Venture firm ParaFi Capital is tokenizing a portion of its $1 billion+ asset management assets. avalanche Abox
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We developed the blockchain in collaboration with Securitize, a real-world asset tokenization platform.
ParaFi is a prominent investor in the crypto industry, having recently raised $120 million to buy stakes in other digital asset funds. It is also one of the largest investors in real-world asset tokenization projects and infrastructure. In May, it participated in a $47 million strategic funding round led by BlackRock in Securitize. But the venture now wants to use the technology itself.
“ParaFi has been one of the most active investors in companies focused on tokenizing traditional assets globally. However, our firm does not want to be a passive investor in this technology. We want to use it ourselves. That’s why we have decided to take the first step by tokenizing a portion of our latest venture fund,” Ben Forman, ParaFi’s founder and managing partner, said in a statement Thursday.
“Tokenizing private market strategies can enable streamlined settlement processes, reduce legal and administrative costs, and provide a wide range of benefits in the long term, including liquidity, programmability, and cross-margining,” Forman added.
The tokenized fund is designed to open ParaFi’s venture strategy to a new group of investors, expanding the existing institutional investor base including funds, foundations, family offices, and blockchain founders. It will be traded on Securitize, and investors will also be able to utilize the platform’s borrowing and lending capabilities.
Why Avalanche?
According to the statement, Avalanche was selected for the tokenization process due to its compatibility with the Ethereum Virtual Machine, sub-second transaction finality, low fees, customizability, and the growing tokenized asset ecosystem on the network.
“We are proud to partner with ParaFi to tokenize a portion of their fund on the Avalanche blockchain,” said Carlos Domingo, Co-Founder and CEO of Securitize. “It is increasingly beneficial for asset managers to move their products to public blockchains, and this fund represents another evolution for the Avalanche ecosystem.”
Last month, asset manager Franklin Templeton expanded its $419 million on-chain money market fund to the Avalanche network, joining Arbitrum, Polygon, and Stellar. The Avalanche Foundation’s Vista initiative also allocated $50 million last year to purchase tokenized assets minted on the blockchain, encouraging tokenization on the network.
“Financial markets demand innovation, and we have recently seen significant leaps forward in the evolution of financial assets leveraging blockchain and tokenization as enablers for greater accessibility and usability,” said John Wu, President of Ava Labs. “ParaFi and Securitize continue to innovate within the ecosystem, and we are excited to see the Avalanche platform support ParaFi’s first steps in tokenizing fund interests.”
Securitize’s Growing Tokenization Portfolio
Securitize is currently facilitating over $950 million in tokenized investments, including tokenizing funds across asset classes with BlackRock, Hamilton Lane, KKR, and more.
BlackRock’s USD Institutional Digital Liquidity Fund, BUIDL, has been tokenized on Ethereum in partnership with Securitize and is currently the largest tokenized US Treasury fund on the market, with $515 million in assets under management.
According to data compiled by asset management firm 21.co (parent company of Bitcoin exchange-traded fund (ETF) provider 21Shares), total assets managed in tokenized government securities, including funds for Franklin Templeton’s Avalanche and other chains, are now a market exceeding $2 billion.
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