Citibank Leverages Avalanche to Test Tokenization of Private Equity Funds

• Citibank conducted a blockchain trial on Avalanche’s Spruce Subnet to explore tokenizing private equity funds for capital market efficiencies.

• Avalanche’s network activity and interest from financial institutions like Citibank indicate a growing adoption of blockchain in finance.

Citibank has tapped into the Avalanche blockchain network, employing its Spruce Subnet for a proof-of-concept that could significantly transform capital markets. This initiative explores the tokenization of private equity funds, which could pave the way for more streamlined and efficient operations within the sector.

Wall Street’s growing interest in the real-world uses of blockchain technology is demonstrated by Citibank’s most recent blockchain initiative, launched in partnership with major financial institutions, including WisdomTree and Wellington Management. Avalanche’s Spruce, an Evergreen subnet designed for large financial institutions, is the site of a proof-of-concept trial that represents a critical turning point in using public blockchain infrastructure to improve the capital market.

Citi has worked with @Wellington_Mgmt, @WisdomTreeFunds, and @The_DTCC_DA to demonstrate how private assets could be tokenized and opened-up to new capabilities through the power of smart contracts and blockchain technology. Learn more here: https://t.co/Qr77KR1VNo pic.twitter.com/kf3G26Fjm6

— Citi (@Citi) February 14, 2024

The testing included comprehensive token transfers, including secondary transfers to enable trade and verify novel capabilities through collateralized lending. This illustrates the bank’s dedication to investigating cutting-edge operating models and efficiencies for the market and shows how smart contracts can automate and enhance compliance and control procedures for issuers and investors.

The experiment is important for testing the tokenization of private assets, aiming to open up new efficiencies and operating models for the larger market, according to Nisha Surendran, the lead for emerging solutions at Citi Digital Assets. This endeavor is especially relevant because of the complexity of the private markets and the urgent need for efficiency and uniformity in a $10 trillion industry.

Blockchain’s growing influence in financial services

Trade execution and settlement procedures are becoming more efficient due to traditional financial institutions’ (TradFi) adoption of blockchain technology, as demonstrated by Citi’s participation in the Avalanche subnet. The partnership also explored identification credentials and automated loan contract scenarios, highlighting how blockchain may improve data portability, rule enforcement, and integration with conventional financial ecosystems.

Morgan Krupetsky, Ava Labs’ senior director of business development, institutions, and capital markets, remarked on the growing adoption of Avalanche by leading financial services firms. This trend reinforces Avalanche’s position as an institutional blockchain leader, reflecting the technology’s capacity to meet the sophisticated requirements of the financial industry.

The success of this trial is indicative of the broader financial sector’s growing enthusiasm for blockchain technology as a means to enhance financial operations. This is further supported by Avalanche’s network activity, which has seen remarkable transaction counts and user growth spikes, highlighting sustained interest and diversity in its applications.

Avalanche’s Network Thrives

According to a recent news piece by Crypto News Flash, Avalanche’s network experienced considerable activity spikes, with transaction counts reaching 6.4 million and 6.3 million on noteworthy dates in the final quarter of 2023.  This trend persisted, with daily transaction volumes rising by 36.4% since October to 19.2 million transactions in January.

Moreover, deploying over 249.4k new contracts across several subnets and projects impressively generated 75.3 million subnet transactions. This strong expansion highlights the scalability, adaptability, and attractiveness of Avalanche in facilitating a wide range of blockchain applications.