AllianceBlock, a company that aims to create frictionless bridges between Traditional Finance (TradFi) and Decentralized Finance (DeFi) by using decentralized and trustless infrastructure, has announced a partnership with ABO Digital, the private digital asset investment branch of Alpha Blue Ocean. The partnership will enable the two companies to provide tokenized structured products to institutions and crypto projects that are looking for alternative financing options.
Through their collaboration, AllianceBlock and ABO Digital will leverage the Nexera Protocol and AllianceBlock’s decentralized and trustless blockchain infrastructure to tokenize traditional financial instruments. This will also include the option to wrap them into traditional Actively Managed Certificates (AMCs) for capital providers that prefer not to hold digital assets. This partnership represents a significant milestone for AllianceBlock, as they continue to develop seamless bridges between Traditional Finance and Decentralized Finance.
ABO Digital was established in order to provide startups with the capital they require so that they can expand their customer and revenue base. Some of the structured financial products that ABO Digital offers to the digital asset market are convertible bonds, debt issuance, and warrants/options. In addition to this, ABO Digital will explore the prospect of providing institutions with alternative financial investments through the use of tokenization.
Novel Financing Solutions for Crypto Startups
The structured products that are offered by AllianceBlock and ABO Digital will provide cryptocurrency projects with an alternative to the conventional funding options that are currently available. One example of this would be the issuance of tokens to market makers or venture capitalists through a Simple Agreement for Future Tokens (SAFT), which would assist these projects in gaining access to additional liquidity from institutional capital providers while maintaining full compliance.
As part of the partnership, ABO Digital will provide help in negotiating and structuring financial instruments according to the needs of the project in terms of both capital and liquidity. AllianceBlock, in conjunction with the infrastructure provided by Nexera Protocol and the identity management toolkit offered by NexeraID, will tokenize and transform these into AMCs that are compliant in their entirety. The funds contributed by participants will be secured under smart contracts. However, these funds will not be distributed to projects until after a certain minimum funding threshold has been reached.
In exchange for their funding, investors will receive a conventional AMC, with AllianceBlock acting as the asset manager and keeping any convertible bonds, debt, or warrants that may be issued. A structuring fee will be paid to ABO Digital, and this fee will be proportional to the amount that is successfully funded. AllianceBlock will get the majority of the fees, either for administering the AMC or directly through the tokenized asset.
Institutional and retail participants alike will reap the benefits of being able to contribute capital to promising cryptocurrency projects through funding mechanisms that are less prone to risk and more compliant. This will provide the participants with a form of ownership that is distinct from directly owning the project’s tokens. In addition to this, the Fundrs platform will grant them access to token fund-raising rounds that are reserved only for significant capital providers and the AllianceBlock community.
Bridging the Gap Between Crypto and Traditional Financial Markets
ABO Digital and AllianceBlock will further bridge the gap between the cryptocurrency community and traditional financial markets by providing large cryptocurrency funds, private equity firms, and other market participants with the ability to provide financing in tokenized forms of traditional financial instruments. These tokenized forms of traditional financial instruments include shares, options, bonds, tokenized funds, and tokenized AMCs. By tokenization, these unique instruments will be able to access new groups of investors on both sides of the market, which will result in an increase in market liquidity.
Rachid Ajaja, CEO of AllianceBlock, said: “Through this strategic partnership, AllianceBlock is set to revolutionize the industry by leveraging its infrastructure to tokenize traditional financial instruments and new instruments for the digital asset space, taking a giant leap forward in providing institutions with a more compliant and risk-averse way to take advantage of DeFi’s benefits. This partnership marks a significant milestone for both companies and the industry as a whole, demonstrating our commitment to innovation, compliance, and risk management. The future of finance is looking brighter than ever.”
The tokenization of real-world assets has garnered attention from institutional capital providers due to its potential impact on the investment landscape. Currently, many real-world assets are still traded using primitive methods, with ownership represented on paper, leading to longer transaction times and higher costs. This model also limits the subdivision of real-world assets. However, with the tokenization of real-world assets, fractional ownership becomes a viable option and trading is streamlined, democratizing access to new markets while making them safer and fairer. As a result, tokenization is poised to play a transformative role in asset management for years to come.
Amine Nedjai, CEO of ABO Digital, said: “Together, ABO Digital and AllianceBlock represent the perfect combination of innovation, expertise, and professionalism in the cryptocurrency market. With our combined effort, we aim to bring a fresh perspective to the world of decentralized and traditional finance and attract more institutional capital providers. We look forward to working with AllianceBlock and paving the way for a new era in finance, one that is both creative and professional.”
Paving the Way for Innovative Cross-Industry Benefits
The unique way in which the traditional banking industry and the digital asset industry may mutually benefit from one another is demonstrated by this latest partnership between AllianceBlock and ABO Digital. Tokenization will allow traditional institutions to have access to a new class of assets that were previously unavailable to them as the cryptocurrency sector continues to evolve and AllianceBlock advances the notion of structured financial instruments in the cryptocurrency space.
ABO Digital serves as the digital asset investment arm of the ABO group, a global provider of PIPE (Private Investment in Public Equity) financing to publicly listed companies, with a track record of executing more than $2 billion in financing commitments over five years. Leveraging its institutional-grade expertise, ABO Digital offers innovative and alternative financing solutions to cryptocurrency projects.
By addressing problems in both traditional and decentralized forms of banking and bringing them closer together, AllianceBlock is working to create smooth gateways between the two types of financial systems. They envision an integrated system as the future of finance, one in which the most advantageous aspects of both sectors will cooperate with one another to boost capital flows and technology advancements.
They are developing a next-generation financial infrastructure by connecting traditional finance with compliant, data-driven access to new decentralized markets, DeFi initiatives, and ecosystem-scaling tools like funding and interoperability. The ultimate goal of this endeavor is to provide regulated financial entities all over the world with the tools they need to access the DeFi space in a highly efficient manner.