Article Update: 22:15 March 5, 2024 UTC: Following publication, a representative from Trident clarified that the loan is not on-chain as originally reported. The reference has been removed.
A group of institutional investors has successfully tokenized a loan on the Avalanche blockchain and transferred it to a counterparty.
According to an announcement on March 5, venture capital firm Electric, which manages assets worth over $1 billion, provided an undercollateralized AVAX loan to a proprietary trading firm with 4x leverage. Trident Digital Group and Membrane Labs facilitated the loan. Anthony DeMartino, co-founder and CEO of Trident, explained the importance of having commercially viable terms, real counterparties, and a high-demand token for their product. He stated, “While BTC and ETH are readily available, our focus will be on lending alt coins.”
In the meantime, John Wu, president of Ava Labs, the developer behind Avalanche, expressed that there is currently limited interest among investors in unsecured lending or overcollateralized borrowing due to the collapse of Genesis Trading in 2022. However, Wu is optimistic that the development of new tools will attract institutional investors back to the tokenization of real-world assets. Prior to the downfall of FTX, the crypto lending market reached its peak value of $80 billion.
The Avalanche ecosystem is also expanding into other areas. On January 16, it was reported that Avalanche is embracing the memecoin culture by establishing a $100 million investment fund dedicated to such ventures and nonfungible token investments. Paps, CEO of Husky Avax, a project within Avalanche, stated in an interview, “Those who are not familiar with Avalanche may not have noticed, but over the past two years, Avalanche has invested a significant amount of time, effort, and money into culture.”
Related: The Avalanche Foundation is preparing to acquire memecoins for the sake of “culture.”