In brief
- The NYSE will use Avalanche as the core ledger for clearing and settlement on its planned tokenized securities platform, pending regulatory approval.
- Analysts called it a major credibility win for Avalanche, with one expert noting it came after around a year of testing.
- But the platform will run on dedicated infrastructure rather than the public C-Chain, and experts warn that won’t necessarily translate into value for AVAX.
The New York Stock Exchange this week selected Avalanche to provide infrastructure for a tokenized securities platform it's prepping. Experts say that it's a big deal for Avalanche's reputation, but warn that it may not translate into an uptick in value for the network's AVAX token.
On Monday, Ava Labs announced Avalanche would serve as the "core ledger technology" for a tokenized securities platform developed by NYSE parent company Intercontinental Exchange. The product will be designed to allow 24/7 trading, clearing, and settlement of tokenized securities, subject to regulatory approval.
Carlos Guzman, research analyst at market maker GSR, told Decrypt it’s “definitely a big win for the project.”
“Having NYSE choose its tech for settlement is a big institutional credibility boost, and it validates the benefits blockchain tech can provide to traditional financial plumbing with instant settlement and programmability,” he said.
Luther Maday, head of North America at crypto payments firm Mercuryo, told Decrypt that the decision came after a year of testing on Avalanche, which signals the network passed checks on "performance, reliability, and control."
"NYSE has chosen the technology for the clearing and settlement layer, which is a much deeper use of blockchain than simply issuing a tokenized asset on a network," Maday added.
Avalanche's AVAX token has risen 3.6% in the past day to $8.64, according to Decrypt data. But experts warn that providing infrastructure doesn't necessarily mean a long-term increase in token value.
"NYSE will be using Avalanche’s infrastructure for clearing and settlement, so the actual trading will still happen off-chain," Guzman explained.
This means NYSE activity will run on dedicated Avalanche infrastructure rather than the public C-Chain, where most of the network's activity happens.
"I would be careful about translating the news directly into expectations for activity on the public C-Chain," Maday said.
That said, Maday said to keep an eye on the details of how the AVAX token is used within the dedicated infrastructure. He also suggested that stablecoin liquidity, validator activity, and network fees could see a boost.
The NYSE has also teamed up with Blockchain.com to sell tokenized stocks and ETFs to crypto investors, while its parent company ICE is working with OKX on a 24/7 tokenized stock venue under an SEC exemption. Morgan Stanley, meanwhile, has started tokenizing securities of its own.
Not every company wants in, though. All seven of the so-called "Magnificent Seven" stocks—Apple, Meta, and the like—opted out of having their shares tokenized on the OKX-ICE venue, along with dozens of other companies.
Even if tokenization does take off, that doesn't guarantee profits for AVAX investors.
"The main question for Avalanche is whether it can do what other blockchains have struggled to do: capture value," Misha Putiatin, founder of collateral markets platform Symbiotic, told Decrypt. "Avalanche has always had an unusually outcome-focused team for this industry, so I suspect they have plans for that, but it remains to be seen."
Ava Labs did not immediately respond to Decrypt's request for comment.
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