- Polygon has created two blockchain technology organizations in just the past two weeks.
- Jack Melnick, Polygon Senior Director, Growth BD, reveals how Polygon is attacking the traditional finance space.
- Polygon remains one of the most widely used Ethereum scaling projects.
“The institutions are coming” is one of the most well-known sayings in the cryptocurrency industry. But did they really come? Maybe not as much as everyone hopes, at least not yet.
Polygon’s Efforts to Board Institutions to DeFi
In just the past few weeks, Polygon has introduced two organizations into its ecosystem. One of them is Franklin Templeton, an investment management firm with approximately $1.4 trillion in assets under management extended Polygon’s OnChain US Government Fund.
Franklin Templeton’s US Government Fund is the first US-registered mutual fund to use public blockchain to process transactions and record stock ownership with $270 million under management. And this is all happening on Polygon.
The other organization Polygon has partnered with is Hamilton Lane, a leading private markets investment firm. Securitization, a company that digitizes the issuance, management and trading of assets in the real world, Launched A digital version of the Senior Credit Opportunity Fund (“SCOPE”) on Hamilton Lane.
All of this is possible thanks to Polygon’s dedication – and its veteran business development team – in bringing institutions to DeFi.
How Polygon Enterprise is preparing for DeFi
speaks in a Twitter space Organized by QuickSwap, Jack Melnick, Polygon’s senior director, Growth BD, revealed that there are two main ways Polygon is attacking the traditional financial institutions space.
The first, according to Melnick, is the veteran team that Polygon has managed to assemble.
“Our institutional capital team is headed by Colin Butler, who has 20 years of Wall Street experience and has all the relationships with the big banks, and asset managers. He puts a legitimate face on what we’re trying to do and translates what’s happening from the crypto native side into those big institutional minds. What that does is those asset managers do tokenization and bring assets onchain. This is the supply side. But that’s half the battle.”
The other half of the battle is DeFi itself. Melnick acknowledged that one of the constraints that persists since the last cryptocurrency bull cycle is low demand Liquidity.
“What was the big limitation last cycle and even up until today with tokenization? The limitation is on the demand side of the marketplace. If I’m running an onchain credit fund, I have more limited liquidity, I have different risk parameters, and I can’t run any leverage. Whereas offchain, an institutional credit fund is probably extremely liquid and running three to five times leverage.”
Melnick went on to explain that DeFi needs a more diversified infrastructure to cater to all types of institutional investors. This, according to him, will drive the next big wave of institutional adoption of DeFi.
“So the question is, how do we use DeFi to create that backend infrastructure and build out a thoughtful full-stack service, whether it’s through DeFi native builders or using some of that underlying technology to create hybrid solutions for institutions that have to do some sort of custody in-house or fully-customizable solutions that we’re working with the largest asset managers to fulfill that. All of that stuff is going to be what drives the next big wave of institutional adoption.”
Polygon remains one of the most widely used – and financially successful – Ethereum scaling solutions. according to data From CoinGecko, the Polygon MATIC token is the 11th largest cryptocurrency with a market cap of $8.2 billion.
on the flip side
- The elephant in the room when it comes to DeFi adoption by institutional investors is the regulations, or lack thereof. Especially in the US, where the regulatory environment towards cryptocurrencies has been murky.
Why should you bother
Institutional adoption of DeFi is one of the crypto industry’s highest goals. If institutions start coming to DeFi en masse, it will legitimize the use of blockchain technology in traditional finance and drive the next wave of cryptocurrency adoption around the world.
Read more about Polygon’s response to UK regulators:
Read more about Ethereum gas fees hitting record levels: