Amid growing concerns about the fate of cryptocurrency and the looming possibility of another crypto winter, some firms are taking action to preserve the value of the world’s crypto investments. In fact, if JPMorgan’s plans bear fruit, decentralized finance (DeFi) will soon be more secure than ever and backed by trillions of dollars’ worth of collateral.
Speaking at Austin’s Consensus 2022, Tyrone Lobban, JPMorgan’s Head of Blockchain Launch and Onyx Digital Assets, explained that financial assets such as money market fund shares or U.S. Treasuries could be tokenized in order to back 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,” said Lobban.
The plan to institutionalize DeFi represents several significant advantages for investors. Using public blockchains and permissioned liquidity pools based on tokenized bonds has already seen some experimentation in Singapore to great acclaim. Especially when coupled with W3C verifiable credentials, bank-grade DeFi could represent a new era in crypto.
“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,” Lobban explained.