The beginning of DEFYCA embodies the rising trend of tokenizing existing markets like debt and transmitting them to blockchain-based protocols. Tokenizing is another approach it has been seen in the metaverse news.
DEFYCA, a digital securities platform located in Luxembourg, has said that it will be launching its mainnet in late July after releasing its tokenized private credit system on the Avalanche blockchain testnet this month.
DEFYCA, a digital securities platform in Luxembourg
DEFYCA says it is the first company to sell digital securities to professional investors in line with the EU’s upcoming comprehensive crypto regulation, called MiCA, and the Luxembourg blockchain rules that are already in place.
The news comes as decentralized finance (DeFi) protocols offer tokenized versions of real-world assets (RWA) like bonds and credit to investors on the blockchain, further blurring the lines between crypto and traditional financial markets. Broadridge says that the private debt funds that DEFYCA wants to bring to Avalanche are in charge of assets worth a total of $1.6 trillion.
By 2030, Boston Consulting Group (BCG) and Asia’s private market exchange ADDX predict that the asset tokenization market will grow to $16.1 trillion.
Morgan Krupetsky, who is in charge of business development and institutions at DeFi, says that putting “real-world assets and off-chain collateral on-chain” is important for the development of the protocol and for making these applications safer. Ava Labs, a blockchain development company, made the Avalanche ecosystem.
Bringing physical assets on a blockchain
It is likely that DEFYCA will join the growing number of hybrid protocols that combine blockchain-based decentralized finance with traditional finance (TradFi) systems to serve institutional investors looking for ways to make money.
While Ondo Finance just started selling tokenized government and corporate bonds, Maple Finance just announced a tax receivables lending pool. As of the end of November, the Onyx protocol used by U.S. banking behemoth JPMorgan has resolved over $300 billion in intraday buyback agreements.
Tokenized assets will be created, securitized, and organized into liquid pools on the protocol, allowing users to trade using algorithmic techniques. Because smart contracts automate steps like liability matching, settlement, payment flows, and price discovery, the protocol promises to make issuing debt much faster and cheaper than in traditional markets.
Citi will be in charge of the protocol’s cash. Users will be able to deposit either USDC or EUROC, or regular fiat currency issued by Circle.
When DEFYCA’s platform goes live, investors will be able to invest in a direct loan fund of EUR100 million (US$105 million) for SMEs in Europe and a larger private infrastructure digital feeder fund of about $200 million.
A protocol spokeswoman said, “There is a strong pipeline of around $1 billion in issuances over the next 18–24 months.”
In November, QBN Capital, a tech-focused VC firm, and Blizzard Fund, a VC firm with ties to Avalanche, helped DEFYCA raise $1.3 million in a seed round.
Content Source: coindesk.com
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