ParaFi Capital, a firm managing more than $1 billion in assets under management, has announced a partnership with Securitize, a real-world asset tokenization platform, to tokenize a portion of its assets on the Avalanche blockchain. Known for its investments in the crypto industry, ParaFi is also a leading investor in projects focused on real-world asset tokenization. Earlier this year, ParaFi participated in a funding round for Securitize, led by BlackRock. Ben Forman, founder and managing partner of ParaFi, highlighted the benefits of tokenizing private market strategies, such as streamlined settlement processes, reduced legal and administrative costs, improved liquidity, programmability, and cross-margining.
The tokenized fund will be available for trading on the Securitize platform, providing investors with borrowing and lending options while allowing ParaFi to reach a broader range of investors beyond its current institutional base. Avalanche was chosen for this initiative due to its compatibility with the Ethereum Virtual Machine, sub-second transaction finality, low fees, and a growing ecosystem of tokenized assets. Carlos Domingo, co-founder and CEO of Securitize, expressed pride in partnering with ParaFi to tokenize a portion of its fund on the Avalanche blockchain.
Avalanche’s tokenization ecosystem has been expanding, with significant developments such as Franklin Templeton bringing a $419 million on-chain money market fund onto the network. The Avalanche Foundation’s Vista initiative also allocated $50 million to incentivize the tokenization of assets on the platform. John Wu, president of Ava Labs, emphasized the importance of innovation in financial markets and acknowledged the advancements in financial assets leveraging blockchain and tokenization. Securitize, managing over $950 million in tokenized investments, has worked with major players like BlackRock and KKR, with projects like the USD Institutional Digital Liquidity Fund on Ethereum.
McKinsey & Company and the GFMA estimate substantial growth in the tokenization market, with predictions reaching a $2 trillion market for tokenized financial assets by 2030. Citigroup projects that $4 trillion to $5 trillion worth of tokenized digital securities could be minted by 2030. Major companies like Goldman Sachs are making moves in the tokenization space, planning to launch new tokenization products driven by increasing client interest. These developments underscore the growing trend of tokenizing financial assets as a means to enhance liquidity, programmability, and cross-margining in the long term.
Overall, the partnership between ParaFi Capital and Securitize to tokenize a portion of ParaFi’s assets on the Avalanche blockchain represents a significant step in the evolution of tokenization in the financial markets. With the potential benefits of improved settlement processes, reduced costs, increased liquidity, and expanded investor reach, this initiative showcases the growing interest and investment in real-world asset tokenization. As the tokenization ecosystem on Avalanche continues to grow, fueled by initiatives from the Avalanche Foundation and support from partners like Securitize, the future of tokenized financial assets looks promising. Major players in the industry are recognizing the potential of tokenization and are actively investing in the development of tokenized products and services, setting the stage for further growth and innovation in the space.
