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"Blockchain Rails: Revolutionizing Private Asset Trading"
Coin WorldWednesday, Feb 19, 2025 11:24 am ET
1min readOnboarding the Buy-Side to Blockchain Rails
The integration of blockchain technology into traditional finance is poised to revolutionize the way alternative private assets are traded and managed. Tokenization, a key aspect of this transition, aims to create full-fledged secondary trading markets, integrate assets into the decentralized finance (DeFi) ecosystem, and enhance investment accessibility. However, the process of bringing legacy assets onto the blockchain has faced inherent limitations.
Tokenizing a portfolio of loans from a middle-market direct lender, for instance, could enable the use of the portfolio collateral in DeFi applications like Moonwell, Aave, or Morpho. The ideal real-world asset lending workflow, as outlined in Blue Water’s Opportunities in Tokenization 2025 report, involves a seamless integration of traditional assets into the blockchain ecosystem.
To successfully onboard the buy-side to blockchain rails, several challenges must be addressed. Quarterly, semi-annual, or annual portfolio markings by direct lenders lag behind the real-time execution expected in digital asset markets. To unlock the trillions of dollars of current, performing alternative assets, an operating system or systems that enable end-goal applications, such as decentralized exchanges and lending platforms, is necessary.
Transparency and proof-of-metrics are crucial for crypto markets, and bringing legacy assets onto the blockchain requires above-average levels of transparency. Operational speedbumps that inhibit a 24/7 operating schedule can reduce trust and increase execution risk in the eyes of crypto investors. Therefore, a holistic solution enabling real-time monitoring of off-chain assets and near real-time execution speed is essential.
Platforms like Inveniam’s blockchain-based operating system and Accountable, along with blockchain layers such as Chainlink and Pyth, offer low-hanging fruit for asset managers and capital markets players to get token-ready by onboarding to blockchain rails. By addressing these challenges and leveraging available technologies, the buy-side can effectively transition to the blockchain ecosystem, unlocking new opportunities and enhancing the overall investment landscape.
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