty risk, and opens access to global investors. In Grove’s case, it allows DeFi protocols to earn yields on AAA-rated CLOs without navigating complex legal entities or custody arrangements.
But challenges remain. Regulatory clarity, audit transparency, and cross-chain interoperability are still evolving. Grove’s partnership with established players like Janus Henderson and Deloitte helps address these concerns by bringing institutional-grade compliance and due diligence on-chain.
Frequently Asked Questions (FAQ)
Q: What is Grove?
A: Grove is an institutional-grade credit protocol launched by Sky to connect traditional finance (TradFi) asset managers with decentralized finance (DeFi) platforms through tokenized real-world assets.
Q: How does Grove benefit DeFi protocols?
A: It allows them to invest idle treasury funds into stable, off-chain yield sources like tokenized AAA CLOs—generating returns independent of crypto market performance.
Q: What is the $1 billion allocation used for?
A: The funds are deployed into the tokenized Janus Henderson Anemoy AAA CLO Strategy, providing immediate liquidity and yield opportunities within the Grove ecosystem.
Q: Who backs Grove?
A: Grove is supported by Sky Protocol and developed with expertise from Citigroup, Deloitte, BlockTower Capital, Hildene Capital, and Centrifuge.
Q: Is Grove part of a larger strategy?
A: Yes—it’s a key component of Sky’s “Endgame” plan to decentralize its ecosystem into autonomous units called “Stars,” each focused on specific financial functions.
Q: Can individual investors participate in Grove?
A: Initially focused on institutional and protocol-level participation, broader access may be introduced as the system matures and regulatory frameworks evolve.
The Future Is Converged Finance
Just a few years ago, the idea of DeFi protocols investing in AAA-rated CLOs would have sounded like science fiction. Today, it’s reality. Grove represents a pivotal moment in financial convergence—where blockchain isn’t just disrupting finance but becoming an integral part of its foundation.
As more institutions explore tokenization and DeFi protocols seek stable yield sources, platforms like Grove will play a crucial role in shaping the next era of finance. This isn’t about replacing TradFi or DeFi—it’s about creating a hybrid system that leverages the strengths of both.
👉 Be part of the financial revolution—learn how decentralized credit is changing everything.
With $1 billion already deployed and major financial players at the table, Grove isn’t just launching—it’s accelerating. And if this is just one “Star” in Sky’s expanding universe, the full constellation could redefine how capital moves across borders, blockchains, and balance sheets.
The future of finance isn’t either/or. It’s both—and it’s already beginning.