A recent report by blockchain oracle platform Chainlink suggests that asset managers have a significant opportunity to enter the world of tokenization as financial asset infrastructures continue to shift towards digitalization.
The report, titled “Beyond Token Issuance,” explains where this opportunity lies and how interoperability and real-world data can unlock the value of tokenized assets. It highlights the potential benefits of tokenization for asset managers, including unlocking dormant capital, increasing asset availability, and creating new revenue models.
Furthermore, Chainlink suggests that asset managers can create unified client portfolios, differentiate their services, and enhance risk management through tokenization, as it allows for more automated risk assessment.
The report also emphasizes that blockchains are becoming an integral part of the existing financial ecosystem. It notes that traditional and blockchain-based assets are merging into a single financial ecosystem, driven by the ongoing digitization process. Blockchains offer superior infrastructure for asset storage and transactions, contributing to this convergence.
Ryan Lovell, the director of capital markets at Chainlink Labs, explains that tokenization has been in the research and development phase for several years. Institutions have been exploring the potential impact of tokenization on their businesses, primarily at a basic level by bringing simple account balances on-chain.
However, Lovell believes that the next phase of tokenization will focus on building foundational infrastructure to make tokenized assets composable and programmable across traditional systems, as well as private and public chains. He suggests that enhancing tokens with real-world data and enabling interoperability across blockchains and traditional systems could unlock powerful applications. These applications would offer more transparency, lower costs, and streamlined administrative processes compared to traditional finance infrastructure.
Chainlink is actively working on initiatives to enable institutions to go beyond token issuance and manage tokenized assets throughout their lifecycle while transacting across the cross-chain economy. Lovell expresses excitement about these initiatives and the potential they hold.
Overall, the report highlights the potential for asset managers to embrace tokenization and leverage the benefits it offers in terms of capital unlocking, asset availability, revenue models, risk management, and the merging of traditional and blockchain-based assets into a single financial ecosystem.