ParaFi Capital has announced a strategic partnership with Securitize, a platform specializing in real-world asset tokenization. This collaboration will see a segment of ParaFi’s extensive $1 billion asset portfolio being tokenized on the Avalanche blockchain.
Tokenization Offers Major Benefits
ParaFi Capital, recognized for its significant investments in the cryptocurrency sector, is a prominent supporter of asset tokenization. Ben Forman, ParaFi’s founder and managing partner, highlighted several advantages of tokenizing private market assets. These benefits include more efficient settlement processes, reduced legal and administrative expenses, as well as enhanced liquidity and programmability.
Forman emphasized that ParaFi is not just an investor but aims to actively engage with this technology. “Our goal is not only to invest in asset tokenization but also to implement it ourselves. Hence, we are starting with the tokenization of a portion of our latest venture fund,” he stated.
Avalanche’s Tokenization Ecosystem Grows
The decision to utilize Avalanche for this initiative is attributed to its compatibility with the Ethereum Virtual Machine, rapid transaction finality, minimal fees, and expanding ecosystem. The tokenized portion of ParaFi’s fund will be available on the Securitize platform, which offers diverse borrowing and lending options. This move aims to broaden ParaFi’s investor base beyond its current institutional network.
Carlos Domingo, co-founder and CEO of Securitize, expressed enthusiasm about the partnership. “We are thrilled to work with ParaFi to tokenize part of its fund on the Avalanche blockchain,” Domingo said.
Avalanche’s Tokenization Ecosystem Expands
Avalanche’s tokenization landscape is advancing with significant milestones, including Franklin Templeton’s $419 million expansion of its on-chain money market fund onto the network. The Avalanche Foundation’s Vista initiative has also contributed $50 million to support asset tokenization efforts on the platform.
John Wu, president of Ava Labs, remarked on the evolving financial markets, stating, “We are witnessing remarkable progress in financial assets through blockchain and tokenization innovations.”
Securitize has a strong track record, facilitating over $950 million in tokenized investments. The firm has collaborated with major entities such as BlackRock and KKR. BlackRock’s USD Institutional Digital Liquidity Fund, tokenized with Securitize on Ethereum, holds $515 million, making it the largest tokenized U.S. Treasuries fund.
Recent reports from McKinsey & Company and the Global Financial Markets Association (GFMA) forecast substantial growth in tokenized financial assets. McKinsey predicts a $2 trillion market by 2030, while GFMA estimates the value of tokenized illiquid assets will reach $16 trillion. More conservative projections by Citigroup suggest $4 trillion to $5 trillion worth of tokenized digital securities could be minted by 2030.
In response to this growing market, major financial institutions like Goldman Sachs are planning to introduce new tokenization products, driven by increasing client demand.
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