Avalanche Foundation’s $50M Asset Tokenization Scheme And Its Effects on AVAX

Avalanche Foundation’s $50M Asset Tokenization Scheme And Its Effects on AVAX

Key Insights:

  • Avalanche Foundation allocates $50M to new tokenization initiative 
  • The tokenized asset initiative is called "Avalanche Vista." 
  • Its TVL remained stable over the past week

The Avalanche Foundation has disclosed it would allocate $50 million to promote tokenization on its blockchain. It affirmed that "it is committed to driving forward a more accessible, efficient, and cost-effective financial system."

Avalanche Foundation Twitter handle
Avalanche Foundation Twitter handle

Avalanche Foundation Tokenization Scheme

The tokenization initiative "Avalanche Vista" shows how tokenization is vital in generating an on-chain digital portrayal of real-world assets like equity, credit and tangible asset. Its objective is to advance the extensive adoption of tokenization in the financial ecosystem.

While this is a landmark moment for the Avalanche Foundation, it isn't its first foray into the asset tokenization industry. 

An investment management firm, KKR, earlier tokenized some of its private equity fund on the Avalanche blockchain in September 2022. Next, a tokenized assets marketplace, IntainMARKETS, was launched in January 2023.

John Wu, the president of Ava Labs, mentioned that the tokenization scheme aims to offer increased operational efficiency, accessibility to new users and enhanced liquidity.

"Our mission is to tokenize the world's assets. Vista is our next show of commitment to do that."

Why Did Avalanche Invest In The Scheme?

Tokenization provides a faster and more efficient system for organizations to issue assets and for people to own or transfer them.

The tokenization scheme – while not the first – is coming at an opportune moment as Wall Street leaders are increasingly hinting at the revolutionary possibilities of tokenization.

Larry Fink, the CEO of multinational investment company BlackRock is bullish about its capabilities. He said,

"The next generation for markets, the next generation for securities, will be tokenization of securities." 

John Wu said that in the past deals Ava Labs participated in, its biggest drawback was liquidity. Therefore, it resolved to invest $50 million to inject some much-needed funds into the project. 

"Asset tokenization isn't just the future of capital markets; it's a critical driver of the present."

Wu believes that Avalanche Vista is important for the Avalanche Foundation, as it broke the glass ceiling. To him, more institutions would build on-chain and in the future.

Furthermore, a report by Security Token advisors also disclosed that about 77% of partakers across the capital markets think traditional securities would be digitized within the next five to ten years. Therefore, the tokenized securities market is estimated to reach $20 trillion by 2030.

All this talk of the Avalanche blockchain… let us see its impact on AVAX, its native token.

AVAX Price Action

AVAX experienced a downturn in its social activity last week. Its social media mentions and engagements dropped by almost 100%.

AVAX Daily, a Twitter news outlet, disclosed the news about its social performance and dominance – or lack of it.

Amidst this massive plummet, its volume increased, with the Avalanche TVL (total value locked) stabilizing. 

Avalanche TVL
Avalanche TVL

Struct Finance, Coinsquare and Biconomy were the top 3 TVL gainers in the Avalanche chain within the week.

Avalanche TVL dashboard
Avalanche TVL dashboard

The price action of the token didn't fare as well as the TVL, with its price down by more than 6% and 3% within the past week and 24 hours, respectively. AVAX traded at $13.08 at press time, with a massive market capitalization of over $4 billion.

As a result of the price decline, its 1-week price volatility equally plummeted. Similarly, its open interest also declined, encouraging a trend reversal.

However, other analyses do not share such an optimistic purview due to some market indicators.

Due to the coin's instability in price relative to its volume level and market cap, its risk rating is average.

The Moving Average Convergence Divergence (MACD) indicated a bearish signal, and the Relative Strength Index (RSI) made a southward movement, improving the possibility of a downtrend. 

Disclaimer: Voice of Crypto aims to deliver accurate and up-to-date information but will not be responsible for any missing facts or inaccurate information. Cryptocurrencies are highly volatile financial assets, so research and make your own financial decisions.

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