Citibank, the banking and financial services division of Citi, has tokenized a private equity fund on the blockchain, using Avalanche’s Spruce subnet.
Tokenization remains one of the most explored blockchain use cases by financial institutions.
Recently, the 160+ year-old US bank Citibank reported on the tokenization of a private equity fund using the Avalanche chain, currently the 9th most capitalized network, and one of the most scalable and efficient in the entire cryptocurrency ecosystem.
To tokenize this private fund, Citibank used the Spruce subnet, designed to make it easier for large institutions to access and use blockchain technology.
According to Citibank's press release, quoted According to Bloomberg, exchange-traded fund provider WisdomTree and private equity and management firm Wellington Management participated in the proof of concept on the Spruce Network.
TradFi shows increased interest in blockchain potential
Citibank’s proof of concept (PoC) to test the potential of tokenizing private equity funds on the blockchain included a series of operations, ranging from end-to-end token transfers, to secondary transfers for trading and validation of new capabilities through collateralized lending. All of these operations are designed to explore the capabilities and potential of blockchain technology to redesign the capital market.
The US bank believes that blockchain can help streamline trade execution and settlements, as it brings great versatility, flexibility and interoperability to the current financial system. In addition to this, blockchain also offers greater security and efficiency, which can help reinforce the stability of the system and contribute to making it more transparent and inclusive.
“The project demonstrated that it is possible to issue and hold tokenized versions of private equity funds on behalf of clients in a controlled environment, while remaining compatible with existing banking systems,” the bank said.
On institutional entry into the blockchain ecosystem, Morgan Krupetsky, senior director of business development at Ava Labs, emphasized that more and more institutions that are part of the traditional financial system (TradFi) are exploring potential use cases of blockchain, in order to make their operations and business models more efficient and automated.
Krupetsky to him said CoinDesk said Avalanche’s blockchain is establishing itself as “an institutional blockchain leader.”
What is Spruce by Avalanche?
Spruce, a subnet launched in April last year, is a blockchain built using Avalanche technology that aims to drive institutional entry into the blockchain ecosystem, accelerating the creation of a new generation of digital finance.
The blockchain involves several world-renowned financial institutions, including T. Rowe Price Associates, WisdomTree, Wellington Management and Cumberland, who are using the technology to innovate in financial services.
The Spruce network, also known as Evergreen, offers institutions access to a suite of blockchain implementations and tools that are designed to “address enterprise-specific and industry-wide considerations.” According to Ava Labs, this subnet was created to allow institutions to explore enterprise-grade blockchain functionality while still maintaining the benefits of Avalanche’s public network, including interoperability and composability.
A new update arrives for Avalanche
The rollout of the Durango upgrade coincided with Citi’s announced proof of concept on Avalanche. This new upgrade, which was deployed on the Fuji testnet on Wednesday, will help Avalanche become a much more scalable blockchain.
Durango will improve network scalability and strengthen cross-chain communication.
Its testnet launch on Wednesday pushed the price of AVAX higher. The native cryptocurrency of the Avalanche network rose by 7% in the last 24 hours, reaching a price of $42,11 per unit. Currently, AVAX is the ninth most capitalized cryptocurrency in the market, with a total of $15.480 billion, at the time of writing.
Continue reading: Vryx, Avalanche's new scalability solution
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