R3 and Solana are building an on-chain institutional investor marketplace: the increasing trading volume is set to reshape the future of capital allocation.

R3, a company building financial infrastructure utilizing blockchain technology, has established a strategic partnership with the Solana network to realize on-chain capital markets for traditional financial institutions. This shift is not merely a choice of blockchain but signifies a fundamental strategic transformation—providing a stable yield environment on-chain through the tokenization of real assets, which meets the demands of institutional investors.

Market-Driven Shift: Convergence on Solana

About a year ago, R3 executed a strategic reset. The key question the company posed was straightforward: which network is optimal for fully migrating customer assets on-chain? During this process, the company considered multiple Layer 1 and Layer 2 networks. The reasons for ultimately choosing Solana include its network structure, throughput, and design focused on transaction efficiency.

R3 co-founder Todd McDonald describes Solana as “the Nasdaq of blockchain.” This means it is not just an experimental platform but a specially designed platform for high-performance capital markets. According to his view, the long-term conviction that all markets will eventually migrate to on-chain markets underpins this decision.

Trading Volume and Liquidity Driving Institutional Interest

The Solana ecosystem has seen remarkable growth over recent years. Latest data shows that Solana’s DeFi sector holds over $9 billion in total value locked (TVL), making it one of the major networks excluding Ethereum and its Layer 2 solutions. Particularly in terms of trading volume and active wallets, Solana demonstrates rapid growth in high-frequency trading and application utilization.

The reason for R3’s focus on Solana is a market participant mindset shift. There is a clear move away from traditional speculative trading toward institutional investors seeking stable yields. The company is positioning private credit and trade finance as core initiatives to meet this demand.

Overcoming Liquidity Constraints: The Fundamental Challenge of On-Chain Capital Markets

Todd McDonald of R3 repeatedly emphasizes that the key is not tokenization itself but liquidity. While DeFi’s core functions are borrowing and lending, true value is created only when tokenized real assets are treated as collateral equivalent to native crypto assets.

Currently, limited liquidity and strict permission regimes hinder on-chain use of products for institutional investors. In traditional finance, liquidity for private credit is often on a quarterly or reservation basis. Implementing this on-chain requires balancing returns, liquidity, and composability.

R3’s approach starts from existing demand. Many sophisticated investors seek stable yields uncorrelated with the crypto market, and product designs are being developed with this demand in mind. The target yield is roughly 10%, which is believed to appeal to on-chain investors in the crypto asset market.

Private Credit and Trade Finance: Expanding Opportunities

R3’s prioritized products focus on private credit, citing high yield potential and maturity in existing off-chain markets.

At the same time, R3 is paying close attention to trade finance. McDonald points out that supply and demand in this market are highly elastic. If DeFi capital allocators fully enter, the supply from traditional finance could surge dramatically. Although the market size is currently large, issues such as opacity, jurisdictional fragmentation, bespoke contracts, and inconsistent data standards hinder risk pricing and stall liquidity expansion.

To address these challenges, R3 collaborates with major asset management firms and a wide range of asset holders from manufacturing to shipping companies. Tokenization is not just digitalizing existing products but redesigning them to be investable, tradable, and combinable on-chain.

Corda Protocol: Infrastructure Integrating Trading Volume and Liquidity

The newly announced Corda protocol by R3 is designed as a direct response to these challenges. Its native liquidity layer enables instant swaps of assets with low or restricted liquidity, facilitating collateral use at scale.

The protocol integrates with top-tier curators and lending protocols, supporting borrowing and leverage position building. Since its announcement, Corda has attracted over 30,000 pre-registrations, indicating strong market interest.

Accelerating On-Chain Capital Movement: Toward Off-Chain Capital Inflows

R3’s vision is to migrate hundreds of billions of dollars’ worth of real assets on-chain. Currently, most yields for institutional investors remain off-chain, and the full-scale on-chain capital movement is still in its early stages.

Their approach is not to artificially stimulate demand but to start from existing on-chain demand. As market cycles progress, many sophisticated investors are shifting toward stable yields with low correlation, and product development is aligned with this trend.

McDonald states, “Our goal is to finally bring Wall Street-quality assets on-chain in a rational way through DeFi, and to significantly bring off-chain capital into on-chain markets.” The partnership with Solana that R3 is building is a crucial step toward this realization. Going forward, the extent of growth in on-chain trading volume and the extent to which traditional finance will transition into digital capital markets will be closely watched.