Homium, a protocol built on Avalanche, has successfully raised $10 million in a Series A funding round. This funding was led by Sorenson Impact Group and Blizzard. Homium offers homeowners the option to borrow against their home equity without increasing their monthly debt burden through shared appreciation home equity loans. In exchange for loan equity, homeowners pledge a portion of their home’s future appreciation as collateral. The funds can be used for maintenance and repairs, debt consolidation, or inheritance purposes. On the other side, investors receive a tokenized asset that tracks the price appreciation of a pool of shared homes on the protocol.
The CEO of Homium, Tommy Mercein, believes that the platform is creating a valuable new asset class for institutional investors. This asset class provides uncorrelated, inflation-protected returns in their core portfolios. Homium has currently launched its first home tokenization loans in Colorado. These tokenized assets are backed by second mortgage loans made to owner-occupied single-family homes. Investors have the same level of security on the title as with any other mortgage. The evaluation of each home is done by a third-party valuation service, ensuring transparency and nationwide coverage.
It’s important to note that while the HELOC tokens are built on distributed ledger technology, they are not cryptocurrencies. Instead, they are debt securities compliant with the SEC’s Rule 144A, which pertains to private placement to institutional investors. Homium’s technology provides investors with real-time information about each loan in the pool, including its origination value and estimated current market value. The uniform standard used to underwrite Homium loans allows for instant securitization of the note from inception. This provides investors with pooled exposure to home price appreciation based on the state.
Avalanche, the blockchain platform on which Homium is built, has committed $50 million in investments for on-chain tokenization protocols since last July. This investment has a particular focus on protocols specializing in real estate and digital collectibles. The financial services giant Citi has also recognized the potential of the tokenization market in the crypto industry, describing it as the next “killer use case.”
These HELOC tokens may not be cryptocurrencies, but they still seem like a complicated financial instrument.
The ability to instantly securitize notes is a game-changer. It opens up so many possibilities for investors and makes the process efficient.
Investing in tokenization protocols feels like jumping on a bandwagon. Not sure it’s worth the hype.