Polygon to Power the First TradFi-Focused Ethereum Layer 2


“Institutions are coming” is a common saying within the crypto industry that espouses the belief that traditional financial markets will eventually be democratized on the blockchain. While the saying has often come across as a far-flung dream, the Polygon network continues to defy the narrative.

Building on milestones recorded last year by bringing funds from Franklin Templeton and Hamilton Lane on-chain, the Polygon ecosystem will now welcome the first financial institution-backed and focused Ethereum Layer 2 chain.

Polygon Labs: “The Institutions Have Arrived”

In an X post on Wednesday, January 10, Polygon Labs unveiled the Libre Chain, a protocol powered by the Polygon CDK and backed by some of the biggest names in institutional blockchain adoption, asserting that “the Institutions have arrived on Polygon.”

Libre’s backers include a subsidiary of Japan’s largest Investment bank, Nomura Group called Laser Digital, WebN Group, an incubation hub backed by alternative investment giant Brevan Howard’s founder Alan Howard, Brevan Howard itself, Hamilton Lane, and the visionary Avtar Sehra. Sehra is regarded as one of the pioneers of tokenization, widely known for his work with Nivaura. This project brought asset tokenization to Bitcoin and Ethereum when most argued that such use cases be restricted to private blockchains.

Per Polygon Labs’ blog post, Libre chain, the latest offering from these heavyweights, will empower regulated institutions to tokenize and issue alternative investments on the blockchain compliantly. The motivation? To allow for broader distribution for asset managers “by safely and securely streamlining legal, regulatory, and operational workflows.”

The Ethereum Layer 2 chain is set to launch in Q1 2024 and will first see adoption from Hamilton Lane and Brevan Howard. In addition to issuing and creating tokenized assets, there are plans to introduce more features like collateralized lending and automated rebalancing of separately managed accounts (SMAs).

Responding to the development, Polygon co-founder Sandeep Nailwal hailed the potential of the project to unlock new investment opportunities.

"We are thrilled to see Libre select Polygon CDK's scalability and security to revolutionize the alternative investments space. Libre demonstrates the immense potential of blockchain technology to unlock new opportunities for investors globally." Polygon Labs Institutional Capital Head Colin Butler teased the Libre Chain launch last week, stoking significant excitement within the Polygon community. 

Polygon CDK: ‘The Home For Institutional Assets?’

Following the Libre Chain announcement, Polygon Labs CEO Marc Boiron asserted that the Polygon CDK was “the real home for bringing institutional assets onchain.” Boiron contended that the Polygon Ethereum Layer 2 development kit’s zero knowledge technology and modularity offered asset managers the tools to tap into the DeFi ecosystem while maintaining a fully controlled environment.

Libre is the latest addition to Polygon’s growing multichain ecosystem powered by the CDK. Other projects and firms building with the tech stack include Palm Network, Flipkart, and OKX. 

Polygon’s multichain vision outlined under its 2.0 roadmap intends to create “the ultimate value layer” on Ethereum, promising to allow users to navigate the ecosystem like a single blockchain with unified liquidity.

On the Flipside

The Libre chain has yet to launch. Whether the Libre chain will attract other financial institutions remains to be seen. 

Why This Matters

Institutional adoption has long been one of the biggest desires of crypto industry participants. The Libre chain powered by Polygon represents a massive step towards this ambition.

Source : DailyCoin by Okoya David / Jan 10, 2024

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