JPMorgan Looking to Bring DeFi Yields to Non-Crypto Assets via Tokenization
Wall Steet behemoth #JPMorgan has reportedly found a way that enables #DeFi developers to leverage the yield-generating potential of non-crypto assets.
JPMorgan Could Bring DeFi Yields to #NonCrypto Assets:
According to a #Coindesk report published June 11, JPMorgan hinted that it has found a way to bring #trillions of dollars of tokenized assets to DeFi.
At #Consensus2022 in Austin, Texas, Tyrone Lobban, head of #Onyx Digital Assets at JPMorgan told Coindesk the bank’s institutional-grade DeFi plans and highlighted the amount of value in tokenized assets waiting to be poured into the #DeFi landscape.
He said:
“Over time, we think tokenizing U.S. Treasurys or money market fund shares, for example, means these could all potentially be used as collateral in #DeFi pools. The overall goal is to bring these trillions of dollars of assets into DeFi, so that we can use these new mechanisms for trading, borrowing [and] lending, but with the scale of institutional assets.”
For the uninitiated, #institutional DeFi differs from #retail DeFi in that the former typically requires users to pass certain know-your-customer (#KYC) strictures to benefit from the underlying digital asset’s permissionless pools.
To date, several leading DeFi protocols have unveiled their institutional-grade DeFi solutions such as #Aave Arc, #Compound Treasury, and others.
Lobban added that JPMorgan’s plans to incorporate the #tokenization of traditional assets is on a much larger scale. He added that #Onyx Digital Assets views two complementary parts to bringing bank-grade DeFi to fruition.
What Are the Components?
Per the report, the first component is #JPMorgan’s blockchain-based #collateral settlement system. The system was extended in May to include tokenized versions of #BlackRock’s money market fund shares which is essentially a kind of #mutualfund invested in cash and highly liquid short-term debt instruments.
Lobben noted that such kind of application on the #Onyx Digital Assets #blockchain – settled in the bank’s in-house digital token #JPM Coin – has witnessed a whopping $350 billion in trading volume.
The second component is a recent pilot called “Project Guardian” being spearheaded by the Monetary Authority of Singapore which includes #JPMorgan, #DBS Bank, and #Marketnode. While not much is know about this pilot yet, we do know that it tests institutional-friendly #DeFi using permissioned liquidity pools that are made up of tokenized bonds and deposits.
Lobban added that JPMorgan’s approach to permissioned DeFi will involve digital identity building #blocks, such as #W3C verifiable credentials.
“We want to use verifiable credentials as a way of identifying and proving identity, which is different from the current Aave model, for instance,” #Lobban said. “Verifiable credentials are interesting because they can introduce the scale that you need to provide access to these pools without necessarily having to maintain a white list of addresses. Since verifiable credentials are not held on-chain, you don’t have the same overhead involved with writing this kind of information to blockchain, paying for gas fees, etc.”