The year 2024 will mark the beginning of a new era in asset management. Since years, institutional investment in blockchain has been predicted. But it is now becoming a reality.

The development of the Zero-Knowledge Ethereum Virtual Machine (zkEVM) is a key capability that can enable tokenization of real world assets, and set the stage for an important transformation of the global finance system.

Institutions require mainnet-level safety, infinite scalability and massive liquidity. The necessary components have been assembled thanks to the advances in developer tools, mathematically proven security measures and the development of developer tools.

This will lead to the mainstream adoption of blockchain.


Transparency through Chain Abstraction

zkEVM has established itself as a blockchain infrastructure that is capable of performing transactions with smart contracts in a zero proof environment. Institutional investors can now tap into the proven ecosystem of Ethereum based blockchains with their robust security guarantees and transactional transparency. This is all at a lower cost and faster settlement time, as well as with potentially unlimited scaling capability.

Web3’s success is based on creating a “chain” of chains, which creates a seamless experience for users across the entire ecosystem. The ability to integrate multiple applications, including gaming, DeFi and permissioned institution platforms, is a key part of Web3’s liquidity advantage. Each of these require custom-tailored Blockchain architectures, with varying degrees of permission, privacy and security.

Developers can focus on optimizing a specific use case, as technical decisions regarding chain design are abstracted. The application layer can be enhanced to ensure that blockchain interactions are transparent. The end game is a broader blockchain ecosystem, where institutional investors can access the high liquidity and security of the Ethereum ecosystem as well as the zero-knowledge transactions.


Institutional Scale Liquidity Agregation

The zkEVM allows for seamless transactions, and liquid transfers between chains. The user can transfer liquidity from one chain to another and perform a DEX transaction on the other chain.

Liquidity at institutional scale is required. In the future, we’ll see tokenization products as well as more sophisticated financial instruments like derivatives. To make this possible, major technological innovations will be required. This is largely due to the consolidation of all liquidity within the space into a single layer that can efficiently manage these resources.


A Look to the Future

Blockchain technology offers 24/7 trading and access previously unavailable assets and vehicles. However, institutions need customizable chains and integration with legacy systems is a significant challenge. The capabilities of zkEVMs offer a new level of integration and security.

Hamilton Lane and Brevan Howard have recently become users the new real world asset tokenization platform Libra developed with the Polygon Chain Development Kit. Polygon CDK, permissionless software, allows developers to create new chains that have varying degrees decentralization, functionality and security.

The ecosystem will continue to move forward with the primary goal of enhancing the developer’s experience, and providing security and safety that is backed up by mathematical proof. This will lower operational costs, and provide ways to integrate legacy systems that support compliance and security.

Benjamin Schiller is the editor.