Venture capital firm ParaFi Capital has taken a significant step towards blockchain integration by tokenizing part of its $1 billion in assets under management on the Avalanche (AVAX) blockchain, in collaboration with real-world asset tokenization platform Securitize. This move marks the firm’s shift from merely investing in asset tokenization projects to using the technology itself.
ParaFi, known for its heavy involvement in the crypto sector and real-world asset tokenization, raised $120 million to invest in other digital asset funds and recently participated in a $47 million strategic round for Securitize. Now, the firm plans to tokenize a portion of its latest venture fund, opening it up to a broader range of investors.
ParaFi’s Vision for Tokenization
“ParaFi has been among the most active investors globally in companies focused on traditional asset tokenization,” said Ben Forman, ParaFi’s founder and managing partner. “We don’t just want to be passive investors; we want to actively use this technology ourselves.”
Forman emphasized that tokenizing private market strategies can streamline settlement processes, reduce costs, and offer longer-term benefits such as liquidity, programmability, and cross-margining. This tokenization strategy will expand ParaFi’s investor base beyond institutional investors like endowments and family offices to new participants.
The tokenized venture fund will be traded on Securitize, allowing investors to take advantage of the platform’s borrowing and lending capabilities.
Why Avalanche?
Avalanche was chosen for its Ethereum Virtual Machine (EVM) compatibility, low fees, sub-second transaction finality, and its expanding ecosystem of tokenized assets. Carlos Domingo, co-founder and CEO of Securitize, praised the partnership: “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.”
Growing Tokenization in Financial Markets
ParaFi’s move follows a broader trend of traditional financial players turning to blockchain for asset tokenization. Last month, Franklin Templeton expanded its $419 million on-chain money market fund onto Avalanche, and the Avalanche Foundation allocated $50 million to support tokenized assets through its Vista initiative.
Securitize has already tokenized more than $950 million in assets across funds managed by BlackRock, Hamilton Lane, and KKR. BlackRock’s USD Institutional Digital Liquidity Fund (BUIDL), tokenized via Securitize on Ethereum, is currently the largest tokenized U.S. Treasuries fund, managing $515 million in assets.
As tokenized government securities, including those on Avalanche, gain traction, the total market for such assets has surpassed $2 billion, underscoring the growing demand for blockchain innovation in the financial industry.
