Homium, a protocol that tokenizes home equity lines of credit (HELOC) on the Avalanche network, has successfully raised $10 million in a Series A funding round. The funding was led by Sorenson Impact Group and Blizzard. Homium offers a unique solution for homeowners by allowing them to borrow against their home equity without increasing their monthly debt burden. Through shared appreciation home equity loans, homeowners can use a portion of their home’s future appreciation as collateral for loan equity in various purposes such as maintenance, repairs, debt consolidation, or inheritance.
Investors, on the other hand, can participate in this protocol by receiving a tokenized asset that tracks the price appreciation of a pool of shared homes. This creates a new asset class for institutional investors, offering an opportunity for uncorrelated, inflation-protected returns in their portfolios. Homium’s CEO, Tommy Mercein, stated that the first home tokenization loans are currently available in Colorado.
The tokenized assets in Homium are backed by second mortgage loans made to owner-occupied single-family homes. Investors who hold the HELOC tokens are secured to the title, similar to any other mortgage. Homium ensures that each home is appraised by a third-party, hybrid valuation service, working with nationwide loan originators.
It’s important to note that although the HELOC tokens utilize distributed ledger technology, they are not considered cryptocurrencies. Instead, these tokens are debt securities that comply with the United States Securities and Exchange Commission’s (SEC) Rule 144A, which pertains to private placements for institutional investors.
Avalanche, the network on which Homium operates, has been actively supporting on-chain tokenization protocols since July 2023. They have committed $50 million in investments, with a particular focus on real estate and digital collectibles. The tokenization market is gaining significant attention, 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 the Australasian region.