Dinari, a leading provider of tokenized public securities based in the United States, is gearing up to launch its very own blockchain network. This move comes as part of a growing trend among companies to develop their own infrastructure in the crypto space.
The new blockchain, known as the Dinari Financial Network, is designed to function as a coordination and settlement layer for securities issued on various other networks such as Arbitrum, Base, Plume, and soon, Solana. This network is custom-built using Avalanche’s technology stack.
Gabe Otte, the CEO and co-founder of Dinari, shared in an interview with CoinDesk that this blockchain will serve as the foundational infrastructure for their settlement and clearing system, which has primarily operated off-chain until now. The test net is already live, with plans for a public launch in the coming weeks.
Dinari is at the forefront of the tokenization of equities, a rapidly growing trend that aims to make trading stocks available on blockchain platforms. Proponents believe that tokenization can enable round-the-clock trading, faster settlements, and reduced costs. Recently, popular trading platform Robinhood introduced stock tokens on Ethereum’s layer-2 Arbitrum for EU users and has future plans to create its own blockchain. Other crypto exchanges, including Kraken and Bybit, have also started offering tokens representing U.S. stocks and ETFs.
In June, Dinari received a broker-dealer registration from FINRA, allowing them to tokenize National Market System (NMS) securities and offer a compliant solution for issuing token versions of U.S. public stocks. Gemini, the exchange founded by the Winklevoss twins, launched stock tokens in the EU with Dinari providing the tokenization infrastructure in the backend.
The decision to build their own blockchain reflects a broader trend seen among fintech and crypto companies. Companies like Circle and Stripe have recently announced plans to develop proprietary blockchains. Competitors like Ondo Finance and Securitize are also working on their own networks to gain more control over compliance, uptime, and integration with traditional financial systems.
For Dinari, building their own chain was a necessary step to ensure proper compliance with regulations and facilitate trades of their tokens across multiple blockchains without fragmenting liquidity. By unifying settlement and liquidity, Dinari aims to enable continuous, compliant trading of U.S. equities on a global scale, similar to the role played by the Depository Trust and Clearing Corporation (DTCC) in the traditional stock market.
Choosing Avalanche to build on was a strategic decision for Dinari, as it offers the flexibility and control over transaction fees that are essential for their operations. Avalanche’s blockchain service, Ava Cloud, allows businesses to customize and deploy blockchains according to their specific needs.
Dinari envisions the Dinari Financial Network as a neutral clearinghouse for the industry, with governance initially coming from a consortium of institutions including Gemini, BitGo, and VanEck. The company plans to fully decentralize the chain in the future, potentially launching its own governance token.
In conclusion, Dinari’s foray into building their own blockchain reflects a growing trend in the industry towards greater control and customization. With their innovative approach and strategic partnerships, Dinari is poised to play a significant role in the tokenization of equities and the evolution of the blockchain ecosystem.