As financial asset infrastructures continue to go digital, researchers from the blockchain oracle platform Chainlink think asset managers have a “sizable” opportunity to get into tokenization.
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Blockchain oracle platform Chainlink outlined the opportunity and how interoperability and real-world data could unlock the value of tokenized assets in an industry report titled “Beyond Token Issuance.”
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The paper outlined tokenization’s possible advantages for asset managers. This entails bringing dormant capital back to life, increasing the availability of assets, and developing innovative revenue models.
In addition, Chainlink stated that since tokenization enables more automated risk assessment, asset managers could enhance their risk management, differentiate their service offerings, and build cohesive client portfolios.
Additionally, Chainlink made the case in the report that blockchain technology is still developing and becoming a “integral component of the existing financial ecosystem.” The business also emphasized how assets based on blockchain technology and conventional assets are already combining to form a single financial ecosystem.
The researchers surmise that this is the outcome of ongoing digitization, since blockchains provided better infrastructure for transactions and asset storage.
According to Ryan Lovell, director of capital markets at Chainlink Labs, tokenization has been in a research and development stage for a number of years, as Cointelegraph reported.
According to Lovell, institutions were attempting to determine the basic effects of tokenization on their businesses by bringing basic account balances onto the blockchain. Lovell stated:
“This was kind of like building a concept car without an engine or interior — just a basic shell of what the future will hold.”
The executive does think that creating the necessary infrastructure will take up more of the next tokenization phase. Tokenized assets must be programmable and composable across traditional systems as well as private and public chains.
The Chainlink executive thinks that strong applications might be unlocked by augmenting tokens with real-world data and enabling them to function across blockchains and conventional systems.
Compared to traditional finance infrastructure, Lovell said these use cases would have more cost-effectiveness, transparency, and streamlined administrative procedures.
In order to help institutions go beyond simple token issuance, manage tokenized assets throughout their entire lifecycle, and transact across the cross-chain economy, Lovell continued, “We’re actively working on several exciting initiatives at the moment.”
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