JP Morgan Hunt JPM plans to tokenize institutional funds and have decentralized finance (DeFi) developers capitalize on non-virtual assets.
What happened: Tyrone Lobbanhead of Onyx Digital Assets at JP Morgan, discussed the plans during the CoinDesk Consensus 2022 event in Austin, Texas. The goal is to link traditional and virtual assets by tokenizing institutional currency (i.e. money market funds or US Treasury funds).
Essentially, JPMorgan Chase seeks to tokenize these major assets and collateralize them in DeFi pools. In order to effectively tokenize these assets, the company seeks to use tokenized renderings of money market stocks as collateral for DeFi activities. This company has been integrated into the Onyx Digital Assets blockchain, along with the national currency JPM coin, which has seen a volume of 350 billion dollars traded.
JPMorgan Chase is also launching “Project Guardian,” which tests institutionally compatible DeFi through pools of liquidity, building up tokenized deposits and bonds.
“The overall goal is to bring these trillions of dollars of assets into DeFi, so that we can use these new mechanisms to trade, borrow [and] loans, but with the scale of institutional assets,” Lobban said.
why it matters: Using institutional-level assets as financial tools in DeFi allows both markets to benefit from each other. This bridge allows DeFi to grow by injecting large-scale institutional funds into it. Furthermore, it allows traditional institutional asset classes to benefit from the technology and tokenomics underlying the various DeFi, trading, lending and borrowing mechanisms. As permissionless lending pools within the crypto space are subject to know-your-customer (KYC) constraints, the world of institutional and virtual assets are coming together to innovate the DeFi space on a larger scale. . Lobban explains the importance of “verifiable credentials” in institutional DeFi, stating, “We want to use verifiable credentials as a way to identify and prove identity, which is different from the current Aave model. , for example.” By transforming “permissionless pools” into “permitted pools” and using conventional collateral in DeFi business, JPMorgan Chase is bolstering the DeFi landscape with institutional funds.