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While all eyes are on the development of RWAs in the Ethereum ecosystem or on the new Ondo blockchain, Avalanche positions itself as an outsider in this market. Indeed, the investment management company VanEck has just made an investment fund available to support the growth of RWAs in the Avalanche ecosystem.
In Brief
Avalanche highlighted thanks to an investment fund created by VanEck.
Avalanche’s underestimated strengths to assert itself in the RWA market.
Real World Assets: a highly competitive market.
VanEck partners with Avalanche to support the rise of RWAs
While the Avalanche Summit was a real success in London last week, Avalanche has just announced a partnership with VanEck. This is one of the largest global investment management companies, which is already very present in the crypto market. Since 1955, it has been following the evolution of financial markets and obviously the beginning of tokenization of assets.
With $116 billion managed in its investment fund, VanEck can therefore be a significant support for Avalanche. Specifically, VanEck has just launched the Purposebuilt fund managed by the Digital Asset Alpha Fund (DAAF) team of VanEck.
By supporting the development of RWAs in the Avalanche ecosystem, VanEck also wants to change investment in web3 to move away from short-term visions. Indeed, token prices are very often linked to hype cycles which cause most of them to lose their value in the long term.
VanEck therefore proposes a three-point strategy: to invest not upstream, but during the TGE period to have a more realistic capitalization, to mix an investment in liquid tokens and VC agreements (often with token lock-up), and to propose the deployment of RWAs on Avalanche.
Avalanche’s underestimated strengths
Even though the partnership with VanEck is an important signal for the development of RWAs on Avalanche, this blockchain has actually started positioning itself on this market quite a long time ago. In terms of its architecture, Avalanche offers the creation of customizable Layer 1s that benefit both from Avalanche consensus and interoperability within its ecosystem. Each company can therefore create a private or semi-public Layer 1 whose usage rules comply with the legal framework of its country, a necessary condition for RWAs. This network access management is one of the features of Evergreen Subnet, Avalanche’s service specially dedicated to financial institutions. Deloitte was the first institution to create a Layer 1 with this service, the aim of this new network being to accelerate reimbursements following a disaster.
Besides these internal strengths, it should be remembered that Avalanche has always had the trust of major decentralized finance companies. For example, Avalanche is the oldest network outside of Ethereum and its Layer 2s on which Aave has deployed. But it is especially the support of Chainlink that is important for the deployment of RWAs on Avalanche since Chainlink opened its CCIP interoperability solution on Avalanche right from the start in addition to Ethereum. These assets show that the partnership with VanEck is in fact a natural continuation of this network’s evolution.
State of RWA distribution
A quick analysis of the distribution of RWAs in decentralized finance shows that these assets are deployed on few projects and blockchains. Only three projects have a TVL of more than one billion dollars: Build by BlackRock, Ethena, and Ondo Finance, and only 19 exceed one hundred million dollars in TVL.
On the blockchain side, Ethereum still dominates this sector with more than 80% of the RWA TVL ($4.4 billion on Ethereum). In second position is Stellar, rarely mentioned but which has always had the trust of banking institutions, followed by some Ethereum Layer 2s and Avalanche in 5th place, showing the resilience of this network in the RWA market. For now, Ondo Chain is in an embryonic state and has a very minimal TVL, but it will gradually have to be considered an important competitor.
Thanks to its partnership with VanEck, the Avalanche network shows that it should not be considered a secondary network in the RWA market. Despite the dominance of Ethereum, this partnership and the Evergreen service will undoubtedly accelerate the arrival of RWAs on Avalanche.
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Passionné par l’histoire du Web3, je m’efforce de rendre cette nouvelle ère numérique plus compréhensible grâce à mes articles et à ma thèse de doctorat en cours sur le sujet.
DISCLAIMER
The views, thoughts, and opinions expressed in this article belong solely to the author, and should not be taken as investment advice. Do your own research before taking any investment decisions.
