thecoinrepublic.com
JPMorgan (JPM) thinks it has devised a method for DeFi developers to benefit from the yield-generating potential of non-crypto assets.
Tyrone Lobban, head of Onyx Digital Assets at JPMorgan, spoke at Consensus 2022 in Austin, Texas, about the bank’s institutional-grade DeFi plans and outlined how much value the in tokenized assets have on the waiting list.
Lobban explained that with time people believe that conducting the tokenization of the U.S. Treasurys or money market fund shares translates to all potentially being utilized as collateral in DeFi pools. The main aim is to incite these assets worth trillions of dollars into DeFi, therefore allowing these new mechanisms for lending, trading, and borrowing, but with the scale of institutional assets.
Institutional DeFi usually refers to inflicting know-your-customer (KYC) strictures on permissionless lending pools in Crypto. This has begun in projects such as Aave Arc, Compound Treasury, and Siam Commercial Bank, announced quite recently.
JPMorgan intends to introduce the tokenization of traditional assets to a bigger scale. Lobban further elaborated that there are two complementary parts as seen by Onyx Digital Assets to take bank-grade DeFi to fruition.JPMorgan’s blockchain-based collateral settlement system is one component. It was launched last month for including tokenized versions of BlackRock’s money market fund shares.
“Project Guardian,” the latest pilot led by the Monetary Authority of Singapore. JPMorgan, DBS Bank, and Marketnode are too involved in it and are the second component. “Project Guardian” checks institutional-friendly DeFi through permissioned liquidity pools that consist of tokenized bonds and deposits.
These ventures too will have blockchains and have a permission structure Pretty much similar to what Aave Arc and Fireblocks are doing. Lobban observed one difference that the verifying customer information in Project Guardian is being done by large financial institutions who are taking part contrary to DeFi platforms and crypto-native custody firms. A JPMorgan trader would have to prove that he possesses the rights and entitlements to trade on behalf of the Wall Street bank.
The novel approach to permissioned DeFi done through digital identity building blocks like W3C verifiable credentials is another difference.
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