DeFi partnership aims to tokenize shares of pre-IPO companies



The decentralized finance (DeFi) protocol portal has partnered with asset marketplace HighCircleX (HCX) to tokenize shares of pre-initial public offering (IPO) companies, according to an announcement shared with Cointelegraph on Monday.

The collaboration aims to facilitate private equity investment by building on the Bitcoin (BTC) blockchain. Through this, HighCircleX seeks to solve problems such as lack of liquidity and value uncertainty of traditional assets.

According to the announcement, HCX will create and manage a limited liability company (LLC) for the investments. While investors will not own the shares of the LLC, they will own tokens that “represent ownership” of the LLC. Such tokens can be traded on the HCX market.

In addition, the funds raised by the LLC will be used to purchase a pre-IPO investment. Pre-IPO companies that can be tokenized and traded include SpaceX, Epic Games, Klarna, Automation Anywhere, and Cross River Bank.

Chandra Duggirala, CEO of Portal, explained that the association aims to bring more utility to BTC. He said that:

“Portal is bringing real world use cases to Bitcoin. Eventually, we will see the tokenization of many more financial assets on the Bitcoin blockchain.”

Furthermore, Duggirala explained that while the assets are different from BTC, the simplification of the interface for traditional assets initiates the “beginning of the Bitcoin ecosystem merging with mainstream finance.”

Related: Texas-Based Bitcoin Mining Operator Files $60M IPO

Last year, crypto platform Coinbase became the first publicly traded company in the United States. However, based on market trends, owning BTC is currently 20 percent better than owning Coinbase (COIN) shares.

Meanwhile, crypto block explorer and exchange Blockchain.com is exploring how the company can hold an IPO in 2022. If the company manages to go through with an IPO, it will be the second exchange in the United States to do so, after Coinbase. .