Venture Firm ParaFi Capital Tokenizes Assets on Avalanche Blockchain

Venture firm ParaFi Capital is tokenizing part of its over $1 billion in assets under management on the Avalanche blockchain, in collaboration with Securitize, a platform for real-world asset tokenization.

ParaFi, a significant player in the crypto space, recently raised $120 million to acquire stakes in digital asset funds and is known for its investments in real-world asset tokenization initiatives. Earlier this year, the firm participated in a $47 million funding round for Securitize, which was led by BlackRock. Now, ParaFi aims to leverage the tokenization technology directly.

Ben Forman, ParaFi’s founder and Managing Partner, stated that while they have been active investors in traditional asset tokenization, they want to be more than just passive stakeholders: “This is why we decided to tokenize a portion of our latest venture fund.”

Forman highlighted the benefits of tokenization, stating that it can enhance settlement processes, lower legal and administrative costs, and eventually provide advantages such as liquidity and programmability.

The tokenized fund will attract a new group of investors, expanding ParaFi’s existing institutional investor base, which includes endowments, foundations, family offices, and blockchain founders. Trading will occur on Securitize, enabling investors to utilize the platform’s lending and borrowing features.

Why Avalanche?

Avalanche was chosen for the tokenization process due to its Ethereum Virtual Machine compatibility, very fast transaction times, low fees, customizability, and a growing ecosystem of tokenized assets. Carlos Domingo, co-founder and CEO of Securitize, remarked on the importance of asset managers leveraging public blockchains for their products, seeing the partnership with ParaFi as a step forward in the Avalanche ecosystem.

Recently, Franklin Templeton expanded its on-chain money market fund of $419 million onto the Avalanche network alongside Arbitrum, Polygon, and Stellar. The Avalanche Foundation’s Vista initiative had previously allocated $50 million to promote the purchase of tokenized assets on the blockchain.

John Wu, President of Ava Labs, noted that innovation is critical for financial markets, citing advancements in the blockchain and tokenization of financial assets as essential for greater access and utility.

Securitize’s Expanding Tokenization Portfolio

Securitize has facilitated over $950 million in tokenized investments, working with major players like BlackRock, Hamilton Lane, and KKR across various asset classes.

BlackRock’s USD Institutional Digital Liquidity Fund, BUIDL, which was tokenized with Securitize on Ethereum, stands as the largest tokenized U.S. Treasuries fund, boasting $515 million in assets. Overall, the tokenized government securities market has expanded, now surpassing $2 billion in total assets under management, as per data from 21.co, the parent company of 21Shares.