Avalanche Doubles Down On Asset Tokenization with $50M Fund

Avalanche, a Layer 1 blockchain, has unveiled a new incentive scheme, dubbed Avalanche Vista, to promote asset tokenization on the network.

The initiative allocates $50M to purchasing Avalanche-based tokenized assets. Avalanche said it will consider assets “across the full liquidity spectrum, including equity, credit, real estate, commodities, as well as those that are blockchain-native.”

“Tokenization is poised to be one of the most impactful blockchain innovations of the next decade,” Avalanche said. “The $50M allocation reflects the Avalanche Foundation’s commitment to driving forward a financial system that’s more accessible, efficient, and cost-effective.”

Avalanche said the program will focus on supporting protocols that have a “clear value prop[osition], comprehensive go-to-market strategy, and thoughtful view on product-market fit.”

AVAX is down nearly 25% in the past 3 months, underperforming Ether, which has been relatively flat over the period.

The news comes as real-world assets (RWAs) are gaining increasing momentum within DeFi.

Earlier this month, MakerDAO, the third-largest DeFi protocol, published data showing that 79% of its fee revenue was derived from RWAs in 2023. Maker has been aggressively expanding its RWA portfolio in recent years.

DeFi Llama estimates protocols operating with RWAs boast a combined total value locked of $930M.

Asset Tokenization Sector Could Exceed $16T: BofA

Avalanche cited a recent analysis from Bank of America predicting the asset tokenization sector will exceed $16T in value over the next five to fifteen years.

Avalanche also noted increasing interest in tokenized assets from wall street luminaries, republishing recent remarks from BlackRock CEO, Larry Fink. “The next generation for markets, the next generation for securities, will be tokenization of securities,” Fink said in December.

“Asset tokenization isn’t just the future of capital markets, it’s a critical driver of the present,” said John Wu, President of Ava Labs. “The groundswell of momentum across institutions building on-chain has been astounding.”

Several projects focused on asset tokenization are already live on the Avalanche network.

Last September, Securitize, a project focused on security tokens, created tokenized assets representing stakes in the KKR Health Care Strategic Growth Fund II, a $4B private equity fund.

In February, Intain launched a marketplace for asset-backed tokenized securities as an Avalanche Evergreen Subnet. Subnets are application-specific chains that host a single dApp on a dedicated network.