According to the veteran crypto investment firm Pantera Capital, we’re headed for a massive onchain finance revolution fueled by the growing tokenization of real-world assets. Trend 1—Out with the old In their September blog post “The Great Onchain Migration,” they showcase a key trend. With clear efficiency and accessibility benefits, public blockchains are quickly becoming the preferred infrastructure for tokenized assets. More than $24 billion worth has already been tokenized. The fact that major institutions are leading the charge here indicates that capital markets are undergoing a sea-change.
The firm’s thesis outlines some of the main benefits to tokenizing real-world assets on public blockchains. These advantages encompass immediate transactions, 24/7 market access, and diminished need for intermediaries. Facilitating these efficiencies like reducing clearance time is drawing enormous interest from established financial institutions.
According to Dan Morehead, the CEO of Pantera Capital, that capital is now flowing into blockchains that support decentralized applications (DeFi) and tokenization. He thinks that it’s the trend of least resistance for investors. DeFi use cases like instant payments, loans and other forms of credit creation, smart contract execution, and others are booming on these ecosystems. The increasing use of stablecoins feeds this transition. Morehead believes they could be a game-changer for the industry.
Ethereum has its uses for crypto investors, but Bitcoin remains the most trusted store of value. Yet, its design limitations prevent it from being widely applicable to DeFi projects. This is where other blockchains with smart contract capabilities are stepping in to facilitate the tokenization of assets and enable a broader range of financial services.
Of course, major institutions such as BlackRock, J.P. Morgan, and Siemens are already on the forefront of exploring and implementing tokenization strategies. This continued institutional participation only serves to legitimize the game-changing ability of this technology to upend traditional financial systems. The heightened interest from these legacy players is a testament to the growing awareness of the advantages that tokenization can provide.
