The Challenge
Franklin Templeton faced a decision that many asset managers will soon encounter: whether to tokenize a major money market fund and which blockchain infrastructure could handle institutional-grade transaction volumes without excessive fees.
The firm managed a $594 million tokenized money market fund. Their existing blockchain infrastructure couldn't meet the speed and cost efficiency their institutional clients demanded. Ethereum, the dominant tokenization platform, processes only 15 to 30 transactions per second. For a fund handling hundreds of millions in assets with frequent activity, this creates bottlenecks.
Additionally, Ethereum's transaction fees made some operations economically impractical. When competing on basis points, paying dollars per transaction undermines the benefits of tokenization.
Regulatory and Operational Constraints
Franklin Templeton operated under the same constraints as all money market funds. They needed:
- Real-time settlement to meet investor expectations shaped by 24/7 crypto markets.
- Low transaction costs to ensure tokenization reduced expenses rather than added new ones.
- Scalable infrastructure for fund growth or additional product tokenization.
- Custodial and security protocols that satisfied institutional risk committees.
The broader market context was also important. Joel Hugentobler, Analyst of Cryptocurrency at Javelin Strategy & Research, notes that tokenization's growth rates range from 400% to 4000%. The number of companies launching on-chain funds has surged. Franklin Templeton wasn't acting in isolation; they were positioning themselves in a rapidly maturing market.
Traditional financial infrastructure is outdated. Moving to tokenized assets meant rebuilding settlement, custody, and transaction processing on new rails.
The Approach Taken
Franklin Templeton moved the entire $594 million fund onto Solana.
The technical rationale was clear: Solana handles around 1,000 transactions per second, far surpassing Ethereum's throughput. Transaction fees on Solana are often under $0.01, making frequent operations economically viable.
This decision wasn't just about current performance. Anza, the firm managing Solana's Agave validator client, has a roadmap targeting one million transactions per second. Franklin Templeton was betting on future infrastructure capacity.
The decision also reflected a broader shift in institutional sentiment. Citadel Securities, once avoiding crypto, now serves as a market maker on platforms like Coinbase. When major market players start building on-chain infrastructure, it signals that tokenization is now an operational priority.
Results and Measurable Outcomes
The fund now operates on infrastructure that processes transactions much faster and at a fraction of the cost. While Franklin Templeton hasn't detailed cost savings, the economics are clear: sub-penny transaction fees versus Ethereum's higher costs mean more basis points preserved for investors.
The move positioned Franklin Templeton in a market with significant growth potential. Tokenization of private credit and treasuries continues at high rates, with opportunities for assets not yet on-chain.
The infrastructure investment also prepared Franklin Templeton for 24/7 trading. Unlike traditional business hours, tokenized assets can trade around the clock, which is essential for liquidity.
What They Would Do Differently
Franklin Templeton hasn't publicly stated what they might change. However, their decision highlights their priorities: transaction throughput and cost over network effects and ecosystem maturity.
Ethereum has more developers and deeper institutional relationships. Choosing Solana meant accepting tradeoffs for performance. Other firms might prioritize differently based on their risk tolerances.
Takeaways for Your Team
Start with a cost-benefit analysis that includes infrastructure trajectory. If you're evaluating blockchain platforms for tokenization, model transaction volumes over 18 to 36 months. A platform that handles your current load might not suffice after you tokenize more products.
Transaction fees are strategic. When competing on basis points or justifying tokenization ROI, per-transaction costs are crucial. Calculate your monthly transaction volume, multiply by fee estimates, and present the difference to your steering committee.
Custodial and security infrastructure has matured. Hugentobler notes that custodians have significantly developed their infrastructure for institutional players. If your last blockchain evaluation was 18 months ago, request updated SOC 2 reports and penetration test results.
Build your tokenization roadmap now. Franklin Templeton's move reflected years of assessment and risk evaluation. Firms that wait lose first-mover advantages in a rapidly growing market. Your roadmap should include which assets to tokenize, which platforms to evaluate, and what regulatory guidance to monitor.
You don't have to build this alone. Companies with blockchain experience now serve institutional clients. Use their expertise rather than developing in-house capabilities from scratch. Your advantage isn't building a validator node; it's understanding how tokenization changes your product economics and client experience.
The infrastructure financial institutions use is outdated. Tokenization isn't about trends; it's about rebuilding settlement, custody, and transaction processing for a digital economy. Franklin Templeton's decision shows what that rebuild looks like when prioritizing performance and cost.
