Institutional investors managing trillions of dollars worldwide are seeking solutions for tokenization, which can allow fractional ownership of an asset that previously had to be sold as a whole. This method can improve liquidity for global assets, which is expected to reach $145.4 trillion by 2025, according to Big Four firm PwC. Polygon, a blockchain scaling and infrastructure development platform, has been working with many global players in this space, including Hamilton Lane and JPMorgan.
In January, Hamilton Lane announced the first of three tokenized funds backed by Polygon, bringing part of its $824 billion in assets under management on-chain. By tokenizing its flagship Equity Opportunities Fund, Hamilton Lane was able to lower the minimum required investment from an average of $5 million to $20,000. This move enables greater accessibility for smaller investors and creates a more liquid market for the asset.
JPMorgan also explored the potential of decentralized finance (DeFi) for wholesale funding markets by executing its first cross-border DeFi transaction on the Polygon network in November. This initiative is part of a pilot program that aims to leverage the benefits of blockchain technology to improve traditional financial markets.
Polygon offers a blockchain scaling solution that enables developers to build and connect decentralized applications. The platform has been working on providing institutional-grade infrastructure for tokenization, which is crucial for institutional investors who require reliable and secure systems. Colin Butler, the global head of institutional capital at Polygon, acknowledges the need for institutional-grade systems and solutions that are easy to implement, flexible, and upgradeable, which are essential for institutional investors to integrate tokenization into their existing systems.
Overall, tokenization presents a significant opportunity for institutional investors to improve liquidity and accessibility to a wider range of investors, and platforms like Polygon are working to provide the necessary infrastructure to support the growth of this market.