UK investment firm Abrdn is taking another major leap into the digital asset space by partnering with enterprise network Hedera.
The asset manager, which oversees $579 billion in assets, will join the likes of Google, FIS, Standard Bank and Nomura on the Hedera Governing Council.
“We're really long-term investors,” said Duncan Moir, senior investment manager at Abrdn, in an interview with The Block. “We see this as being a very long-term story for us and for the industry.”
What is the Hedera network?
Hedera is an enterprise DLT stack that uses the hashgraph consensus mechanism for transactions.
The Hedera Governing Council run the consensus nodes, which determine the transaction ordering. They also manage the software and vote on decisions related to the network.
Many major industry players from the council are building on the network. IBM uses Hyperledger Fabric in its solutions, while digital workflow company ServiceNow is integrating Hedera into its Now platform.
Despite this mainstream interest, general adoption on the chain remains light. Total value locked (TVL) – a figure which includes liquid staking – amounts to around $103 million, according to DefiLlama. By contrast, Ethereum had around $39 billion in TVL and Solana has around $1.7 billion at the time of writing.
Selecting Hedera wasn’t a difficult decision for Abrdn, Moir said. The chain aligns with the company’s values in terms of both innovation and sustainability.
Researchers at the University College London found Hedera to be the most sustainable proof-of-stake network compared to others like Algorand, Cardano, Ethereum, Tezos and Polkadot. However, the chain compromises on some components of decentralization through its governing council.
The enterprise grade solution sits well with the institutional community, he added.
Shaking up the investment industry
Abrdn, formerly known as Standard Life Aberdeen, is a titan in the UK investing industry. It was founded in 1825 and offers a range of investment services focused on investment solutions, tools and technologies for financial advisers and a personal wealth business.
It sees the investment industry as ripe for a shake up and that blockchain technology might be the key to creating this shift.
“I don't think anybody is really, let's say, full service. They're very much focused on specific things and they've been dipping their toes in,” Moir said. “We want to go about it a bit more comprehensively.”
The company sees potential in using Hedera to tokenize investment funds, which can then be listed on digital exchanges. Tokenization will enable a secondary market for funds that have less frequent redemptions and create opportunities for better price discovery, Moir said.
It’s also one step toward a fully on chain process, Moir added.
Abrdn isn’t the only firm dabbling in investment fund tokenization. Investment manager Hamilton Lane, which has $832.5 billion in assets under management, tokenized three funds this week in partnership with Securitize. Private equity giant KKR has also been exploring tokenizing funds on the Avalanche blockchain.
Leading the way in digital assets
Abrdn wants to go deeper than just tokenization instead exploring how it can help shape the investment industry with blockchain technology.
The firm started dipping its toes into the digital assets space for a few years ago, first exploring crypto as an asset class within hedge funds.
It then plunged into the deep end earlier this year with a significant stake in digital assets exchange Archax, creating a route for investors to access opportunities within digital securities as well as connect existing offerings through tokenization.
Moir expects that Abrdn will announce more about the firm’s plans in the digital assets space towards the end of this year.
Correction: This story has been updated to amend TVL figures, clarify Hedera's technology stack and IBM's use of Hyperledger Fabric.
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