Summary
Financial firm Citi has conducted a proof of concept to test the tokenization of a private equity fund issued by Wellington Management. The company found that tokenization of existing assets can offer significant improvements over traditional models and is likely a necessary step for achieving scalability. Citi brought the fund onto Avalanche’s Spruce subnet and encoded its distribution rules into a smart contract embedded within a token. The token was used as collateral in an automated lending contract with DTCC Digital Assets. Tokenization of traditional assets has become a popular topic in the past year, with other firms, such as JPMorgan and BitGo, also exploring this area.
Key Points
1. Tokenization of traditional assets can offer significant improvements over traditional models, including greater automation, standardized data rails, and improved overall operating models facilitated by digital identity and smart contracts.
2. Citi completed a proof of concept focused on tokenizing a private equity fund issued by Wellington Management, using Avalanche’s Spruce subnet for on-chain trade execution and settlement.
3. Tokenization efforts have been increasing in recent months, with companies like Securitize, JPMorgan, and BitGo exploring the benefits of tokenizing assets and conducting transactions on blockchain networks.