The technical architecture of the Fractalized protocol translates the legal income rights structure described in Section 3 into an onchain system that is compliant, automated, auditable, and accessible to investors without requiring DeFi expertise.
Fractalized is deployed on Arbitrum One, an Ethereum Layer 2 network developed by Offchain Labs and governed by the Arbitrum DAO.
The platform originally launched on Base, where MT Tulip was issued and the first yield distributions were executed, and where Fractalized was selected as a top-12 project from over 750 applicants in Coinbase's Base Batches 002 program. Base served the MVP phase well. As the pipeline expanded beyond a single vessel into private credit and structured lending, Fractalized migrated to Arbitrum for two reasons: stronger ecosystem support for RWA issuers, and the concentration of institutional tokenization activity on the network.
Arbitrum hosts the tokenized products of the asset managers defining this market, including BlackRock's BUIDL and Franklin Templeton's BENJI. The Arbitrum DAO allocates its own treasury into tokenized Treasuries through the Stable Treasury Endowment Program, working directly with Franklin Templeton, Spiko and WisdomTree, in one of the largest DAO-led RWA allocations to date. Robinhood built its chain on the Arbitrum Orbit stack. In practice this means the custodians, auditors and compliance vendors our institutional partners already use have established Arbitrum coverage.
Arbitrum inherits Ethereum's security through its optimistic rollup architecture, with finality anchored to Ethereum consensus. Its BoLD dispute protocol enables permissionless validation: anyone can challenge an incorrect state assertion without whitelisting. Arbitrum One holds Stage 1 classification under L2BEAT's rollup framework, meaning holders can exit even if operators act maliciously. For an asset held for years rather than traded for minutes, that exit guarantee matters more than raw throughput.
Arbitrum is governed by the Arbitrum DAO, with the Nitro stack maintained by Offchain Labs, a team founded by Princeton researchers and backed by Lightspeed Venture Partners, Polychain Capital, Ribbit Capital, Redpoint Ventures and Pantera Capital. Because Fractalized distributes through banks, fintechs and asset managers, settling on infrastructure not owned by any single commercial financial operator keeps distribution partners off a competitor's rails.
Arbitrum is fully EVM-compatible, so existing Ethereum tooling, wallet standards and audit frameworks apply without modification. Fractalized's audited contract architecture carried through migration unchanged.
Median transaction costs on Arbitrum are a few cents. Relative to Ethereum mainnet, this is what makes monthly distribution to thousands of holders at retail ticket sizes economically viable.
Two requirements pull against each other in any regulated tokenised asset. Income can only reach investors who have passed identity checks. Liquid secondary markets, meanwhile, require that anyone be able to buy and sell without waiting for approval. Most platforms sacrifice one to get the other.
Fractalized resolves this by giving every asset two token forms. Ownership can trade freely. Income rights cannot.
| Unwrapped Token (base token) | Wrapped token (wTOKEN) | |
|---|---|---|
| Who can hold it | Anyone | KYC-verified, allowlisted addresses only |
| Receives monthly yield | No | Yes |
| Trades on secondary market | Yes | Converted automatically on sale |
A standard ERC-20 that transfers freely between any wallets. It carries no yield distribution rights. It is the tradeable representation of a position in the asset, exchanged through the liquidity pool. Anyone can hold it. They simply receive no income unless they are verified and holding the wrapped version.