July 25, 2023 at 16:22 GMTModified date: July 25, 2023 at 16:45 GMT
July 25, 2023 at 16:22 GMT

Avalanche announces $50m tokenisation initiative

The Avalanche Foundation will spend up to $50million on purchasing tokenised assets minted on the Avalanche blockchain.

Avalanche announces $50m tokenisation initiative

Avalanche Foundation has shown its commitment towards driving the future of asset tokenisation in its new initiative announced today.

The foundation will spend up to $50million in purchasing tokenised assets minted on the Avalanche blockchain. This would be achieved through its program called ‘Avalanche Vista’.

The program is aimed to support and demonstrate the “value of tokenization, the process of creating an on-chain digital representation of an asset, item or thing–something that Avalanche is designed to facilitate with greater speed, scalability, and customizability”.

Avalanche Vista will consider assets across the full liquidity spectrum, including equity, credit, real estate, commodities, as well as those that are native to the layer-1 blockchain.

Announcing the move, Avalanche’s official twitter account posted saying that tokenisation is poised to be one of the most impactful blockchain innovations of the next decade and in this Avalanche stood “uniquely equipped to power these systems”. Adding on, it claimed: ”The Foundation is committed to driving forward a more accessible, efficient and cost-effective financial system through the use of Avalanche’s novel consensus mechanism, Subnet architecture, and technical innovation.”

Tokenised assets are often referred to as ‘real world assets’ or tokenised ‘off-chain assets’. Tokenisation gained much popularity this year as traditional finance (TradFi) pillars like Franklin Templeton, as well as crypto native firms, offered more old-school financial assets. This included things like government bonds in the form of a blockchain-based token.

In a report titled ‘Relevance of on-chain asset tokenization in ‘crypto winter”, global business advisory firm, Boston Consulting Group, predicted the tokenised assets market potential to mushroom to $16trillion by 2030.

While Ethereum stands as the most popular network for tokenised assets, smaller blockchains such as Stellar, Solana and Polygon have also risen to grab sizeable market shares, as per real-world asset data platform rwa.xyz.

Avalanche, on the other hand, is an Ethereum challenger smart contract platform which aims to beat the largest smart contract platform in its game. In this pursuit, it offers faster transactions and scaling capabilities.

The foundation’s multi-million dollar initiative closely follows one of its major milestones in asset tokenisation, i.e., Securitise’s tokenising an interest in a flagship KKR fund on the Avalanche blockchain.

President of Ava Labs, John Wu, commented on the potential of Avalanche’s latest initiative saying: “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.”

The past year has seen an acceleration among crypto native initiatives to enable on-chain use cases with tokenised assets typically held off-chain. The official blog post by the Avalanche Foundation stated a report by Security Token Advisors to prove this point.

The report revealed that about 77% of capital markets participants believe traditional securities will be digitised within 5-10 years. They also expect that the size of the tokenised securities market alone would grow to $20trillion by the end of 2030.

Furthermore, asset manager VanEck has also predicted that institutions will tokenise $25billion in off-chain assets in 2023.