Dinari, a U.S.-based provider of tokenized public securities, is set to launch its own blockchain, joining the latest wave of firms to build their own infrastructure.
The chain, called the Dinari Financial Network, aims to serve as a coordination and settlement layer for the securities issued on other networks like Arbitrum (ARB), Base, Plume (PLUME) and, soon, Solana (SOL). The network is custom built using Avalanche’s (AVAX) tech stack.
“This is going to be the foundational infrastructure for our settlement and clearing system, which has up to this point predominantly happened off-chain,” Gabe Otte, CEO and co-founder of Dinari, told CoinDesk in an interview.
The test net is currently live with plans for a public launch in the next couple weeks, Otte added.
Dinari is one of the firms spearheading the tokenization of equities, a red-hot trend to make trading with stocks available on blockchain rails. Proponents say tokenization could enable round-the-clock trading, faster settlements while reduce costs.
Recently, digital trading platform Robinhood introduced stock tokens on Ethereum layer-2 Arbitrum (ARB) for EU users with future plans to build its own chain, while crypto exchanges including Kraken, Bybit also started offering tokens of U.S. stocks and ETFs.
In June, Dinari obtained a broker-dealer registration by FINRA with an approval to tokenize National Market System (NMS) securities, offering a compliant solution to issue token version of U.S. public stocks. Gemini, the exchange founded by Cameron and Tyler Winklevoss, launched stock tokens in the EU with Dinari providing the tokenization infrastructure in the backend.
Why another L1?
Dinari’s decision to build its own chain follows a recent pattern seen across fintechs and crypto firms. USDC stablecoin issuer Circle and payments company Stripe revealed this week to pursue proprietary blockchains. Rival tokenization firms like Ondo Finance and Securitize (teamed up with Ethena) are also working on their own networks.
With this approach, they aim to gain more control over compliance with regulations, uptime and integration with traditional finance systems compared to deploying on existing public blockchains.
For Dinari, having their own chain was “out of necessity,” Otte said.
“A lot of the public chains doesn’t really allow for the proper level of compliance needed for dealing with securities,” he explained. Another key reason was to facilitate and coordinate trades of Dinari-issued tokens across multiple blockchains without fragmenting liquidity.
“If part of [the stock tokens] lives on Solana, part on Arbitrum, part on Base, you’re taking this $100 trillion market and fragmenting it,” he said. “How do you prevent that? With a purpose-built chain that allows us to essentially pull liquidity across all these different chains.”
By unifying settlement and liquidity, the company aims to bring continuous, compliant trading of U.S. equities to a global market, gunning for a similar role to the Depository Trust and Clearing Corporation (DTCC) for the stock market. DTCC is the world’s largest securities clearing and settlement system.
For choosing Avalanche to build on, Otte emphasized the need for flexibility and the ability to control transaction fees (gas prices), which is difficult with rollup and layer-2 solutions. Avalanche’s blockchain service, Ava Cloud lets businesses spin up and customize blockchains for their own needs, said Morgan Krupetsky, VP of ecosystem growth at Ava Labs.
Neutral clearinghouse
Dinari wants to position the Dinari Financial Network to be a “neutral clearinghouse” for the industry, Otte said.
At the start, governance will come from a consortium of institutions including Gemini, custodian BitGo and asset manager VanEck, who will serve as validators and also offer custody services.
The plan is to fully decentralize the chain in future, Otte said. That includes potentially launching the chain’s own governance token, he added.
Read more: Tokenized Equities Need an ADR Structure to Protect Investors