Franklin Templeton Bets Big on Ethereum by Investing in Polygon. On April 13, 2021, Franklin Templeton announced that it had invested in Polygon, a scaling solution for Ethereum’s Layer 2. The funds were put into investments by Franklin Templeton’s venture fund. It looks for innovative companies and technologies that have the potential to disrupt existing markets. The total amount of money invested was not disclosed to the public.
Franklin Templeton’s investment in Polygon is attractive for more than one reason. For starters, it shows that big investors are becoming more interested in the Ethereum environment. Franklin Templeton Bets: It also talks about how Layer 2 options might be able to fix the Ethereum network’s problems with being able to grow. Additionally, it means that big financial companies are aware of the potential of blockchain technology and are ready to put money into new businesses and solutions. Roger Bayston, head of digital assets at Franklin Templeton, said, “Adding Polygon to the Franklin OnChain U.S. Government Money Fund makes it more compatible with the rest of the digital ecosystem, as seen through an Ethereum-based blockchain.”
According to Colin Butler, Global Head of Institutional Capital at Polygon Labs, “Franklin Templetonton is at the forefront” of tokenizing assets. Through the Benji Investments smartphone app, investors can purchase shares of FOBXX and store them in digital wallets. Franklin Templeton has a lengthy history with cryptocurrency: In addition to announcing a fund for digital assets two years ago, it also began digitizing shares for a money market fund on the Stellar blockchain in 2019. The cryptocurrency product FOBXX from Franklin Templeton invests money in buyback agreements, cash, and American government assets. It presently manages assets worth more than $270 million.
Understanding Ethereum Layer 2 Solutions
To realize the relevance of Franklin Templeton’s investment in Polygon, it is vital to understand Layer 2 solutions and how they function.
One easy way to explain what they are is as “layer two solutions,” which are scaling methods that work on top of the Ethereum network. Franklin Templeton Bets: By cutting down on the amount of data that needs to be received on the main Ethereum blockchain, they speed up and lower the cost of transfers. This means that the blockchain doesn’t have to store as much info. This is done by layer two solutions, which do most of the work in a place. It is not connected to the Ethereum network and then sends the result to the Ethereum network.
Rollups, state channels, and sidechains are a few examples of the many different types of Layer 2 solutions that are available. Combining sidechains and plasma chains is something that the Layer 2 solution Polygon does to achieve high performance.
Benefits of Ethereum Layer 2 Solutions
For the Ethereum network, layer two solutions have various advantages, including:
- Scalability: Layer 2 options can significantly increase the rate of the Ethereum network, which means that more transactions can be processed every second.
- Low Transaction Fees: Layer 2 solutions can drastically lower the cost of transactions on the Ethereum network by moving the majority of the processing off-chain.
- Faster Transaction Confirmation: Layer 2 solutions can speed up transaction confirmation on the Ethereum network, benefiting users.
- Increased Security: By lowering the quantity of data that needs to be processed on the primary blockchain, Layer 2 solutions can improve the security of the Ethereum network.
Impact of Franklin Templeton’s Investment Potential
Since Franklin Templeton invested in Polygon, the Ethereum ecosystem may be affected. By taking this step, Franklin Templeton is exhibiting the extent of its confidence in the viability of blockchain technology. The capability of investing in a Layer 2 solution has the potential to shake up traditional financial markets.
More institutional investors may want to learn more about the Ethereum community because of this investment. You might want to consider giving money to several blockchain-based companies. Ether, or ETH, is the coin that runs on the Ethereum network. Prices can go up because of this, making the web even more flexible. This is the first US-registered Fund to employ a blockchain for deals and share ownership tracking.
Risk Of Buying Polygon
Polygon, the Layer 2 scaling option for Ethereum, was once known as the Matic Network. Efforts are being made to improve its speed as well as its scalability and interoperability. Owing to the exceptional technological features, robust ecosystem, and astute relationships that it possesses. On the other hand, the cryptocurrency community has shown a significant amount of interest and adoption in Polygon. But just like any additional investment, Polygon has its share of potential risks. Nevertheless, potential investors need to be informed of this information before choosing.