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Why Tokenization is Set to Become the First Trillion-Dollar Blockchain Breakthrough

Enterprise Adoption of Blockchain and Smart Contracts[edit | edit source]

Securitized Lending[edit | edit source]

  • Major banks are collaborating on blockchain projects in production, like EquiLend's OneSource, demonstrating that enterprise adoption is happening.
  • The focus is on practical business benefits and use cases that improve workflows, not just implementing blockchain for its own sake. This results-driven approach will encourage more meaningful adoption.
  • Problems like reconciliation and collateral optimization in securities financing provide strong use cases that blockchain and smart contracts can address through shared data and automation.
  • Gradual implementation starting with pilots allows new technologies to be tested and integrated with existing systems, easing adoption barriers like technical risk and regulatory approval.
  • User engagement across business, operations and tech roles is critical to ensure solutions optimize whole workflows, not just technology. Adoption requires organizational change management.
  • Success stories like the projected $100M+ savings in securities lending will motivate other enterprises to implement blockchain where it can improve efficiency and unlock new opportunities.

How Tokenization Can Help Improve Securitized Lending[edit | edit source]

  • Securities financing, including securities lending, repos, and collateral management, is an important area of capital markets that enables liquidity and market making. However, the systems supporting these areas are outdated and fragmented, relying heavily on manual processes.
  • A working group of 10 major banks and lending agents evaluated the problems and decided eliminating post-trade reconciliation breaks was the top priority that could be addressed with distributed ledger technology (DLT).
  • By using DLT and smart contracts to create a shared single source of truth for contract data, they estimate over $100 million in annual savings is achievable just from eliminating reconciliation and improving efficiency.
  • Beyond the near-term savings, optimizing processes around settlement and collateral management can unlock additional benefits like freeing up collateral, reducing settlement risk, and enabling straight-through processing.
  • EquiLend's OneSource project aims to gradually roll out DLT for contract initiation and management, starting with a 5 client pilot for North American equities. The full rollout will expand across regions, asset classes and allow exploration of new opportunities on top of the shared infrastructure.
  • Key to success is stakeholder engagement across technology, operations, and business teams to adapt workflows, not just implement new technology. The focus is on practical use cases and business benefits, not just technology hype.

for more, see VXInsight Podcast