In March digital asset bank Sygnum invested $50 million in Fidelity International’s Institutional Liquidity Fund and created a security token representing that amount. The tokenization was on behalf of client Matter Labs, the founder of ZkSync, that wanted to invest some of its treasury funds in the Fidelity fund and have a tokenized representation on the ZkSync chain. Now, Chainlink announced it is providing net asset value (NAV) data on chain.
While Chainlink notes it provides real time transparency, fund valuations are often updated infrequently. However, the data will be available on-chain immediately. What Chainlink also provides is extra security around the on-chain data feed.
The fund tokenization opportunity
Tokenized money market funds appeal to blockchain native firms as a safe, high yield place to park money, while keeping the funds on chain. However, this use case only scratches the surface of the potential benefits.
Native fund issuance is more cost efficient and blockchain can potentially expand the investor base. Fractionalization allows less wealthy accredited investors to access funds they otherwise could not afford. However, some of the most significant benefits come from tokenizing the underlying investments allowing for greater personalization in asset and wealth management.
“As we work to bridge the gap between traditional finance and the blockchain industry, setting standards is crucial for fostering ecosystem participation and strengthening collaboration across blockchain companies, regulated financial institutions, and asset managers,” said Fatmire Bekiri, Head of Tokenization at Sygnum.
Meanwhile, Sygnum has partnered other big names in the asset management sector, so potentially this NAV solution could be of interest to them. For example, in February Hamilton Lane issued a separate class of natively digital funds shares from its Luxembourg-based Global Private Assets (GPA) Fund in conjunction with fund administrator Apex. Sygnum offered the digital shares to its professional, institutional and corporate clients.
Chainlink’s on-chain NAV experience
It’s not the first time Chainlink has worked on NAV. The DTCC provides an existing NAV service, and in May shared details of a proof of concept to put the NAV data on chain. It also previously worked with the DTCC on a blockchain interoperability trial run by Swift.
