Institutional investors execute on-chain AVAX tokenized loan

The crypto lending market has largely stagnated since the collapse of FTX.

Institutional investors have tokenized a loan on the Avalanche (AVAX) blockchain and sent it to a counterparty.

According to the March 5 announcement, venture capital firm Electric, with over $1 billion in assets under management, lent an undercollateralized AVAX loan to a proprietary trading firm with 4x leverage. The loan was facilitated by Trident Digital Group and Membrane Labs. Developers wrote:

“Trident has onboarded with Cumberland's OTC desk, as well as Wintermute‘s, in order for them to facilitate liquidations, if necessary. Loan booking and management was handled via Membrane Labs’ Loan Management System while Trident rolled out the first risk and liquidity management endeavor in the lending space.”

“For our product to work we needed the terms to be commercial, the counterparties to be real, and the token to be in demand,” said Anthony DeMartino, Co-Founder and CEO of Trident. “While BTC and ETH are relatively available, our conduit will focus on lending alt coins.”

Meanwhile, John Wu, president of Avalance developer Ava Labs, said there is “little investor apetite” for unsecured lending or overcollateralized borrowing since the collapse of Genesis Trading in 2022. However, Wu believes that the development of new tools will aid in the return of institutional investors to real-world asset tokenization. Before the collapse of FTX, crypto lending reached a peak market value of $80 billion.

The Avalanche ecosystem is also expanding in other fields. On Jan. 16, Cointelegraph reported that Avalanche is currently embracing memecoin culture with a $100 million investment fund dedicated to such venture and investing in nonfungible tokens. Those outside of Avalanche might not have noticed, but Avalanche has been putting a lot of time, effort and money into culture in the past two years, said Paps, CEO of Avalanche project Husky Avax, in an interview.