Homium, a protocol for tokenizing home equity lines of credit (HELOC), has successfully raised $10 million in a Series A funding round. The funding was led by Sorenson Impact Group and Blizzard. In an announcement made on April 15, Avalanche, the blockchain platform on which Homium is built, stated that the protocol allows homeowners to borrow against their home equity without increasing their monthly debt burden.
By using Homium, homeowners can offer a portion of their home’s future appreciation as collateral for loan equity, which can be used for maintenance and repairs, debt consolidation, or inheritance purposes. In turn, investors receive a tokenized asset that tracks the price appreciation of a pool of shared homes on the protocol.
Homium aims to create a new asset class for institutional investors, offering them an uncorrelated and inflation-protected return for their core portfolios. The first tokenization loans are currently available in Colorado, United States.
The tokenized assets on Homium are backed by second mortgage loans made to owner-occupied single-family homes. Investors who hold HELOC tokens have a secured interest in the title, similar to traditional mortgages. Homium ensures that every home is appraised by a third-party valuation service that operates nationwide.
While the HELOC tokens are built on distributed ledger technology, they should not be mistaken for cryptocurrencies. These tokens are debt securities that comply with the United States Securities and Exchange Commission’s Rule 144A, which governs private placement to institutional investors. Homium clarified that their technology is focused on tokenization protocols for real estate and digital collectibles.
Avalanche has committed $50 million in investments for on-chain tokenization protocols since July 2023, with a particular emphasis on real estate and digital collectibles. Citigroup, a prominent financial services company, has recently highlighted tokenization as the next “killer use case” in the cryptocurrency market.
In a related development, Avalanche and Chainlink have joined forces to collaborate on on-chain asset settlement in the Australasian region.