ParaFi Tokenizes $1 Billion Fund with Securitize

ParaFi Capital has partnered with Securitize, a real-world asset tokenization platform, to tokenize a portion of its assets under management, which totals over $1 billion, on the Avalanche blockchain.

The organization, recognized for its considerable investments in the crypto sector, is also a prominent investor in infrastructure and projects that concentrate on tokenizing real-world assets.

Earlier this year, global asset manager BlackRock led a $47 million funding round for Securitize in which ParaFi took part.

Major Benefits of Tokenization

Ben Forman, the founder and managing partner of ParaFi, recognized the potential advantages of tokenizing private market strategies, such as reducing legal and administrative expenses and streamlining settlement processes.

Additionally, he asserted that tokenization provides enhanced liquidity, programmability, and cross-margining in the long term.

“ParaFi has been one of the most active investors globally in companies specializing in traditional asset tokenization,” Forman stated.

“However, our organization is not exclusively interested in passively investing in this technology; we also intend to employ it ourselves.” That is why we elected to initiate the process of tokenizing a portion of our most recent venture fund.

The tokenized fund will be traded on the Securitize platform, expanding ParaFi’s reach to a broader spectrum of investors beyond its existing institutional base and providing investors with borrowing and lending options.

Due to its compatibility with the Ethereum Virtual Machine, minimal fees, subsecond transaction finality, and a burgeoning ecosystem of tokenized assets, Avalanche was selected for this tokenization initiative.

Carlos Domingo, co-founder and CEO of Securitize, expressed his pride in forging a partnership with ParaFi to tokenize a portion of its fund on the Avalanche blockchain.

The Tokenization Ecosystem of Avalanche Expands

The tokenization ecosystem of Avalanche has been expanding, with notable developments, including Franklin Templeton’s $419 million on-chain money market fund expansion onto the network.

Furthermore, the Vista initiative of the Avalanche Foundation allocated $50 million to promote the tokenization of assets on the platform.

According to John Wu, president of Ava Labs, financial markets necessitate innovation, and the evolution of financial assets has recently made substantial strides using blockchain and tokenization.

Securitize, facilitating over $950 million in tokenized investments, has previously collaborated with prominent entities such as BlackRock and KKR.

BlackRock’s USD Institutional Digital Liquidity Fund, tokenized in partnership with Securitize on Ethereum, currently has $515 million in assets, making it the largest tokenized U.S. Treasury fund.

According to a recent report by McKinsey & Company, tokenized financial assets have experienced a “cold start” but are anticipated to expand to a $2 trillion market by 2030.

In the interim, the Global Financial Markets Association (GFMA) and Boston Consulting Group have projected that the global value of tokenized illiquid assets will exceed $16 trillion by 2030.

Citigroup’s estimates are even more conservative, indicating that tokenized digital securities could be issued from $4 trillion to $5 trillion by 2030.

Major corporations are taking substantial steps in the tokenization sector to acknowledge this potential.

For example, Goldman Sachs intends to introduce three new tokenization products later this year in response to the increasing interest of its clients.