Tokenizing Private Markets: A New Era of Institutional Onchain Access and Liquidity Transformation

The private markets have long been a bastion of exclusivity, characterized by high barriers to entry, opaque liquidity, and rigid structures. However, a seismic shift is underway as institutional players embrace blockchain technology to tokenize these traditionally illiquid assets. At the forefront of this revolution is Mubadala Capital, the asset management arm of Abu Dhabi's Mubadala Investment Company, which has partnered with Kaio, a leading real-world asset (RWA) infrastructure provider, to tokenize private equity products and unlock institutional onchain access. This collaboration is not just a technical innovation-it's a paradigm shift in how capital flows, liquidity is structured, and global investors access alternative assets.

The Problem with Traditional Private Markets

Private equity, private credit, and real estate have historically been inaccessible to most investors due to high minimums, long lock-up periods (often 5–10 years), and geographic restrictions according to recent reports. For institutions, these constraints limit diversification and liquidity. For example, a $100 million private equity fund might require a $25 million minimum investment, locking up capital for a decade with no exit options until a fund's term ends. This rigidity has stifled innovation and excluded smaller players from participating in high-yield, alternative assets.

Tokenization as a Solution: Fractional Ownership and 24/7 Liquidity

Tokenization addresses these challenges by digitizing ownership rights into blockchain-based tokens. These tokens enable fractional ownership, allowing investors to buy smaller slices of high-value assets. More importantly, they introduce programmable liquidity-investors can trade tokens on secondary markets 24/7, bypassing traditional lock-up periods.

Kaio's partnership with Mubadala Capital exemplifies this. By tokenizing private equity products, the firm aims to let accredited and institutional investors access these assets onchain, with reduced minimums and real-time settlement according to industry reports. This mirrors Kaio's prior success with firms like BlackRock and Hamilton Lane, which have already tokenized funds on blockchains like Sei and Hedera as research shows. For instance, BlackRock's BUIDL fund-a tokenized money market fund-surpassed $1 billion in assets under management by March 2025, demonstrating demand for onchain liquidity. Similarly, Hamilton Lane's Senior Credit Opportunities Fund (SCOPE), tokenized on the Sei Network, offers monthly liquidity windows instead of decade-long lockups.

Institutional Onchain Access: A New Infrastructure

The technical infrastructure underpinning these innovations is critical. Kaio leverages high-performance blockchains like Sei and Hedera, which offer fast finality and low costs, enabling real-time trading of tokenized assets. For example, the Sei Network's "high-performance rails" allow institutional-grade transactions to settle in seconds, while Hedera's hashgraph consensus ensures compliance with regulatory frameworks as per industry analysis.

This infrastructure also supports cross-chain interoperability. Brevan Howard, another Kaio partner, has tokenized funds on Polygon's PoS Ethereum sidechain and the NEAR protocol, using Chain Signatures to manage cross-chain assets. By late 2024, Brevan Howard's Abu Dhabi branch had allocated $20 million to Kinto, an Ethereum-based onchain financial network, further cementing blockchain's role in institutional finance.

Real-World Outcomes: Liquidity Metrics and Market Expansion

The results of these initiatives are measurable. Kaio's tokenization of Hamilton Lane's SCOPE fund has already attracted over $200 million in institutional assets onchain according to market data. Meanwhile, BlackRock's BUIDL fund, which allows investors to redeem tokens for USDC via Circle, has become eligible as collateral on DeFi platforms like M0, expanding its utility beyond traditional finance.

For Mubadala Capital, the partnership with Kaio is a strategic move to position itself at the intersection of traditional and digital assets. By tokenizing private equity, the firm is not only democratizing access but also aligning with global trends in digital infrastructure adoption. As of 2025, over 30% of institutional capital is projected to be onchain, driven by demand for programmable, liquid RWAs.

The Future of Institutional Finance

The Mubadala-Kaio collaboration is a harbinger of a broader trend: institutional finance is going onchain. Tokenization is transforming private markets from illiquid, opaque pools into liquid, transparent ecosystems. For investors, this means:
- Lower barriers to entry: Fractional ownership reduces minimums from millions to thousands.
- Enhanced liquidity: 24/7 trading and shorter lock-up periods (e.g., monthly liquidity) replace decade-long commitments.
- Global accessibility: Blockchain eliminates geographic restrictions, enabling cross-border capital flows.

However, challenges remain. Regulatory frameworks must evolve to accommodate tokenized assets, and market participants must navigate risks like smart contract vulnerabilities. Yet, as industry leaders demonstrate, the infrastructure and demand are already in place.

Conclusion

The tokenization of private markets is no longer a theoretical concept-it's a reality being built by institutions like Mubadala Capital and Kaio. By leveraging blockchain's programmability and liquidity, these firms are redefining how capital is allocated, managed, and traded. For investors, the message is clear: the future of institutional finance is onchain, and those who adapt will lead the next era of capital formation.