Galaxy Launches First Tokenized CLO on Avalanche, Backed by $50 Million Grove Allocation
January 15, 2026 – Galaxy announced that it has issued its inaugural collateralized loan‑obligation (CLO) and placed the securities on the Avalanche blockchain. The deal, named Galaxy CLO 2025‑1, totals $75 million, with a $50 million tranche supplied by Grove – an institutional credit protocol that operates as a “Star” SubDAO within the Sky Ecosystem. The tokens are listed on the INX platform for qualified investors.
What the transaction entails
- Structure – A CLO bundles a portfolio of corporate loans and slices the cash‑flow into multiple tranches that carry differing risk‑return profiles. This model is familiar to traditional finance but has rarely been fully represented on a public‑layer blockchain.
- On‑chain execution – The debt tranches were minted and distributed on Avalanche, a Layer‑1 network that currently holds over $1.2 billion in total value locked. Tokenization is expected to cut trading costs, accelerate settlement times, and provide a transparent audit trail for investors.
- Grove’s role – Grove’s $50 million commitment demonstrates the protocol’s ongoing strategy to back on‑chain credit products. The firm has already deployed roughly $250 million into real‑world assets (RWAs) on Avalanche, cementing its position as a leading liquidity provider in the ecosystem.
Galaxy says the proceeds will be used to expand its lending operations, while Grove’s involvement signals confidence that structured credit can meet institutional standards in a decentralized environment.
Market context
Avalanche has become a hub for tokenized private‑credit instruments. Existing products on the network include Janus Henderson’s Anemoy Fund and Apollo’s ACRED, both of which have attracted institutional interest. According to a December 2025 RWAio research report, private‑credit assets represent the largest segment of tokenized RWAs, accounting for roughly $19.1 billion of on‑chain value, followed by tokenized sovereign debt at about $9 billion.
The broader crypto market showed mixed signals on the day of the announcement. AVAX, Avalanche’s native token, was priced near $13.74, down roughly 6 percent over the prior 24 hours with daily trading volume around $388 million (CoinGecko). In contrast, Galaxy’s publicly traded shares (GLXY) rose about 13 percent, trading close to $31.90 (Google Finance).
Analyst perspective
The move illustrates a growing convergence between conventional securitisation techniques and blockchain infrastructure. Tokenising a CLO on a public chain addresses several pain points that have hampered earlier attempts at on‑chain credit:
- Regulatory alignment – By preserving the traditional tranche hierarchy, the product can more easily satisfy compliance checks required by institutional investors.
- Liquidity – Listing on INX opens a secondary market that could bring faster turnover compared with legacy private‑credit funds, which often lock capital for years.
- Transparency – Immutable smart‑contract records provide real‑time visibility into ownership and cash‑flow distribution, a feature that could reduce due‑diligence costs.
However, challenges remain. The market for tokenized CLOs is still nascent, and the price volatility of underlying blockchain assets may affect investor appetite. Moreover, the legal framework for cross‑jurisdictional securitisation on public ledgers is still evolving.
Key takeaways
- First on‑chain CLO – Galaxy’s $75 million CLO marks a milestone for structured credit on Avalanche.
- Significant Grove backing – A $50 million allocation underscores Grove’s commitment to expanding tokenized credit products.
- Strategic positioning for Galaxy – The capital will bolster Galaxy’s lending platform, potentially accelerating its growth in the DeFi credit space.
- Avalanche’s credit ecosystem – The network continues to attract institutional‑grade RWA products, reinforcing its role as a preferred layer‑1 for on‑chain finance.
- Market reaction – Galaxy’s equity outperformed the broader market, while AVAX saw modest price pressure, highlighting divergent sentiment between the token and equity sides of the business.
As the tokenization of traditional finance instruments gains traction, the success of Galaxy CLO 2025‑1 could serve as a blueprint for future securitisation ventures on public blockchains. Stakeholders will be watching closely to see whether the promise of lower costs, faster settlement, and heightened transparency translates into sustained investor participation.
Source: https://thedefiant.io/news/defi/galaxy-tokenizes-first-clo-on-avalanche-with-usd50m-grove-allocation
