Money market fund for digital euro launches on Algorand, with native no-code atomic settlement enabling efficient transactions
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Money market fund for digital euro launches on Algorand, with native no-code atomic settlement enabling efficient transactions
Algorand's native "no-code" atomic settlement enables efficient transactions without relying on smart contract code.
Navigating Web3 tides with focused insightsAuthor: Archax
Translation: TechFlow
Archax has enabled access to and transferability of the abrdn money market fund (Aberdeen Standard Liquidity Fund) by tokenizing a €3.8 billion digital euro-denominated money market fund on the Algorand blockchain using Quantoz’s digital euro currency (EURD).
Algorand's native "codeless" atomic settlement enables efficient transactions without reliance on smart contract code.
On June 26, 2024—today—Algorand Foundation, Archax, and Quantoz Payments jointly announced from Barcelona, London, and Utrecht:
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Following Archax’s issuance of tokenized shares in the abrdn €3.8 billion digital euro money market fund, the first-ever tokenized money market fund has gone live on Algorand.
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Integration between Quantoz Payments and Archax now allows the use of EURD on Archax’s digital asset platform.
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In peer-to-peer secondary market trading, native “codeless” atomic settlement in EURD for USD/fund tokens enables instantaneous execution of interdependent transactions in a predetermined sequence.
By combining robust tokenized assets, on-chain digital currency, and native atomic settlement, the partners have demonstrated the feasibility and efficiency of moving end-to-end investment and cash settlement processes on-chain: investment, asset transfer, trading, settlement, and distribution.
Nick Haasnoot, CEO of Quantoz Payments, commented: “Using EURD to purchase money market funds in tokenized form is the first step toward deploying more tokenized financial instruments. Delivery versus payment (DvP) facilitated through regulated e-money will lay the foundation for broad adoption of such products, offering both retail and institutional investors opportunities to invest across various asset classes.”
Graham Rodford, CEO and Co-Founder of Archax, commented: “Tokenization of real-world assets is gaining real momentum, with yield-bearing, regulated instruments like money market funds leading this activity. Transferring money or money equivalents on-chain for settlement is often more challenging than transferring and recording assets, and using natively digital currencies like EURD can be a key tool in unlocking the benefits that on-chain financial markets offer. We are excited to partner with Algorand and Quantoz to deliver the greater transparency and efficiency that blockchain/distributed ledger technology enables.”
Russell Barlow, Global Head of Multi-Asset & Alternative Investment Solutions at abrdn, commented: “At abrdn, we are committed to leading digital innovation in investment management and are pleased to see continued progress in this space. This development underscores the importance of institutional infrastructure providers, and we congratulate Archax, Quantoz, and the Algorand Foundation on reaching this significant milestone.”
Eric Wragge, Global Head of Business Development and Capital Markets at the Algorand Foundation, said: “The future of finance is truly instant finance, including immediate transaction finality. The collaboration between Archax and Quantoz brings EURD and tokenized funds to Algorand, making this a reality for registered investors across Europe. The combined impact of tokenized assets and EURD is immense, and we look forward to bringing more innovations like this to Algorand’s enterprise-grade, quantum-secure blockchain.”
EURD and Quantoz Payments
Digital Euro Currency is a programmable digital euro issued on Algorand by Quantoz Payments, an electronic money institution (EMI) authorized and regulated by De Nederlandsche Bank (DNB), the Dutch Central Bank. Issued by an EMI authorized and regulated by the Dutch Central Bank on Algorand. EURD is backed by high-quality liquid assets exceeding 102% of its outstanding value, held under strict central bank supervision and deposited with a remote foundation, Stichting Quantoz. EURD can be created by sending funds via the SEPA payment network, and holders have the right to redeem it at par value at any time.
Asset Tokenization and Archax
Headquartered in London, Archax is the first digital securities exchange, custodian, and broker authorized by the UK Financial Conduct Authority ("FCA") and the first company listed on the regulator’s Cryptoasset Register. Under these regulatory permissions and its status as a distributor of abrdn products, Archax is able to: a) acquire and hold fund units within a bankruptcy-remote trust; b) issue Algorand Standard Assets (ASA) tokens representing beneficial ownership of the underlying fund units; c) monitor the Algorand blockchain to identify peer-to-peer transfers and changes in ownership. Furthermore, due to Algorand’s integration with Quantoz, Archax can accept, distribute, and redeem EURD, which can be used for accepting deposits, processing withdrawals, distributing coupons, and paying interest or dividends.
Under Archax’s onboarding procedures, qualified investors can invest in, custody, and trade a range of tokenized products on the Archax Digital Asset Platform, including access to abrdn’s money market funds.
To comply with anti-money laundering and regulatory requirements, tokens issued by Archax can only be transferred between wallets whitelisted by Archax.
Transaction Orchestration and Algorand
A unique feature of the Algorand blockchain is its built-in atomic swap functionality at the protocol level, enabling controlled exchange of assets when all parties fulfill their obligations—without requiring smart contract programming. Algorand’s atomic swaps allow group transactions to be executed with no counterparty risk, precise transaction ordering enforced by consensus, a critical requirement for several complex financial workflows.
Additionally, atomic swaps benefit from Algorand’s instant finality, meaning all transactions are finalized upon creation of a new block (approximately every 3 seconds). As part of an atomic swap, all interdependent transactions are guaranteed to execute within the same block.
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