12th October 2023 > > Tokenisation & techies.

tl;dr

Tokenisation and techies. I know which one tickles my fancy.

Market Snap

Market Wrap

Now that Israel is fighting on two fronts against those who have invaded its sovereign borders – it is irrelevant whether you believe those borders should exist or not, because they do, and Israel will defend them – this war will be longer and bloodier.

The potential for a major upheaval in the Middle East is growing by the day. The impact on markets is unknowable, but we must stay alert to the upside risk that BTC reinforces its position as haven, and the downside risk that it fails to do so.

Curious Cryptos’ Commentary – Tokenisation

Three of the finance industry’s giants have jointly collaborated on a tokenisation experiment that has huge ramifications for TradFi, and the crypto world.

For TradFi, use of this technology will lead to dramatic productivity improvements in two respects.

The first will be the shedding of huge swathes of back-office staff , a process that has been underway ever since the internet revolution commandeered IT for more than just creating huge, unwieldy, and inaccurate databases. The second is far more exciting to bankers – the ability to use assets in the most capital efficient manner. I know what you are thinking – aren’t we a fun band of brothers. But that is to underestimate how important it is that banks work to lower industry’s cost of capital, for the benefit of us all.

For cryptos, and especially ETH and layer-2 solutions, adoption by major banks is about to take-off big-time.

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BlackRock CEO Larry Fink has famously declared for tokenisation, a concept that cannot exist without public blockchains:

“I believe the next generation for markets and next generation for securities will be tokenization of securities.”

You can agree with him or not, but I suggest his track record in taking advantage of new developments in the financial world is second to none.

J.P. Morgan launched tokenisation platform Onyx Digital Assets way back in 2020, a visionary move despite CEO Jamie Dimon’s siding with dinosaurs such as Warren Buffett and his sidekick whose name I keep forgetting.

BlackRock has tokenised shares in one of its money market funds, and transferred those to Barclays Bank as collateral for an OTC derivatives trade using a private dApp named TCN. Don’t get worried by the word “private” there – access to the app is limited but that doesn’t change the fact it uses a public blockchain.

Head of Onyx Digital assets Ty Lobban explains on X:

“Another dApp, another first: in the 1st ever use of tokenized MMFs as derivs margin, @BlackRock & @Barclays posted tokenized MMFs collateral for a live trade using new Onyx Digital Assets dApp “TCN”. The collateral took 1sec to post! (vs the normal 1+days)”.

Ty continues:

“TCN on Onyx Digital Assets is now open for business for institutional clients. We have started with tokenized MMFs [and] plan to expand to other collateral types in the future. We believe ultra fast collateral movement will bring huge value to the $25T collateral industry.”

Handily, Ty is a board member of the Enterprise Ethereum Alliance (https://twitter.com/EntEthAlliance).

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The $25 TRILLION collateral industry now has huge motivation to embrace blockchain solutions.

And this is just one of the myriad use-cases for the tokenisation of financial assets.

Larry has called this one right.

Curious Cryptos’ Commentary – Technical analysis (TA)

A techie comment:

“I THINK this can keep going. There is still room on the 3D rsi. Inverse head and shoulders. About as bullish a chart as u can find.”

Me: Sounds good right. Shall we go all in?

He says:

“Though is mostly played out now”.

Which hits the proverbial nail on the head. TA tells you what has happened in the past. It has zero relevance in predicting the future.

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Or how about this one:

“The more things change, the more they stay the same … No two cycles are ever the same”.

So, to change, things must stay the same, otherwise there can be no change. But nothing is ever the same, so nothing ever changes.

I don’t know about you, but these techies must be very smart cos I just don’t get that at all.