2024 will be the year that will see a transformation in traditional asset management. Institutional investment in blockchain technology has been expected for years, but this is about to become a reality.
Key capabilities, especially the development of the zero-knowledge Ethereum Virtual Machine, or zkEVM, are capable of enabling real-world asset tokenization and paving the way for a fundamental transformation of the global financial system.
Organizations need mainnet-level security, unlimited scalability, and massive liquidity capabilities. With advances in developer tools and mathematically proven security measures, the necessary components to deliver on this promise have finally come together.
This, in turn, will lead to mainstream blockchain adoption.
Transparency through string abstraction
Able to execute smart contract transactions in a risk-free environment, zkEVM has firmly established itself in the blockchain infrastructure. Now institutional investors can benefit from the proven ecosystem of Ethereum-based blockchains, with its strong security guarantees, decentralization, and transaction transparency, at a much lower cost, fast settlement times, and with unlimited potential scaling capacity.
The picture of Web3's success is to create a “chain of chains”, in essence, a seamless user experience across the entire ecosystem. Part of the liquidity advantage comes through the ability to integrate different applications spanning gaming, DeFi, and licensed institutional platforms. Each of these requires tailored blockchain architectures with different levels of permissions, privacy, cost, security, and incentive designs.
With the technical decisions about chain design stripped away, developers can build on a secure infrastructure and focus on optimizing for a single use case. They are able to leverage the capabilities of the application layer so that any blockchain interactions take place transparently. The end game means an expanded blockchain ecosystem where institutional investors have access to the high liquidity of the entire Ethereum ecosystem as well as the security benefits of knowledgeless transactions.
Pooling liquidity at the institutional level
zkEVM technology facilitates massive liquidity potential by enabling near-instantaneous settlements, allowing for seamless transactions and cross-chain liquidity transfers. The user can obtain liquidity from one chain and seamlessly perform a decentralized exchange (DEX) transaction on another chain.
Institutional scale requires institutional levels of liquidity. In the near future, we will not only see tokenization products brought into the ecosystem but also more sophisticated financial instruments such as derivatives. Major technological innovations are necessary to make this happen, driven largely by consolidating all the liquidity in space into a single layer capable of managing these resources efficiently.
Blockchain technology provides around-the-clock trading and access to previously inaccessible assets and vehicles, yet organizations require customizable chains, and integration with legacy systems poses significant challenges. zkEVMs capabilities deliver a level of security and integration capabilities that change everything.
More recently, Hamilton Lane and Brevan Howard They become users From Libra's new real-world asset tokenization platform, developed using the Polygon Chain Development Kit (CDK). Polygon CDK is permissionless software that allows developers to create new chains with varying degrees of decentralization, security, and functionality, allowing for customization to meet developers' compliance needs such as matching users to appropriate financial instruments, be it a hedge fund, collateralized lending, or otherwise. Investment product.
As we move forward, the key enablers of the institutional investor ecosystem are enhancing the developer experience and providing security and safety backed by mathematical proof. This will reduce operating costs and find ways to integrate legacy systems in a way that supports compliance and security requirements.
