Going after $1 trillion: How Tok-Edge’s token model unlocks institutional DeFi

Raees Chowdhury is the Chief Investment Officer at Tok-Edge, where he leads the launch of the firm’s $100 million crypto fund focused on bridging institutional capital and on-chain markets through a novel “Redemption Token” structure. A Forbes 30 Under 30 honoree (2021), he is an Oxford-trained economist with published research and multiple awards in game theory, and has been investing in crypto and DeFi since 2017. He previously served as Managing Partner at Revolt Ventures, the venture arm of a $10bn platform, and began his career at BCG and Bain. He is also the co-author of the Redemption Token whitepaper.

Institutional interest in crypto has clearly arrived. Institutional access to DeFi largely has not. ETFs and treasury companies validate demand, but they keep investors inside traditional financial rails, touching none of the programmable capital markets, on-chain yield, and composable liquidity that make DeFi structurally different from anything that came before it. 

Tok-Edge was built around closing that gap, with a novel Redemption Token model and a $100 million crypto fund as its first proof of concept. We sat down with Raees Chowdhury to find out how he plans to get institutions there.

Tok-Edge just emerged from stealth with a pretty clear conviction: institutions want DeFi exposure, but the products don't exist yet. Walk us through the founding thesis; what specifically did you see that others weren't building?

 The starting point was noticing that institutional interest in crypto had clearly arrived, but institutional access to DeFi really hadn’t. Most of the products available today are still wrappers around crypto rather than actual exposure to on-chain capital markets. ETFs, treasury companies, structured products - they all validate demand, but they largely keep investors inside traditional financial rails. What we felt was missing was a bridge between institutional standards and genuinely crypto native strategies.

On one side, you had products institutions were comfortable with operationally, but they didn’t really capture the innovation happening in DeFi. On the other side, you had highly sophisticated on-chain ecosystems that most institutions simply couldn’t engage with from a governance or compliance perspective. Tok Edge was built around closing that gap.

We think the next phase of crypto is less about passive exposure to large-cap tokens like Bitcoin and more about participation in DeFi as programmable capital markets. Things like permissionless trading venues, on-chain yield generation, liquidity provision - these are fundamentally new financial primitives.

That was the conviction behind the business from day one.

Your background runs through BCG, Bain, Revolt Ventures, and an Oxford MPhil in Economics. At what point did you decide DeFi was where the real capital markets innovation was happening, and what finally convinced you?

 I think the turning point was realizing that DeFi wasn’t just creating new assets; it was creating entirely new market infrastructure.

Coming from a traditional finance background, my initial instinct was skepticism. There was obviously a lot of speculation and noise in the early market. But underneath that, there was genuine innovation happening at an incredible pace.

What really convinced me was seeing financial coordination happen natively on-chain without relying on the traditional layers of intermediaries we’ve accepted for decades.

You suddenly had markets operating globally, 24/7, with transparent settlement and programmable logic built directly into the system. That’s a pretty profound shift once you spend enough time understanding it.

And the speed of iteration was unlike anything I’d seen before. Entire financial models were being tested and rebuilt in months instead of years – take Uniswap, Aave, Morpho or more recently Hyperliquid. At a certain point, it became hard to ignore that some of the most important capital markets experimentation was happening inside DeFi.

You've argued that BlackRock's Bitcoin ETF and Strategy's digital asset treasury validate institutional demand, but that they're "single asset products restricted to traditional finance rails." What does an institution actually miss out on when its crypto exposure is purely ETF-based?

 The simplest way to think about it is that ETFs provide exposure to the asset class, but not really to the underlying financial ecosystem being built around it.  It’s also very limited; ETFs are restricted by geography and, to date, are exclusively for Bitcoin and Ethereum.

If you own a Bitcoin ETF, you’re still participating through traditional infrastructure. You’re not interacting with on-chain trading liquidity or the DeFi composability that makes crypto investment returns structurally different from previous asset classes, such as validating networks, staking or yield farming.

And a lot of the most interesting economics in crypto actually happen there.

One of the big shifts with DeFi is that assets become programmable. Capital can move, generate yield, provide liquidity, or interact with other protocols in real time. That’s a very different framework from simply holding a static exposure through an ETF wrapper.

So I think ETFs are incredibly important because they validate institutional demand, but they’re still an early-stage bridge product rather than the final form of institutional crypto exposure.

You just published the Redemption Token whitepaper. What problem in token design were you trying to solve, and why did existing models fall short?

 A lot of token models struggle with the same issue, which is that there’s often a disconnect between the token itself and a durable economic purpose.  The industry has gone in the wrong direction with governance tokens and memecoins in the latest market cycle.

Some tokens have utility but limited value accrual. Others become highly speculative without a clear long-term reason to exist beyond trading activity. We wanted to approach token design from a more functional perspective.

The Redemption Token model creates a relationship between the token and the ability for authorised participants to redeem their underlying fund exposure at net asset value. That gives the token a real role rather than purely narrative-driven demand, while remaining transferable and composable within DeFi infrastructure – which means it can still integrate into broader on-chain markets.

The whitepaper estimates the opportunity for this token model at over $1 trillion, larger than the entire stablecoin market. Where does that number come from, and what has to be true for it to materialize?

 The estimate comes from looking at the size of global alternative assets and then asking what happens if even a relatively small portion of that capital becomes interoperable on-chain, applying our Redemption Token model.

When you look across hedge funds, private credit, structured products, real estate, private equity, you’re talking about tens of trillions of dollars globally. So even modest penetration creates a very large potential market.

But for that opportunity to materialize, new token models have to provide real utility or function rather than just acting as a branding or speculative exercise.

Stablecoins succeeded because they solved an actual problem. They made digital dollars efficient, transferable, and globally accessible in what is now a $300bn category. I think on-chain financial products have to do something similar around how they use token models for distribution – for liquidity, transferability, composability, or investor access.

The infrastructure also has to develop and reach a certain level of maturity. Regulation, custody, governance, secondary liquidity - all of those pieces matter if institutions are going to participate meaningfully.

You are launching $HF as the first Redemption Token. What specifically about a crypto fund made it the right vehicle to prove out the model, versus other asset types?

 Crypto funds were a natural starting point because institutional capital is only interested in two things right now: artificial intelligence or financial innovation.  In our crypto case, the underlying assets already exist natively on-chain. That makes the operational side much cleaner compared to trying to apply our Redemption Token model to more illiquid or off-chain assets from day one.

There’s also already a strong cultural understanding within crypto that functionality can exist through tokens and programmed by code, so the market is more receptive to new structures.

From an investment perspective, crypto markets are also relatively liquid compared to many alternative asset classes, which makes redemption mechanics and net asset value as a reference value much more practical to manage.

We saw it as the right environment to prove our model before eventually expanding into broader liquid asset categories over time under the Tok-Edge brand.

Most crypto funds lock up capital for years, whereas Tok-Edge is modelling its fund around scheduled redemption intervals, closer to traditional hedge fund liquidity. How do you balance offering that liquidity with deploying into DeFi strategies that may need time to mature?

 A big part of it comes down to strategy selection and portfolio construction. We’re deliberately focused on liquid digital assets and liquid DeFi opportunities rather than highly illiquid venture-style exposure. That creates much more flexibility around redemption management.

At the same time, we also think there’s a middle ground between fully locked capital and fully instant liquidity. Traditional hedge funds have operated with structured redemption windows for decades because it creates a healthier balance between investor flexibility and protecting the integrity of the strategy itself.

We’re trying to take a similar approach while adapting it to crypto native markets.

Tok-Edge is London-based. The UK is in the middle of shaping its stablecoin and cryptoasset frameworks. How much does the regulatory environment factor into how you've structured the fund, and is London actually a competitive jurisdiction for what you're building?

 Regulation is extremely important if your goal is institutional adoption. Institutions need clarity around governance, compliance, and operational structure before they allocate serious capital. So from the beginning, we’ve approached the business with that in mind.

I actually think London still has significant advantages. The city has deep institutional capital markets expertise, sophisticated legal infrastructure, and a strong talent base across finance and technology.

At the same time, crypto is naturally global, so we think about distribution in a permissionless way rather than anchoring everything to a single market. The broader objective is building products institutions can engage with confidently while still preserving the advantages that make DeFi interesting in the first place.

If the fund is the first product, what will Tok-Edge look like in three years as it expands?

 I see the fund as the first implementation of a much broader thesis around what I call “DeFi 3.0”, which is creating functional tokens that bring capital markets onto public blockchains. Long term, the opportunity is bigger than simply managing crypto assets. We think there’s an opportunity for us to build entirely new financial primitives around the Redemption Token model.  We don’t just want to design the model, but also to own the category, just like how MicroStrategy dominates the digital asset treasury market.

So ideally, over the next few years, Tok Edge evolves into a brand and a platform spanning multiple products and different Redemption Token implementations. We still think we’re very early in the transition from traditional financial infrastructure toward on-chain capital markets.

In a lot of ways, it feels similar to the early internet, which transformed the way we shared and consumed information. Now crypto is transforming capital markets and the financial system.