• DEFYCA, a Luxembourg-based digital securities platform, is releasing its tokenized private credit protocol on Avalanche’s testnet this month.
• The launch highlights the trend of bringing tokenized versions of traditional markets like debt to blockchain-based protocols.
• This comes as crypto and traditional capital markets are increasingly getting commingled in decentralized finance (DeFi).
Luxembourg-based digital securities platform DEFYCA will release its tokenized private credit protocol on the Avalanche blockchain’s testnet this month, aiming for a mainnet launch in late July, the firm told CoinDesk. This launch highlights the growing trend of bringing tokenized versions of traditional markets like debt to blockchain-based protocols.
Tokenization and DeFi
DEFYCA says it is the first company to offer digital securities to professional investors under the European Union’s upcoming comprehensive crypto regulation called MiCA and the current blockchain laws of Luxembourg. Tokenization brings new levels of security and trust to financial transactions by adding layers of encryption to them. With DeFi, users can access a variety of different financial services without having to go through intermediaries or brokers.
Trends in Tokenization
BlackRock CEO Larry Fink recently commented that „the next generation for markets, the next generation for securities, will be tokenization of securities.“ These comments highlight an increasing trend towards utilizing tokens in traditional investment practices such as debt and equity issuance. Furthermore, they demonstrate an increased acceptance within mainstream institutions towards these sectors which have been traditionally difficult to penetrate with technology solutions due to regulations or cultural aversion towards risk taking amongst incumbents.
Benefits Of Tokenization
Tokens have numerous potential benefits over other forms of asset ownership or trading methods such as improved liquidity, faster settlement times and lower costs due to reduced middleman fees or overhead costs associated with traditional market infrastructure providers. They also create more efficient systems for raising capital from investors by allowing issuers to conduct offerings at a fraction of what it might cost using other methods such as IPOs or venture financing rounds.
The emergence of tokenized assets has brought about a wave of innovation within capital markets offering new ways for investors and companies alike to raise capital efficiently while also creating more secure transactions than ever before possible with legacy systems. As these technologies continue to become more widely accepted there is an expectation that many more industries will start exploring how they can make use them resulting in increased adoption across various sectors including banking, insurance and retail investing applications amongst others.