Institutional investors managing trillions of dollars around the world are seeking solutions for tokenization, which can enable fractional ownership of an asset that previously had to be sold in its entirety. This method can improve the liquidity of global assets, which are 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 Polygon-backed tokenized funds, bringing part of its $824 billion in assets under management on-chain. By tokenizing its flagship Equity Opportunity Fund, Hamilton Lane was able to reduce the required minimum investment from an average of $5 million to $20,000. This move allows for 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 harness the benefits of blockchain technology to improve traditional financial markets.
Polygon offers a blockchain scaling solution that allows developers to build and connect decentralized applications. The platform has been working to provide an institutional-grade infrastructure for tokenization, which is crucial for institutional investors who require reliable and secure systems. Colin Butler, Global Head of Institutional Capital at Polygon, recognizes the need for institutional-grade systems and solutions that are easy to implement, flexible, and upgradable, 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 broader range of investors, and platforms like Polygon are working to provide the necessary infrastructure to support the growth of this market.
