ProvLabs, a  blockchain infrastructure provider, completed a seed funding round at the end of 2024 and aims to double the amount of assets tokenized on the Provenance blockchain this year to more than $25bn.

In December 2024 ProvLabs said it had completed its seed round of fundraising, as well as its carve-out from the Provenance Blockchain Foundation. The initial funding round was led by Morgan Creek Digital and GateCap Ventures.

Dr. Sachin Jaitly, general partner of Morgan Creek Digital and member of ProvLabs’ board of directors, said in a statement: “Blockchain technology is driving the next generation of financial innovation. We are at the beginning of a seismic shift in financial markets as real world assets make their way on-chain.”

Anthony Moro, chief executive of ProvLabs, told Markets Media that since trading started under the buttonwood tree in front of the New York Stock Exchange with physical certificates, every iteration in finance has added more functions. He said: “This latest iteration adds a revolutionary amount of functions.”

Moro argued that ProvLabs has an advantage as the Provenance blockchain was built specifically for financial services. In contrast, most popular blockchains are generic and need a stack of smart contracts to be built on top of them to make them productive.

“In regulated financial services, that stack of smart contracts turns into what I call a Jenga tower of risk,” added Moro. “Five years down the road will those smart contracts still be interoperable, will the code be broken, who owns the code ?”

Smart contract functions are built into the core Provenance blockchain protocol, making it an operating system for global financial services according to Moro. ProvLabs sees an opportunity to tokenize several trillions of dollars of real world assets over the next decade and to help financial institutions integrate blockchain technology into their operations.

“We will have a more equitable financial system that is cheaper, faster and safer,” Moro added. “We are going to have $1 trillion dollars of real world assets put on Provenance over the next 10 years.”

Tokenization

Coinbase Institutional’s 2025 Crypto Outlook said tokenized real world assets grew over 60% from $8.4bn at the end of 2023 to $13.5bn by 1 December 2024, excluding stablecoins. In particular, on-chain US Treasuries more than tripled from $760m to $2.6bn as of 1 December 2024, which was driven primarily by three new tokenized treasury funds including BlackRock’s fund, BUIDL.

However, Moro argued that tokenized funds are “interesting, but not revolutionary.” In contrast, revolutionary products take illiquid asset classes that operate with a lot of intermediaries and make them more accessible with a decentralized ledger.

Moro gave the example of Figure Technologies digitizing Home Equity Line of Credit (HELOC) loans on the Provenance blockchain, and saving approximately 125 basis points on every HELOC loan.

“Getting access to another tokenized Treasury fund is not a big deal,” said Moro. “Blockchain technology saving money on a mortgage is a big deal.”

For example, a traditional mortgage requires paperwork including a wet ink signature in front of a notary that needs to be recorded on video. Moro explained that all off-chain data points, including the video notary session, can be included in ProvLabs’ Block Vault product which integrates on and off-chain protected data rooms for sensitive information. All the data is then tied to the non-fungible token  (NFT) that creates the loan so that whoever buys a mortgage over the years can go into the NFT to see the video and easily access all the information in one place.

“Approximately 20% of HELOC issuers use the Provenance chain, so I think it is the only asset class that has been disrupted by blockchain,” added Moro.

Figure Technologies are issuing about $650m a month of tokenized home loans every month, according to Moro, which he said is more than the rest of the tokenized world combined.

“The Provenance chain has a three- to five-year head start because it is the only institutional grade business that has been built and distributed on blockchain,” Moro said. “It can be used for complex assets where you need to think about asset ownership perfection.”

The funding round will be used to develop BlockVault as well as ProvConnect which connects enterprises, fintechs, and individuals to Provenance blockchain; Asset Manager which tokenizes and manages the lifecycle of any digital asset; and Trade and Transfer which enables settlement, collateralization, and exchange.

Moro continued that he is also “incredibly excited” about Figure filing a registration statement with the US Securities and Exchange Commission for the first SEC-approved stablecoin that pays a yield.

In digital finance stablecoins have been used to transfer value and liquidity 24/7/365 seamlessly around the globe, in contrast to a fiat currency such as the US dollar that is used in traditional banking. Stablecoins are a type of cryptocurrency designed to maintain a stable price over time by pegging its value to a reference asset such as a fiat currency or a commodity. They are backed by collateral but have not provided investors with yield.

“Instead of an unsecured loan to a private company, investors can now buy an SEC-backed yielding stablecoin,” said Moro. “I think this is pretty revolutionary and is going to change the market in 2025 by opening up a wealth of financial services applications.”

Fidelity Digital Assets said in its 2025 Look Ahead that stablecoins could  potentially continue to evolve as a major use case that complements other potential apps such as the tokenization of real-world assets.

“However, while progress has been made, stablecoins are not a perfect product fit just yet,” added Fidelity. “We expect additional measures will be implemented to address counterparty and compliance risks,facilitate integration with traditional payment and lending rails, improve cross-chain interoperability, and meet the demand for yield-bearing assets.”

Growth

Moro described the ultimate goal of finance moving on-chain is allowing accredited investors to trade assets, such as public equities, into bitcoin or ether or into a BlackRock fund, and cross-collateralize all their assets in a secure wallet that they own and control.

“By the end of 2025 the TVL of the Provenance chain will be well north of $25bn of real world assets, which will be more than double the value today,” said Moro.

TVL, or total value locked, is used in crypto to measure the total US dollar value of digital assets locked, or staked, on a particular blockchain network. Moro expects that by the end of 2025 assets, including all types of insurance will be on-chain, as will home equity investments.

He also expects Provenance and HASH, the native token of the Provenance blockchain, to be listed on centralized exchanges for the first time in 2025.

Fidelity Digital Assets said the total nominal amount of real world assets on-chain sits at $14bn, up from $8bn in 2023. In financial services, Fidelity Digital Assets expects big banks and asset managers to continue to put traditional assets such as bonds, credit, and funds on chain, with burgeoning applications also coming to market.

 “If $14bn of real world assets are on-chain right now, and if demand for this niche use of blockchain technology continues to expand throughout 2025, it would not be surprising to see this value approach $30bn by the end of 2025,” added Fidelity.