Solana versus Layer 2s: Why R3 is betting on the Solana blockchain for institutional tokenization

R3’s decision to choose Solana as its strategic backbone signals a profound shift in how financial institutions view blockchain infrastructure as the optimal foundation for digitalized capital markets. While Layer 2 solutions built on Ethereum dominate in total value locked (TVL), Solana has emerged as the preferred platform for high-frequency trading, rapid settlement, and negligible costs—critical features for high-yield institutional assets.

After more than a decade developing infrastructure solutions for exchanges, central banks, and global financial institutions, R3 faced a strategic question: in a market where hundreds of billions in real-world assets are beginning to migrate onto the chain, which blockchain offers the best conditions for these assets to truly serve institutional investors?

Solana as the preferred platform: beyond comparison with Layer 2s

Ethereum and its Layer 2 solutions still lead in total value locked (TVL), maintaining a significant advantage in application diversity and liquidity depth. However, Solana has built a remarkably different ecosystem. With over $9 billion in TVL and the capacity to process thousands of transactions per second at virtually zero costs, Solana has created an environment where high-frequency trading, instant liquidations, and complex operations become feasible.

Todd McDonald, one of R3’s founders, explained in an interview that the company evaluated nearly all major Layer 1 and Layer 2 options available. The conclusion was that Solana offered not only technical superiority but a philosophical vision aligned with institutional capital markets: “We saw Solana as the Nasdaq of blockchains—a infrastructure built specifically for high-performance markets, not for speculative experimentation.”

This strategic choice, announced in May 2025 at the Accelerate conference, reflects the conviction that all markets will eventually migrate to on-chain networks. But not just any network: Solana has emerged as the preferred destination for institutions seeking to combine liquidity, speed, and minimized operational costs.

The real bottleneck: liquidity, not tokenization

R3 observed something crucial after months analyzing the tokenized real-world assets market: the problem isn’t converting assets into tokens—that technology has been solving for years. The real challenge is creating enough liquidity for these assets to function as collateral in DeFi protocols and as viable investment instruments for on-chain allocators.

This means going beyond issuing a token and completely redesigning how that asset behaves on-chain. An asset yielding 10% annually but with zero liquidity and impossible to be used as collateral in loans remains unattractive. The beating heart of DeFi is lending and credit—and any institutional asset that wants to participate in this economy must operate within these mechanisms.

Today, most tokenized assets face severe restrictions. Limited liquidity, strict permissions, incompatibility with lending protocols, and the inability to be composable with other DeFi instruments create barriers to investment. McDonald emphasized that: “The decisive moment will come when a tokenized real-world asset can be treated as reliable collateral, fully integrated into the DeFi economy.”

R3’s strategy: private credit and trade finance

Instead of forcing demand by creating products no one wants, R3 decided to start from where on-chain appetite already exists. Among sophisticated investors and funds, there is a growing demand for stable yields less correlated with cryptocurrency market volatility.

The company is prioritizing two pillars of high-yield assets:

Private credit: instruments offering returns around 10% attract on-chain allocators accustomed to speculative yields. The challenge is structuring these products to balance attractive returns, on-demand liquidity (when possible), and compatibility with existing DeFi protocols. In traditional markets, private credit offers “scheduled” liquidity—quarterly, semiannual. R3 aims to redesign these products for on-chain environments.

Trade finance: this is a huge yet underexplored market in DeFi. Trade finance moves trillions globally but remains opaque, fragmented across jurisdictions, with customized contracts and irregular data standards. For traditional institutions, tokenization represents a new distribution channel and an alternative capital formation model. For DeFi allocators, the demand for these products could be enormous.

Corda Protocol: transforming illiquid assets into DeFi instruments

Built natively on Solana, the Corda Protocol embodies this strategy. Launching in the first half of 2026, it will offer a “yield vault” structure backed by professionally selected real assets, issuing redeemable and tradable tokens.

Holders of stablecoins will have direct access to tokenized debt instruments, reinsurance funds, and bonds, all maintaining liquidity and composability compatible with DeFi standards. The protocol integrates with leading curators and lending protocols, enabling these assets to immediately function as collateral in leveraged operations.

In a sign of the intense demand, Corda Protocol already has over 30,000 pre-registrations. The market response validates the thesis that investors are ready for this transition.

The future: when Wall Street and DeFi finally converge

R3 already works with renowned investment managers and asset owners—from factories to shipping companies—who see tokenization as a real opportunity. The company supports over $10 billion in assets through its traditional Corda platform, with clients like HSBC, Bank of America, Bank of Italy, Monetary Authority of Singapore, Swiss National Bank, and Euroclear.

But the real opportunity lies in bringing this institutional expertise to scale on Solana. McDonald made the ambition clear: “Our goal is to bridge the gap between Wall Street and on-chain markets. To bring institutional-quality assets onto the blockchain in a way that finally makes sense for DeFi, and to bring off-chain capital onto on-chain networks at an unprecedented scale.”

For this to work, more diverse players willing to deploy capital on-chain are needed, along with more flexible redemption mechanisms that genuinely offer investors options between liquidity and yield. Solana’s choice was not just technical—it was strategic. While Layer 2s continue to dominate in total value locked, Solana has proven to be the environment where institutions can operate with the speed, efficiency, and cost-effectiveness that modern capital markets demand.