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RWA Market Needs to Grow 100X for Financial Institutions to Start Taking Care of Them: Polygon Labs Executives
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Tokenization of real-world assets (RWA) is growing rapidly, as RWA-related tokens increased by an average of 286% in the first quarter, a relationship by CoinGecko shows. Furthermore, the total market capitalization of tokenized US Treasuries recently reached an all-time high of $1.72 billion. second to the data aggregator RWA.xyz. However, the global head of institutional capital at Polygon Labs believes that this market would have to grow 50 to 100 times, for traditional operators to start worrying about it.
“Even if it’s a 50x growth over last year, $1.7 billion doesn’t interest me at all. For it to be relevant and for me to care about this market, it has to be 50 to 100 times what it is right now for me to actually want to spend my time even trying to care about this and trying to enable and generate and create something,” shared Colin Butler with Crypto Briefing.
Butler points out that a billion dollars for companies like BlackRock is “just nothing.” Nonetheless, he expects the RWA market to get to that level soon, although he doesn’t know what “soon” might mean as a time horizon. “You mean twelve months? I do not know. Does that mean 24 months? I do not know. But I believe that huge progress will happen in the next three months.”
The optimism expressed by the Polygon Labs executive is linked to the fact that the main players are tackling “creative ways” that will be known in the next two or three months. “I think it paints a vision of clear next steps for how this thing could get really big.”
Interoperability and privacy
Polygon technology is currently used by some of the players tokenizing US Treasury securities, such as Franklin Templeton, Ondo, and Swarm. Roger Bayston, head of digital assets at Franklin Templeton, She said that Polygon allows its tokenized fund to be compatible with Ethereum-based blockchains, functioning as a gateway.
Butler highlighted this role for Polygon technology adding that AggLayer will play a significant role in unifying liquidity for different traditional financial institutions entering the blockchain space.
“We can connect liquidity across multiple chains through an aggregation layer using zero-knowledge technology, thus creating unified liquidity across the entire blockchain space and settling on Ethereum. And I think this is the infrastructure that will underpin much of global finance in the future,” Butler explained.
AggLayer, short for Aggregation Layer, is a phase in Polygon’s roadmap where several layer 1 blockchains will be connected by touching the same layer. As a result, various networks will be able to communicate seamlessly, which is what most institutions entering the blockchain industry are looking for.
“This is what I see currently at the center of all these conversations. This is what I currently consider the standard for traditional finance and connectivity for financial transactions,” he added. This is also one of the biggest current challenges for Polygon, as they need to avoid liquidity being trapped in different silos without connectivity.
In particular, the use of zero-knowledge technology is also important for financial institutions approaching blockchain, as it can ensure the privacy of their transactions and this is something they are aiming for as well. “It is, by and large, in the hidden jobs at the world’s largest global financial institutions. “
Therefore, Polygon and other Web3 players are in the process of convincing traditional institutions that the blockchain sector currently offers interoperability, privacy and scalability.
“What has been announced publicly represents about 1% of what will happen in the next twelve months in terms of the impact of global finance. I would say there is a wave of institutional capital about to flow into the space, based on the idea that everyone is trying to transition to this technology over time,” concludes Butler.
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