Securitize: What You Need to Know
Blackrock $47M Round, TradFi Private Investing Onchain, & More
Earlier this week we published a report highlighting our bullish outlook on Coinbase. A key reason for this COIN conviction is the various avenues of business Coinbase pursues pertaining to crypto, one of which is custodial fees for ETF issuers. This begs the question, how much more of a tailwind can TradFi’s penetration into crypto be for the asset class at large? The ETFs impact on BTC price is evident, even other finance hubs besides the US have implemented ETFs of their own. How TradFi can boost the rest of crypto, if at all, is a little bit more murky. The intent is clearly there though, as many market participants noticed with Blackrock’s creation of a $100M Ethereum tokenization fund.
Securitize is a protocol that may fit the bill and represent interest from traditional capital managers in crypto, recently raising a monster $47M round led by Blackrock. The protocol operates in the RWA space (hence the name), In today’s edition, we’ll be giving you a brief rundown on what exactly Securitize is, its relation to Blackrock, and more.
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Background on Securitize
Securitize recently raised $47M earlier this month in a round led by Blackrock, with participation from Parafi Capital, a crypto-native institution, as well as Hamilton Lane and Tradeweb Markets, which are traditional institutions. Hamilton Lane is an investment manager that focuses on providing private market solutons, while Tradeweb Markets is a trading platform, providing fixed income, derivatives, and ETF access for retail, institutions, and more.
The protocol’s self-stated mission is to unlock access to the most private asset class in the world; private markets. It aims to ‘securitize’ these sorts of investments, so that participants aren’t subject to multi-year lockups, as is often the case in crypto and traditional private investing.
Securitize isn’t the first project using the benefits of blockchain to make private investing easier, other projects have also aimed to make the inaccessible accessible. One example is Arcton, which brings startup investing onchain. Crypto personality Cobie launched a project called Echo that aims to create groups in which investors can pool money to participate in early-stage investments. And of course, we have our own Syndicate at Revelo Ventures, which has seen well over $500k in capital invested towards a variety of project raises.
Securitize isn’t in the early-stage investment game, so these comparisons aren’t perfect. Rather it’s in the RWA game, looking to use blockchain to register ownership rights, effectively ‘securitizing’ them, without actually doing so and making them liquid through traditional channels. The project offers onchain alternatives for funds by Blackrock, Hamilton Lane, and Tradeweb Markets. This will be a TradFi-heavy operation most likely, definitely not the same kind of vibe as the likes of Berachain and other projects of this nature. BlackRock's Global Head of Strategic Ecosystem Partnerships, Joseph Chalom, maintains a position on Securitize’s Board of Directors.
“At BlackRock, we believe that tokenization has the potential to drive a significant transformation in capital markets infrastructure. Our investment in Securitize is another step in the evolution of our digital assets strategy”
-Joseph Chalom
So what exactly do Securitize’s product offerings look like? More details are to come, but offerings mostly reflect existing products and funds offered by the TradFi institutions partnered with Securitize, just using blockchain rails, which can provide efficiency and cost savings for the product issuers as well as some ease of access for users, especially those familiar with the onchain landscape. One thing is for sure; this will not be a ‘connect your wallet’ type of protocol, users will have to KYC in some fashion, similar to the likes of Kinto, a ‘safety-first’ L2
Below, you can see a taste of existing products available, which also include a fund by Arca. Minimum investments vary widely, and some funds offer redemptions immediately while others do indeed have lockups. There is $600M invested onchain through Securitize, with over 500k accounts created. A 0.5% management fee is employed.
Securitize represents an interesting rejuvenation in the RWA space, though by no means the only project gaining popularity in the sector. The RWA narrative was one of the most discussed last year, with a lot of the attention garnered based around the fact that interest rates were being raised and perhaps wold remain elevated for some time, a fear which has somewhat subsided for many. With this in mind, as well as apparent opportunity cost as the rest of the crypto markets trends upwards, many are not that interested in the RWA sector, even with drastic measures taking place like popular stablecoins including $DAI and $USDB seeing 15% APRs, and some higher figures on lending protocols. RWAs might be a little underwhelming right now for crypto natives, but for institutions who are first timers in the space, it may be the perfect place to start.
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