Welcome to the April edition of the COSIMO Verbatim newsletter! This month we’re bringing you the latest industry news, some portfolio updates, and a roundup of events from conferences we’re attending to the Bitcoin Halving.

April Insights

Ripple’s CEO believes crypto’s market cap will double to $5T by year-end

Gen Z Americans are more likely to own crypto than stocks

Bank for International Settlements announces cross-border payment tokenization trial

Restaking protocol EigenLayer launches on Ethereum mainnet

Brevan Howard’s Crypto Fund Rises 35% as Macro Trading Dips

 

Unveiling the Future of Finance: Tokenization on Ethereum and BlackRock's Innovative Approach

Tokenization: A Gateway to Digital Assets

Tokenization, the process of converting assets into digital tokens tradable on blockchain networks, is reshaping traditional finance. Through tokenization, any asset, physical or digital, can be represented as a digital token on the blockchain. By digitizing assets, tokenization enhances liquidity, facilitates fractional ownership, and streamlines transactions, revolutionizing traditional asset management paradigms.

Tokenization's allure lies in its ability to eliminate settlement delays, reduce transaction costs, and enable 24/7 trading. Assets, ranging from real estate to debt instruments to intellectual property, can be transformed into digital tokens, democratizing access to investment opportunities. This disruptive technology not only simplifies asset trading but also attracts a new wave of investors, particularly crypto-savvy individuals seeking alternative investment avenues.

Institutional Products Pioneering Tokenization

Institutional giants like BlackRock are leading the charge in adopting tokenization technology to offer novel investment avenues. BlackRock's foray into tokenization includes launching the BlackRock USD Institutional Digital Liquidity Fund (BUIDL), a tokenized fund built on the Ethereum blockchain. BUIDL, fully collateralized by cash and U.S. Treasury bills, provides qualified investors with opportunities to earn U.S. dollar yields while enjoying the benefits of blockchain technology.

BlackRock's strategic partnerships with key players like Securitize and BNY Mellon underscore its commitment to digital asset innovation. The success of BUIDL, attracting $288 million in deposits in initial weeks since its inception, highlights the growing demand for tokenized investment products. Moreover, BlackRock's venture into tokenization mirrors a broader trend among financial giants embracing blockchain technology to enhance liquidity, transparency, and accessibility for investors.

In addition to BlackRock, several other institutional players are pioneering tokenized investment products. Franklin Templeton, for instance, manages a tokenized mutual fund with assets exceeding $360 million, showcasing the industry's growing interest in digital asset offerings. Furthermore, JPMorgan is exploring tokenization through deposit tokens, representing bank deposits, highlighting the broader adoption of blockchain technology across financial institutions. These initiatives underscore a seismic shift in traditional finance towards embracing tokenization and blockchain technology to enhance liquidity, transparency, and accessibility for investors.

Ethereum: Powering the Tokenization Revolution

At the core of tokenization's rapid expansion lies Ethereum, the leading blockchain platform for decentralized applications and smart contracts. Ethereum's programmable functionality enables the creation of custom tokens and deployment of complex smart contracts, making it the preferred choice for tokenization projects across various industries. Ethereum's dominance is evident in its total value locked in decentralized finance (DeFi) protocols, with $54 billion at the time of writing.

Ethereum's recent upgrades, notably the Dencun upgrade aimed at enhancing scalability and reducing transaction costs for Layer 2 solutions, signal its commitment to addressing scalability challenges. The flourishing Layer 2 ecosystem post-Dencun upgrade, with increased transaction activity and lower gas fees, bodes well for Ethereum's scalability and broader adoption. Investment firm VanEck predicts Ethereum Layer 2 networks to reach a valuation of over $1 trillion by 2030, underscoring the potential of Ethereum's scalability solutions.

The Future of Tokenization on Ethereum

Looking ahead, tokenization on Ethereum promises a future characterized by increased liquidity, democratized access to investment opportunities, and innovative financial instruments. Furthermore, tokenization's ability to enhance liquidity and accessibility for previously illiquid assets like real estate and art opens up a world of investment opportunities for a broader range of investors. With Ethereum's ongoing upgrades and the maturation of its Layer 2 ecosystem, the stage is set for a new era of decentralized finance powered by blockchain technology. 

If you’d like to learn more about tokenization from experts like Securitize, watch our latest episode of Coffee with COSIMO here where our managing partner Rob Frasca sat down with president of Securitize Jamie Finn to dive into the intricacies and vast potential of tokenization.

Portfolio Updates

Archax, the only FCA-regulated digital asset platform, has forged a partnership with Talos to enhance institutional crypto trading. The move will develop Archax's OTC trading desk, potentially improving liquidity and efficiency. More here.

Dusk Network, a privacy-oriented blockchain platform for financial applications, has announced an ecosystem fund worth $10 million to support developers who are interested in building on Dusk. The aim is to grow the network, attracting and supporting project teams to create a sustainable, thriving, and well-rounded ecosystem. More here.

Hedera, a leading Proof of Stake (POS) blockchain platform, has developed a strategic alliance with UK Cryptoasset Business Council (UKCBC). The UKCBC is dedicated to advancing the UK’s crypto ecosystem, focusing on supporting users, investors, and businesses, with a roster of prominent crypto firms that have previously joined like Ripple and Coinbase. More here.

 

Upcoming Events

The COSIMO team are on the road and will be present at the following industry events:

• Jack Ward will be at the Harvard Blockchain Conference this weekend, April 13-14th.

• Rob Frasca will be at Token2049 in Dubai April 18-19th.

• Ciarán Hynes will be at ETHBoston April 26-28th.

• Connor Cantwell will be at ETHDublin May 31 May-2nd June, 2024

We welcome the opportunity to connect with fellow professionals and stakeholders during these events. If you plan on attending any of these events, we encourage you to reach out and engage with us.

 

Join us for next week’s Coffee with COSIMO ☕

Next week on Coffee with COSIMO - the mini series that breaks down complex Blockchain and crypto concepts into short simple episodes - we are talking about a big event in crypto…the Bitcoin Halving.

Joining us to dive into this phenomenon in more detail is John Lester, VP of Operations at npayme labs. John is a software executive, community builder and fintech pioneer but most importantly he’s a crypto expert who has worked in the space for years.

Together with COSIMO’s Connor Cantwell, John will be discussing what exactly is the Bitcoin Halving, and why is there so much anticipation surrounding it? How does it connect to the broader concepts of Bitcoin's scarcity and value? Beyond the Bitcoin community, can the Halving have far-reaching effects on the broader cryptocurrency landscape?

Join us live on Tuesday April 16th at 11am EST!

Register here: https://us02web.zoom.us/webinar/register/WN_7z0EGim7RbWkOi7qApcQpw