Tokenization on Polygon A real hype

Tokenization is when a digital representation of an asset is minted on the blockchain. Polygon Labs, for one, leads the industry with benefits like 24/7 liquidity, reduced costs, and new distribution channels. However, there is often a question about tokenization losing its charm in the traditional financial ecosystem. Polygon Labs has clarified that the concept is far from dying. As a matter of fact, there is a high chance that tokenization has just started gaining traction.

Citi has published a report saying there could be over $4 trillion in tokenized securities by 2030. Boston Consulting Group, or BCG, has drawn a more optimistic figure by stating that the number could be more than $16 trillion.

A reason tokenization is gaining hype once again is because it adds value propositions to the financial world innovatively. Some more benefits include better capital efficiency, wider asset exposure to more investors, and reduced intermediary costs.

Tokenization has also helped with real-world problems. Pokemon cards are one such example. They were immensely popular during the COVID-19 pandemic. However, the demand was pretty high, especially for the rare collection. This gave birth to the idea that since owning Pokemon cards is a greater joy, irrespective of their form, the best way is to capitalize on it and launch tokenization of the physical object. Offchain serves two purposes: that of a physical object and utility for buying and selling.

When Pokemon Cards are digitized, it enables users to seamlessly trade assets that are in demand. This also paves the way for DeFi integration.

The same fundamental principle applies to Government Bonds. They can be instantly traded at a time when demand is higher than usual. Thereby, providing a seamless interactive experience without skipping a beat, yet retaining the real-time value on paper. DeFi possibilities, when talking about Pokemon Cards, open up in the sense that the holder can take a loan against that asset. This would not be possible if the tokenization of assets was never implemented.

Polygon relies heavily on two elements to support tokenization:

• Interoperable environment
• Zero-knowledge bridge

Polygon believes that tokenization is the only way Web3 can scale the size of traditional finance. Top players in the industries who are tokenizing are Franklin Templeton, Hamilton Lane + Securitize, and Mirae Asset Securities, to mention a few.

Moving forward, Polygon has stated that it is working to deploy a ZK bridge to Ethereum as the first step in unifying the ecosystem. It is only then that there will be convenient interoperability and cross-chain transactions. Also, a unified ecosystem will give deeper liquidity to tokenized projects.

The development comes days after Polygon announced the launch of POL contracts on Goerli Testnet. POL is the upgraded token of the Polygon 2.0 architecture, often called the next-generation MATIC.