Homium, a protocol for tokenizing home equity lines of credit (HELOC), has successfully raised $10 million in a Series A funding round. The funding was led by Sorenson Impact Group and Blizzard. By leveraging Homium, homeowners can borrow against their home equity without adding to their monthly debt burden. They can use the borrowed funds for purposes such as home maintenance and repairs, debt consolidation, or inheritance. In return, investors receive a tokenized asset that tracks the price appreciation of a pool of shared homes on the protocol.
According to Avalanche, the company behind Homium, this tokenization protocol introduces a new asset class for institutional investors. It offers them an opportunity to diversify their portfolios and gain uncorrelated, inflation-protected returns. Currently, the first home tokenization loans are available in the state of Colorado in the United States.
The tokenized assets on Homium are backed by second mortgage loans made to owner-occupied single-family homes. Investors who hold the HELOC tokens have the same level of security as any other mortgage holder. Homium ensures that each home is appraised by a third-party valuation service that operates nationwide.
It’s important to note that the HELOC tokens on Homium are not cryptocurrencies. Instead, they are debt securities that comply with the regulations set by the United States Securities and Exchange Commission (SEC). Specifically, they adhere to Rule 144A, which governs private placements to institutional investors.
Avalanche has shown its commitment to on-chain tokenization protocols by pledging $50 million in investments since July 2023. The platform has a particular focus on protocols that specialize in real estate and digital collectibles. The growing interest in tokenization is evident, with financial services giant Citi describing it as the next “killer use case” in the crypto industry.
In related news, Avalanche and Chainlink have recently collaborated on an on-chain asset settlement project in Australasia.