Read the Original Article on LinkedIn:
On Institutional DeFi through Tokenization -- Despite a turbulent year, during which the noises in market gradually phases out, there is a clearer distinction of blockchain technology and crypto itself. The powerful global networks allow congregation of liquidity (interoperability), streamlining transaction flow and settlement with great deal of transparency, accessibility and automation. The same goes to DeFi protocol infrastructure (DEX, Lending, Stablecoin, Derivatives etc).
To fully utilize such powerful infrastructure, financial institutions have partnered with tokenization platforms and leading blockchain scaling solutions such as Polygon and Avalanche in tokenizing some certain assets, let it be equity funds, deposits (money), bonds in a CONTAINED on-chain environment in consideration of counterparty risk. An interesting example to highlight is the joint collaboration between JPM <> MAS <>DBS <> SBI <> Oliver Wyman (Project Guardian), tokenizing deposits of Japanese Jen and Singapore dollar for an on-chain forex swap and buying and selling tokenized bonds through a modified version of Aave on Polygon. In addition, Circle has also announced a collaboration with Uniswap in forex on DEX research.
Now with tokenization, all the building blocks are there and can be assembled, for “Institutional Defi as the application of DeFi protocols to tokenized real-world assets, combined with appropriate safeguards to ensure financial integrity, regulatory compliance and customer protection”.
Below is a wonderful JPM report detailing some key thinking on the value of Institutional DeFi, key consideration of design, example of Project Guardian and strategic implications -