The Avalanche Foundation announced the allocation of approximately $50 million to purchase tokenized assets minted on the Avalanche blockchain.
Avalanche to Invest in Tokenized Assets
The initiative, “Avalanche Vista,” aims to support and demonstrate the value of tokenization across multiple sectors, including equity, credit, real estate, and commodities.
Tokenization refers to the process of creating an on-chain digital representation of a real-world or off-chain asset on a blockchain.
“Asset tokenization isn’t just the future of capital markets, it’s a critical driver of the present. The groundswell of momentum across institutions building on-chain has been astounding, and the Avalanche Foundation is taking a big leap forward with this initiative,” said John Wu, President of Ava Labs, the creator of Avalanche.
Accelerating the Growth of Tokenization
The Avalanche Foundation noted that the $50 million allocation highlights the company’s commitment to developing a financial system that is more accessible, efficient, and cost-effective through the use of Avalanche’s “novel consensus mechanism, unique Subnet architecture, and technical innovation.”
“It intends to accelerate the growth of tokenization and its role in on-chain finance (“OnFi”) by demonstrating the merits of applying blockchain rails to historically more manual and operationally-intensive use cases, including asset issuance, settlement, transfer, and administration,” the Foundation added.
Avalanche is not a newcomer in the asset tokenization space. Last September, U.S.-based private equity giant KKR, through a collaboration with Securitize, tokenized part of its second Health Care Strategic Growth Fund on the Avalanche blockchain.
Several other major traditional financial institutions have also shown interest in asset tokenization over the past year. During the New York Times DealBook event last year, BlackRock CEO Larry Fink stated that the next generation for markets and securities would be the tokenization of securities.
According to a research by Security Token Advisors, 77% of capital markets participants believe traditional securities will be digitized within 5-10 years, and the size of the tokenized securities market could reach $20 trillion in the next seven years.
