ParaFi Capital is tokenizing an interest in one of its venture funds on the Avalanche blockchain via the Securitize platform.
The tokenized fund opens ParaFi’s venture strategy to a new group of investors, selecting Avalanche for its EVM compatibility, fast transactions and low fees.
Venture firm ParaFi Capital is tokenizing part of its more than $1 billion of assets under management on the Avalanche
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blockchain in collaboration with the real-world asset tokenization platform Securitize.
ParaFi is a prominent investor in the crypto industry that recently raised $120 million to buy stakes in other digital asset funds. It is also one of the largest investors in real-world asset tokenization projects and infrastructure. In May, it participated in a $47 million strategic funding round for Securitize, led by BlackRock. However, the venture firm now wants to use the technology itself.
“ParaFi has been among the most active investors globally in companies focused on traditional asset tokenization. However, our firm doesn't solely want to be passive investors in this technology; we want to use it ourselves. That is why we decided to take the initial step of tokenizing a portion of our latest venture fund," ParaFi founder and Managing Partner Ben Forman said in a statement on Thursday.
"Tokenization of private market strategies can unlock streamlined settlement processes, reduce legal and administrative costs, and longer term can unlock a broad range of benefits including liquidity, programmability, and cross-margining,” Forman added.
The tokenized fund is designed to open up ParaFi’s venture strategy to a new group of investors, expanding on its existing institutional investor base, including endowments, foundations, family offices and blockchain founders. It will trade on Securitize, where investors can also leverage the platform’s borrowing and lending capabilities.
Why Avalanche?
Avalanche was selected for the tokenization process due to its Ethereum Virtual Machine compatibility, sub-second transaction finality, low fees, customizability and the network’s growing ecosystem of tokenized assets, according to the statement.
“We are proud to partner with ParaFi to tokenize a portion of its fund on the Avalanche blockchain,” Securitize co-founder and CEO Carlos Domingo said. “It’s becoming increasingly beneficial for asset managers to move their products onto public blockchains and this fund represents another evolution in the Avalanche ecosystem.”
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