Avalanche Triumphs Over NYSE, Now Faces 'Value Capture' for AVAX

NYSE Taps Avalanche for Tokenized Securities Platform, Experts Cautious on AVAX Token Impact

The New York Stock Exchange (NYSE) has selected Avalanche to provide the underlying infrastructure for a forthcoming tokenized securities platform, a move industry observers deem significant for Avalanche’s reputation but one that may not directly translate into a surge in the network’s native AVAX token value.

On Monday, Ava Labs announced that Avalanche would serve as the “core ledger technology” for a tokenized securities platform being developed by Intercontinental Exchange (ICE), the parent company of the NYSE. The platform is designed to facilitate round-the-clock trading, clearing, and settlement of tokenized securities, pending regulatory approval.

Carlos Guzman, a research analyst at market maker GSR, described the development as “definitely a big win for the project.” He told Decrypt, “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.”

Luther Maday, head of North America at crypto payments firm Mercuryo, indicated that the NYSE’s decision followed a year of testing on Avalanche, suggesting the network met stringent requirements for “performance, reliability, and control.” Maday further elaborated, “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.”

While Avalanche’s AVAX token saw a 3.6% increase in the past day, reaching $8.64 according to Decrypt data, experts caution against equating infrastructure provision with a guaranteed long-term rise 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 implies that NYSE’s operations will utilize dedicated Avalanche infrastructure rather than the public C-Chain, which typically handles the majority of the network’s activity.

“I would be careful about translating the news directly into expectations for activity on the public C-Chain,” Maday advised. However, he suggested keeping a close watch on how the AVAX token is integrated within the dedicated infrastructure, noting potential boosts to stablecoin liquidity, validator activity, and network fees.

The NYSE has also engaged in other blockchain-related initiatives, including a partnership with Blockchain.com to offer tokenized stocks and ETFs to cryptocurrency investors. Concurrently, its parent company ICE is collaborating with OKX on a 24/7 tokenized stock venue under an SEC exemption. In parallel, Morgan Stanley has begun tokenizing its own securities.

However, not all major players are embracing tokenization. All seven of the prominent “Magnificent Seven” stocks, including Apple and Meta, along with dozens of other companies, have opted out of having their shares tokenized on the OKX-ICE venue.

Even if tokenization gains widespread adoption, it does not automatically guarantee returns for AVAX investors. Misha Putiatin, founder of collateral markets platform Symbiotic, told Decrypt, “The main question for Avalanche is whether it can do what other blockchains have struggled to do: capture value.” He added, “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.