On-Chain Growth Strategy Revealed by Marketnode CEO Rehan Ahmed in the $140 Trillion Equity Market
Fresh Perspective on Financial Infrastructure Revolution through Digital Assets
Chainlink's recent interview with Marketnode's Rehan Ahmed reveals insights on the transformation of financial infrastructure by digital assets. With global equity markets totalling around $130 trillion and funds under management approximately $140 trillion, Ahmed points out that onchain assets, currently valued between two and five billion dollars, are a rapidly growing yet minuscule portion. This trend, he argues, represents a significant shift in finance, as institutions explore programmable assets to reshape capital markets.
Adapting Blockchain for Finance
Ahmed outlined a phased transition in blockchain adoption. Currently, finance teams primarily employ blockchain for internal upgrades, with smart contracts and improved record-keeping driving notable efficiency gains. For instance, fund managers are unlocking operational speed using smart contracts. Wider distribution of onchain assets relies on agreed-upon digital formats, similar to the popularization of MP3 files in the music industry, paving the way for services like Spotify.
Tokenizing Assets for a Seamless Finance Future
Marketnode's Singapore branch exemplifies this shift, automating post-trade processes with blockchain tools. While tokenization grabs attention, Ahmed discussed that most efforts are aimed at building systems and refining legacy workflows. This approach serves as a robust foundation for future digital asset services.
Ahmed proposed two primary strategies for asset tokenization in market structures. One focuses on digitizing private, illiquid assets to expand investor access, while the other optimizes large, liquid instruments for efficiency gains. For instance, Marketnode focuses on improving liquid loans, funds, and structured products. Tokenization can significantly shorten settlement cycles.
Strategic Approach to Tokenization
Digitization isn't equally beneficial for all asset classes. Public equities already function well within existing brokerage systems, offering little value through tokenization for market access. Instead, resources should be directed to asset classes with clear inefficiencies, such as loans and structured instruments, which often face slow settlement and high costs. By focusing on these areas, tokenization can offer measurable improvements, ensuring that resources are prioritized effectively.
Interoperability: The Key to On-chain Asset Expansion
Interoperability plays a crucial role in expanding on-chain assets usage. Ahmed emphasized that the integration of blockchain tools with legacy finance platforms presents the first challenge. Once achieved, infrastructure can be developed for seamless cross-chain communication. Traditional finance systems and digital assets will likely coexist, with issuers given the freedom to choose preferred formats. Over time, digital issuance may become standardized.
The Synergy of Blockchain and AI in Capital Markets Transformation
Ahmed noted the importance of combining blockchain with AI and machine learning to achieve the full benefits. By merging these tools, transaction processes and settlements could be expedited, and novel financial models could emerge. The short-term growth of onchain assets might seem slow, but long-term fluctuations could lead to momentous change. As infrastructure advances and interoperability improves, the finance industry will evolve progressively. By the next decade, digital infrastructure and tokenization may fundamentally alter global capital flows and system efficiency, redefining how capital moves across markets worldwide.
- In a phased transition, finance teams are initially using blockchain for internal upgrades, with smart contracts and improved record-keeping driving efficiency.
- The Singapore branch of Marketnode showcases this shift by automating post-trade processes with blockchain tools, focusing on liquid loans, funds, and structured products for improvements.
- Two primary strategies for asset tokenization have been proposed: one to expand access for private, illiquid assets, while the other optimizes liquid instruments for efficiency gains.
- According to Ahmed, digitization is not equally beneficial for all asset classes, with public equities already functioning well within existing brokerage systems offering little value through tokenization.
- Interoperability is crucial for expanding on-chain assets' usage, as the integration of blockchain tools with legacy finance platforms is the first challenge, followed by the development of seamless cross-chain communication.
- The synergy of blockchain and AI, combined with machine learning, could expedite transaction processes and settlements, leading to the emergence of novel financial models.
- By the next decade, digital infrastructure and tokenization may fundamentally alter global capital flows and system efficiency, redefining how capital moves across markets with the aid of artificial intelligence.
