- Onyx by J.P. Morgan and Apollo Global collaborate under MAS Project Guardian to revolutionize asset management using blockchain technology.
- Proof-of-concept demonstrates automated portfolio management, inclusion of alternative assets, and interoperability with multiple blockchains.
- Benefits include increased efficiency, scalability, a broader investable universe, and improved user experience.
In a groundbreaking collaboration under the Monetary Authority of Singapore’s (MAS) Project Guardian, Onyx by J.P. Morgan and Apollo Global have unveiled a proof-of-concept (PoC) that marks a pivotal stride toward reshaping the asset and wealth management industry. This initiative showcases the transformative potential of blockchain technology, smart contracts, and tokenization in automating portfolio management.
Unveiling the Proof-of-Concept
The PoC demonstrates how blockchain technology can revolutionize portfolio management by automating the inclusion of alternatives (“alts”) alongside liquid assets in discretionary portfolios. Historically, traditional portfolios have faced challenges in allocating to alts due to operational complexities. This initiative builds upon the success of Onyx Digital Assets, processing $1B-$2B in tokenized assets daily and settling $950B+ in tokenized treasuries since launch.
Multi-Chain Future Preparation
Anticipating a multi-chain future, Onyx Digital Assets strategically leveraged interoperability protocols to tap into assets tokenized on blockchains beyond its Consensys Quorum platform. LayerZero connected Onyx Digital Assets with a permissioned Avalanche Evergreen Subnet, enabling subscriptions and redemptions for funds offered by WisdomTree, a leading asset manager and pioneer in fund tokenization.
Evergreen Subnets: Customized Blockchains for Institutional Applications
Avalanche Evergreen Subnets, tailored for institutional applications, offer features like EVM compatibility, permissioning at various levels, network privacy, and custom gas features. These subnets, built for industry-specific considerations, benefit from public network development, innovation, and native integrations, uniquely combining enterprise blockchain features.
Key Learnings and Benefits
The PoC participants reported several key learnings that validated significant benefits:
1. Inclusion of Alts in Discretionary Portfolios
Representing investments as tokenized funds standardizes and automates funding, order execution, and settlement for traditional and alternative asset classes. Automation through smart contracts simplifies the management of investments in alts, potentially allowing wealth managers to include more alts in client portfolios.
2. Efficiency and Scalability
Deploying smart contracts representing discretionary portfolios demonstrated the ability to programmatically link portfolios to models and automatically rebalance en masse. This ensures efficiency and scalability in portfolio management.
3. Broadening the Investable Universe
Interoperability protocols enabled wealth managers to access funds tokenized on various blockchain platforms without moving the underlying assets from their base ledger of record. This broadens the investable universe for wealth managers.
4. Improving the Blockchain User Experience
Innovative concepts like Biconomy’s Paymaster service abstract complexities in interacting with blockchains, including the need to pay for transaction fees. Interoperability solutions simplify accessing assets across disparate blockchains and managing blockchain private keys, enhancing the overall blockchain user experience.
Project Guardian’s Significance
Tyrone Lobban, Head of Onyx Digital Assets, emphasized the significant opportunity for the asset and wealth management industry presented by Project Guardian. The initiative showcases how the construction and management of discretionary portfolios could be revolutionized through the power of blockchain technology.
While the PoC is currently operationalized in a testnet environment, it represents a bold step toward enabling personalized investment portfolios at scale. The initiative promises vastly simplified and streamlined order execution and settlement processes, laying the foundation for a new era in asset and wealth management.
In conclusion, the collaborative effort between Onyx by J.P. Morgan and Apollo Global, under the Monetary Authority of Singapore’s Project Guardian, unveils a promising future for the asset and wealth management industry. The proof-of-concept demonstrates how blockchain, smart contracts, and tokenization can revolutionize portfolio management, addressing historical challenges and opening new avenues for inclusion. With key learnings validating benefits such as automated portfolio management, increased efficiency, a broader investable universe, and improved blockchain user experiences, this initiative marks a pivotal step toward reshaping the landscape of personalized and scalable investment portfolios. As the industry embraces these innovations, we stand at the forefront of a transformative era in asset and wealth management.
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