Avalanche Foundation’s New Initiative Means to Spend $50m to Inspire Tokenization on Its Network

Updated: 25 July 2023

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The Avalanche Foundation announced its decision to allocate up to $50 million for purchasing tokenized assets minted on Avalanche’s network.

The Foundation’s new program is known as Avalanche Vista, and its intention is to bring new digital versions of traditional investment products to the platform.

Tokenization expands to reach new use cases

Tokenization has been a highly popular activity in the crypto industry for a few years now, but it primarily focuses on creating NFTs for artworks, gaming assets, metaverse elements, and alike.

However, that is only a portion of its capabilities, and throughout this year, investors and traders started turning to its other potential uses.

Specifically, through tokenization, assets from traditional finance can reach the crypto industry and blockchain technology. This is something that institutional investors, which are becoming increasingly engaged with the industry, could be particularly interested in.

Assets like government bonds, commodities, and more, could easily reach the blockchain through tokenization and allow institutions to engage with familiar assets in their new form.

If the sector continues to improve, Boston Consulting Group — a global business advisory company — expects the market for tokenized assets to reach $16 trillion by 2030.

Siddhartha S, who founded a structured finance platform Intain, also commented on the tokenization sector stating:

Moving parts of the asset administration process on-chain allows issuers to have one workflow and one system of record, enabling a better, more seamless user experience for service providers and investors.

The most popular platform for tokenization has always been Ethereum — the network that invented both smart contracts, NFTs, and tokenization itself. However, the sector has started to spill onto smaller networks, such as Polygon, Solana, and Stellar.

With that being the case, Avalanche has also decided to fight for its own share of the market. The network emerged as one of Ethereum’s challengers, also offering smart contracts and similar other products, but it also addressed some of Ethereum’s old issues, including scalability and high fees.

Avalanche also introduced a different architecture, which consists of smaller sovereign networks known as subnets.

Benefits of tokenization

Now, its new initiative intends to boost tokenization on its blockchain. The project has seen several instances of tokenization in the past.

For example, in September 2022, KKR tokenized a portion of its private equity fund on Avalanche’s network using digital asset securities firm, Securitize.

John Wu, president of Avalanche’s parent company, Ava Labs, said that the mission is to tokenize the world’s assets and that Vista is the next show of commitment to that goal.

It’s not just dollars involved, but commitment to help web2 players work with us and explain tokenization.

Wu added that people are seeing that this concept of instant settlement does not exist in the real world and that clearing in a traditional system takes days.

That means locking up billions, and even trillions of dollars, for several days at a time. All of it can be done instantly using blockchain technology.

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