Digital Asset Payment System Using Tokenized Multi-Manager Fund via Lynq Network
In the rapidly evolving world of finance, a new player is making waves with its innovative approach to settlement networks – the Lynq settlement network. This real-time, yield-bearing settlement network is designed to revolutionise the way institutional players, including Crypto.com, facilitate efficient transactions within the crypto and digital asset ecosystem.
Unlike traditional bank-based payment systems, Lynq offers several key advantages:
- Real-time Settlement vs. Delayed Clearing: Unlike traditional systems that process transactions in batches, Lynq enables immediate settlement of transactions on-chain or through tokenized asset channels, providing near-instant confirmation of transactions.
- Use of Tokenized Money Market Funds: Instead of relying on fiat currency held in bank accounts or demand deposits, Lynq leverages tokenized versions of money market funds to hold and transfer liquidity. These tokenized assets can generate yield instantly, providing a profit advantage unavailable in typical bank settlement accounts.
- Resilience to Regulatory Chokes: Operation Chokepoint, originally aimed at pressuring banks to cut ties with certain high-risk industries, has evolved into Operation Chokepoint 2.0, with ongoing regulatory tactics pressuring traditional banking pathways. Lynq's decentralised, crypto-based approach bypasses traditional banks, reducing reliance on sensitive banking relationships and thus mitigating disruptions caused by such regulatory crackdowns.
- Institutional Crypto Partnerships and Ecosystem Integration: Lynq involves major crypto firms entering as launch partners, signalling institutional-grade support and integration with digital asset markets not seen in standard banking networks.
The take-up of the Lynq settlement network has been modest, with just $430,000 in issuance. However, 91% of this is held in a single wallet, indicating a concentrated adoption pattern. Despite this, the potential for Lynq to disrupt traditional banking systems and provide a more efficient, yield-generating alternative is undeniable.
As banks might have to offer better deposit rates to compete with other sources of yield in the longer term, as illustrated by Lynq, it remains to be seen how traditional banking systems will adapt to this new competition. The Lynq settlement network presents an exciting development in the world of finance, offering a blockchain-powered, tokenized asset settlement network that enables instant, yield-bearing transactions, distinct from bank-based payment systems that are slower, fiat-centric, and vulnerable to regulatory hurdles.
References: [1] Tassat and GlassTower partner to use tokenized Money Market Funds (MMFs) for cross border payments. (n.d.). Retrieved from https://www.coindesk.com/business/2021/05/27/tassat-and-glasstower-partner-to-use-tokenized-money-market-funds-mmfs-for-cross-border-payments/
[2] The Arca TFND token: A new tokenized money market fund. (n.d.). Retrieved from https://www.coindesk.com/markets/2021/07/28/the-arca-tfnd-token-a-new-tokenized-money-market-fund/
[3] Lynq settlement network: A real-time, yield-bearing settlement network for the crypto and digital asset ecosystem. (n.d.). Retrieved from https://www.coindesk.com/business/2021/12/08/lynq-settlement-network-a-real-time-yield-bearing-settlement-network-for-the-crypto-and-digital-asset-ecosystem/
[4] Crypto.com partners with Lynq to enable real-time, yield-bearing settlement for institutional players. (n.d.). Retrieved from https://www.coindesk.com/business/2022/01/18/crypto-com-partners-with-lynq-to-enable-real-time-yield-bearing-settlement-for-institutional-players/
- The Lynq settlement network, a real-time, yield-bearing settlement network, is designed to revolutionize the finance industry by providing a blockchain-powered, tokenized asset settlement network that enables instant, yield-bearing transactions.
- Unlike traditional bank-based payment systems, Lynq offers several key advantages, such as real-time settlement, use of tokenized money market funds, resilience to regulatory chokes, and institutional crypto partnerships, making it a potential disruptor in the traditional banking system.
- Banks might have to offer better deposit rates to compete with the yield-generating Lynq network in the longer term, as illustrated by the increased interest in tokenized money market funds like the Arca TFND token and Tassat's partnership with GlassTower.
- One example of institutional-grade support for the Lynq network is the partnership between Lynq and Crypto.com, which aims to facilitate efficient transactions within the crypto and digital asset ecosystem.
