ParaFi Capital, a prominent alternative asset management firm with over $1 billion in assets under management, has partnered with Securitize, a real-world asset tokenization platform, to tokenize a portion of its assets on the Avalanche blockchain. ParaFi is known for its substantial investments in the crypto industry and has been a leading investor in projects focused on real-world asset tokenization. Earlier this year, ParaFi participated in a $47 million funding round for Securitize, led by global asset manager BlackRock. The firm’s founder and managing partner, Ben Forman, highlighted the potential benefits of tokenizing private market strategies, including streamlined settlement processes, reduced legal and administrative costs, improved liquidity, programmability, and cross-margining in the long term.
The tokenized fund by ParaFi will be traded on the Securitize platform, offering investors borrowing and lending options while expanding ParaFi’s investor base beyond institutions. Avalanche was chosen for this tokenization 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. The tokenization ecosystem on Avalanche has been expanding, with significant developments like Franklin Templeton’s $419 million on-chain money market fund expansion onto the network and the Avalanche Foundation’s Vista initiative allocating $50 million to incentivize asset tokenization.
Securitize, with over $950 million in tokenized investments, has previously collaborated with major players such as BlackRock and KKR. For example, BlackRock’s USD Institutional Digital Liquidity Fund, tokenized on Ethereum in partnership with Securitize, currently holds $515 million in assets, making it the largest tokenized U.S. Treasuries fund. Industry reports indicate a growing trend towards tokenized financial assets, with McKinsey & Company forecasting a $2 trillion market for tokenized financial assets by 2030. The Global Financial Markets Association (GFMA) and Boston Consulting Group estimate the global value of tokenized illiquid assets could reach $16 trillion by 2030, with more conservative estimates from Citigroup suggesting $4 trillion to $5 trillion worth of tokenized digital securities could be in circulation by 2030.
Major companies are actively exploring tokenization opportunities, with Goldman Sachs planning to launch three new tokenization products later this year in response to increasing client interest. The rise of tokenization in the financial markets is driven by the desire for innovation and efficiency in traditional asset management processes. This evolution towards tokenized assets represents a significant shift in the finance industry, offering benefits such as improved liquidity, reduced costs, enhanced programmability, and cross-margining capabilities. As the tokenization space continues to grow and mature, more firms are expected to leverage blockchain technology to tokenize a wide range of assets, unlocking new opportunities for investors and reshaping the financial landscape.
