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Securities platform DEFYCA will release tokenized Private Debt Protocol on Avalanche

Securities platform DEFYCA will release tokenized Private Debt Protocol on Avalanche

The introduction of DEFYCA highlights the growing trend of tokenizing existing debt markets utilizing blockchain-based protocols.

Luxembourg-based digital securities platform DEFYCA explained the tokenized private credit protocol will be added to the Avalanche blockchain testnet this month, with the mainnet releasing in late July.

DEFYCA said that it is the first company to offer digital assets to professional investors in compliance with Luxembourg’s current blockchain rules and the European Union’s imminent, comprehensive cryptocurrency legislation known as MiCA.

The announcement comes as decentralized finance (DeFi) protocols offer tokenized versions of real-world assets (RWA) such as bonds and credit to investors on the blockchain, blurring the borders between crypto and traditional financial markets. Private debt funds manage $1.6 trillion in assets, according to Broadridge analysis, which DEFYCA is aiming to bring to Avalanche.

As shown by Boston Consulting Group (BCG) and Asia’s private market exchange ADDX, the asset tokenization industry may be worth $16.1 trillion by 2030.

Morgan Krupetsky, director of business development and institutions at Ava Labs, says the future of DeFi and enhancing the risk profile of these apps is dependent on transferring tangible assets and off-chain collateral into the blockchain. Ava Labs, a blockchain development company, established the Avalanche ecosystem.

tangible assets have been tokenized

DEFYCA will join a growing range of hybrid protocols that combine traditional finance (TradFi) systems with blockchain-based decentralized finance to satisfy institutional investors seeking income.

Earlier this year, Ondo Finance began offering tokenized corporate and government bonds, while Maple Finance announced a lending pool for tax receivables. As of November, the Onyx protocol employed by JPMorgan cleared more than $300 billion in intraday buyback transactions.

Under the protocol, investors may utilize algorithmic trading methods to transact in tokenized assets that are issued, securitized, and arranged into liquid pools. The protocol claims that the operation is faster and less expensive than in traditional markets since smart contracts automatically carry out normal debt issuance procedures such as liability matching, settlement, payment flows, and price discovery.

DEFYCA’s two investment options

Investors can deposit either regular fiat currency or Circle’s USDC and EUROC stablecoins with Citi as the protocol’s cash custodian.

The DEFYCA platform will initially provide two investment options: a larger private infrastructure digital feeder fund of around $200 million and a smaller direct lending fund of EUR100 million (US$105 million) aimed at European small and medium-sized enterprises.
The DEFYCA platform will initially provide two investment options: a larger private infrastructure digital feeder fund of around $200 million and a smaller direct lending fund of EUR100 million (US$105 million) aimed at European small and medium-sized enterprises.

According to a protocol spokesperson, there is a “strong pipeline” of around $1 billion in issuances over the next 18 to 24 months.

DEFYCA received $1.3 million in a seed round led by the tech-focused fund QBN Capital and the Avalanche-affiliated VC firm Blizzard Fund in November.

Content Source: coindesk.com

Cover Image Source: theblock.co

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