After greater than a decade constructing infrastructure for exchanges, monetary establishments and central banks, R3 noticed the market beginning to bend in a brand new route. A couple of 12 months in the past, the agency initiated a strategic reset, asking a easy however basic query: what’s the easiest way for purchasers to maneuver belongings absolutely onchain?
Todd McDonald, R3’s co-founder, mentioned that course of coincided with a deep assessment of the blockchain panorama.
“We spoke to primarily all of the layer ones and layer twos,” he defined in an interview with CoinDesk, as R3 evaluated the place institutional capital markets have been most definitely emigrate. That work culminated in a strategic partnership with the Solana Basis, introduced final Might on the blockchain’s Speed up convention, he mentioned.
A layer 1 community is the bottom layer, or the underlying infrastructure of a blockchain. Layer 2 refers to a set of offchain techniques or separate blockchains constructed on high of layer 1s.
The choice, McDonald mentioned, was grounded in a long-term conviction that every one markets will in the end develop into onchain markets.
“We expect Solana is the very best community for that future,” he mentioned, pointing to its construction, throughput and trading-first design. R3 got here to see Solana as “the Nasdaq of blockchains,” a venue purpose-built for high-performance capital markets quite than basic experimentation.
By means of its Corda blockchain platform, R3 helps greater than $10 billion in belongings and works with contributors together with HSBC, Financial institution of America, the Financial institution of Italy, the Financial Authority of Singapore, the Swiss Nationwide Financial institution, Euroclear, SDX and SBI, he mentioned.
Tokenization, the method of representing real-world belongings equivalent to shares and bonds as digital tokens tradable on blockchain networks, has emerged as one of many key use instances drawing rising curiosity and funding from conventional monetary establishments.
Exercise in decentralized finance (DeFi) stays focused on a handful of chains, with Ethereum nonetheless the biggest by complete worth locked (TVL), reflecting its deep liquidity, broad developer ecosystem and institutional adoption. Nonetheless, Solana has emerged as one of many fastest-growing DeFi platforms, benefitting from excessive throughput, ultra-low charges and quickly increasing consumer engagement.
Latest information exhibits Solana’s DeFi ecosystem holding greater than $9 billion in TVL, making it one of many high networks outdoors Ethereum and its Layer 2s, and in some durations rivaling the mixed DeFi exercise of main Ethereum L2s.
Solana’s mannequin has pushed considerably increased onchain transaction quantity and energetic wallets, particularly for buying and selling and high-frequency functions, at the same time as Ethereum retains general TVL dominance and the biggest share of institutional belongings.
Since that pivot final Might, R3 has spent the previous eight to 9 months nearly fully centered on one downside: methods to tokenize the following trillion {dollars} of belongings and produce them onchain in a manner that really works for buyers. Which means not simply issuing tokens, however designing merchandise that present onchain allocators need to use, and that conventional buyers can develop into over time.
McDonald mentioned R3 is already seeing a shift in deal with Solana towards capital formation and capital allocation, quite than pure hypothesis.
Liquidity, McDonald argued, is the actual bottleneck for tokenized real-world belongings.
“The beating coronary heart of DeFi is borrow and lend,” he mentioned. The breakthrough second will come when a tokenized real-world asset could be handled as credible collateral on equal footing with native crypto belongings. At the moment, restricted liquidity, and in some instances inflexible permissioning, discourages DeFi buyers from participating meaningfully with these merchandise.
Reasonably than forcing demand, R3 is ranging from the place onchain urge for food already exists. McDonald pointed to boom-and-bust cycles and notes that many subtle buyers at the moment are searching for yield that’s extra secure and fewer correlated to crypto markets.
“We’re making an attempt to convey these belongings onchain and package deal them in a DeFi-native manner,” he mentioned, whereas working carefully with present allocators to enhance entry.
The agency’s asset focus displays that technique. R3 is prioritizing higher-yielding merchandise, with personal credit score as a core pillar.
“You want a headline yield to get consideration,” McDonald mentioned, noting that returns round 10% are likely to resonate strongly with onchain buyers. On the identical time, these merchandise should stability return, liquidity and composability; a problem given that non-public credit score liquidity is commonly quarterly or “by appointment” in conventional markets.
Past personal credit score, R3 sees important alternative in commerce finance, the place McDonald mentioned demand and provide are extremely elastic.
“If DeFi allocators actually leaned into commerce finance, the provision from the normal world is gigantic,” he explains, pointing to the sheer scale of the market and the potential for sustainable returns.
Commerce finance is notoriously opaque, spanning fragmented jurisdictions, bespoke contracts and uneven information requirements, which makes danger tough to cost, belongings arduous to standardize and liquidity gradual to scale regardless of the market’s monumental dimension.
On the issuer aspect, R3 is already working with household-name funding managers, alongside an extended tail of asset house owners, from factories to delivery companies, who see tokenization as a brand new distribution channel and a brand new mannequin for capital formation. The intention is not only to reflect off chain merchandise, however to revamp them so they’re investable, tradable and composable onchain.
Enhancing liquidity will even require extra danger capital deployed instantly onchain. McDonald mentioned that whereas there are massive native DeFi gamers as we speak, participation stays slim.
“We want extra variety of stability sheets prepared to place capital to work,” he mentioned, alongside extra versatile redemption mechanisms that give buyers real alternative.
That imaginative and prescient underpins R3’s newly introduced Corda Protocol. Constructed natively on Solana, the protocol introduces professionally curated, real-world-asset-backed yield vaults that difficulty liquid, redeemable vault tokens. Launching within the first half of 2026, the vaults are designed to offer stablecoin holders entry to tokenized debt devices, funds and reinsurance-linked securities, with out sacrificing DeFi-style liquidity or composability.
“Property obtainable by way of Corda will probably be supported by protocol-native liquidity layer, enabling instantaneous swaps out of in any other case illiquid or liquidity-constrained belongings for onchain buyers. This unlocks the usage of the belongings as collateral at scale. The protocol will probably be built-in with high curators and lending protocols to energy borrowing and levered place constructing,” McDonald mentioned.
In an indication of sturdy early demand, Corda has acquired greater than 30,000 pre-registrations up to now.
He framed the trouble as a direct response to a rising hole out there. As DeFi buyers transfer away from purely speculative methods, demand is rising for secure, diversified yield that’s uncorrelated with crypto markets. Whereas a whole bunch of billions of {dollars} in real-world belongings at the moment are represented onchain, most institutional-grade yield nonetheless forces capital to maneuver off chain.
“Our objective is to shut that hole,” McDonald mentioned. “To convey Wall Avenue-quality belongings onchain in a manner that lastly is sensible for DeFi, and to convey off chain capital into onchain markets at scale.”
Learn extra: ‘DeFi is useless’: Maple Finance’s CEO says onchain markets will swallow Wall Avenue