Avalanche Foundation outlines pathways for institutionalising tokenised equities amid growing market confidence

The Avalanche Foundation this week set out a granular framework for how public equities might be represented on blockchains, at a moment when tokenized shares are moving from niche experiments toward institutional plausibility. According to the Foundation’s analysis, tokenized equities have expanded roughly 30-fold in recent months to about $800 million as of early March 2026, while the broader real-world assets category is estimated at roughly $36 billion.

That surge has been accompanied by regulatory signalling that clears a major hurdle for institutions. Regulators have confirmed that capital treatment for tokenized securities is intended to mirror that of their conventional equivalents, a “technology neutral” stance that, the Avalanche paper argues, removes a key barrier to adoption. The Foundation’s report lays out three architectural routes to achieve tokenized public securities, each carrying distinct operational and legal trade-offs.

The first, and conceptually cleanest, is direct issuer tokenization: transfer agents or registries record ownership natively onchain so tokens are the canonical ownership record. That approach embeds corporate actions, dividends and voting into token logic and avoids intermediated claims, but implementing it at scale requires coordinated change across thousands of issuers and multiple regulators, a multi-year project, the Foundation acknowledges.

A second model relies on regulated custodians acting as the bridge between paper and ledger. The report highlights Dinari, an SEC-registered broker-dealer operating in more than 85 jurisdictions with over 250 tokenised equities and ETFs, whose “dShares” provide holders with beneficial ownership of the underlying stocks held in segregated custody. According to the Foundation, this architecture can deliver continuous NBBO pricing and near-instant settlement while leaving issuer-side processes intact, smoothing cross-border frictions without forcing issuers to rebuild registry systems.

The third path uses legal wrappers such as special purpose vehicles that issue tokens representing contractual claims on underlying securities. These structures can be deployed rapidly but, the analysis warns, introduce counterparty exposure to SPV solvency, often require manual reconciliation for corporate events and create liquidity fragmentation when competing wrappers for the same underlying appear.

The paper situates those trade-offs in the context of longstanding regulatory scepticism and market structure realities. SEC Commissioner Hester Peirce, speaking last July, framed the limits and potential succinctly: tokenization “may facilitate capital formation and enhance investors’ ability to use their assets as collateral,” but blockchain “does not have magical abilities to transform the nature of the underlying asset.” The Foundation uses that warning to argue that superficial ledger overlays will preserve, or even exacerbate, reconciliation inefficiencies unless ownership models are redesigned to capture automation benefits.

The rush of activity from incumbents underlines that market participants regard tokenization as more than academic. Nasdaq announced plans on March 9 to launch an equity token design that centres issuers in the tokenisation process, signalling that exchanges and market infrastructure providers are preparing issuer-facing options. At the same time, industry observers note Avalanche’s broader technical and ecosystem developments that strengthen its candidacy as a tokenisation layer. The network’s Etna (Avalanche9000) upgrade, introduced in early 2025, cut C-Chain transaction costs by roughly 99.9%, bringing fees into parity with many Ethereum layer-2s and enabling horizontal scaling across use cases including gaming and real-world-asset tokenisation, according to market commentary.

On-chain metrics and treasury moves add texture to the story. Analysis from late 2025 pointed to recovering DeFi activity on Avalanche with Total Value Locked rising back above the $1.5–2.0 billion band, while token statistics show a circulating supply of about 422.3 million AVAX, near 59% of the 720 million cap. AVAX One Technology Ltd disclosed that it acquired an additional 9.38 million AVAX in November 2025, bringing its holdings to over 13.8 million tokens and signalling institutional-scale treasury interest in the asset. Yet market valuations tell a more mixed picture: commentators have observed that AVAX remains substantially below its all-time highs, reflecting macro-driven liquidations and risk-off flows even as infrastructure adoption advances.

For market participants and token holders the architecture choices being locked in now matter for decades in the same way legacy custody and settlement decisions from the 1970s still shape today’s capital markets. If issuers embrace native onchain registries, token designs that natively capture corporate events and legal ownership could attract institutional balance-sheet capital. If the industry instead relies predominantly on custodial or wrapper models, tokenisation may offer efficiency gains but preserve intermediated claims and attendant counterparty exposures.

Practically, traders and institutions should watch three vectors over the next 12 months: regulatory guidance and capital-treatment clarity; which architectural approaches win support from major issuers and exchanges; and the emergence of interoperable custodial rails that can deliver continuous pricing and automated corporate actions. According to the Avalanche analysis, those dynamics will determine whether tokenised equities evolve into a broadly trusted conduit for institutional capital or remain a parallel market with frictions inherited from legacy structures.