The allocation will support the process of creating on-chain digital representations of real world assets using Avalanche’s consensus mechanism, the Foundation said.

The Avalanche Foundation, the entity behind the Avalanche blockchain, plans to allocate $50 million towards purchasing tokenized assets minted on its network.

Today, the Avalanche Foundation introduces Avalanche Vista, a $50M initiative to pioneer tokenization on #Avalanche

Tokenization is poised to be one of the most impactful blockchain innovations of the next decade, and Avalanche is uniquely equipped to power these systems. pic.twitter.com/ZWy109CMCi

— Avalanche 🔺 (@avax) July 25, 2023

In a blog post on July 25, the Foundation announced the initiative called “Avalanche Vista,” which says it aims to accelerate a financial system that is more accessible, efficient and cost effective.

Tokenized assets are essentially an on-chain representation of real-world assets, including equity, credit, real estate and commodities. Through the use of smart contracts, these tokens often represent ownership rights to the assets that can be transacted on-chain. 

Some of the benefits of tokenization include the facilitation of fractionalized asset ownership, which increases its inherent liquidity, and reduced management costs associated with lawyers and other intermediaries involved in handling paperwork. 

From an investor’s perspective, tokenization could potentially shorten lock-up periods, while allowing for more informed investment decisions due to the transparency of the blockchain.

Over the last year, both traditional finance companies and crypto-native firms have accelerated initiatives to enable on-chain use cases with tokenized assets that are typically held off-chain. A recent study by asset manager VanEck estimates that institutions will tokenize $25 billion in off-chain assets in 2023. 

“We do believe that if we can create more tokenization of assets and securities…  it could revolutionize finance,” said BlackRock CEO Larry Fink in a recent interview with CNBC.

In some cases, blockchain-native assets can also be tokenized if they are made available as an asset class because they are issued on-chain.

The Avalanche Vista fund will invest in both tokenized versions of real-world assets as well as blockchain native funds. 

Last year, digital asset securities platform Securitize successfully tokenized a KKR fund on the Avalanche blockchain, marking the first time one of KKR’s alternative investment strategies was offered in a digital form in the U.S.