In a remarkable debut, BlackRock’s Ethereum-based tokenized fund, BUIDL, has rapidly garnered $245 million in deposits within its first week. This impressive performance ranks it second among its peers, trailing only Franklin Templeton’s Franklin OnChain U.S. Government Money Fund (FOBXX), boasting $360 million in deposits.
Introduction
BlackRock’s foray into the world of tokenized real-world assets (RWA) has been met with enthusiasm. BUIDL represents an investment in a fund that holds U.S. Treasury bills and repo agreements. Built on the Ethereum blockchain using the asset tokenization platform Securitize, BUIDL offers stability and yield to large institutional investors. Its price is pegged to $1, and holders receive a yield from the underlying assets paid in the token.
The Tokenized Treasury Market
U.S. Treasuries serve as a gateway for tokenization efforts due to their low-risk nature and widespread recognition. Investors can park their on-chain cash in these familiar instruments while earning a stable yield without leaving the blockchain ecosystem. Over the past year, the tokenized Treasury market has grown exponentially, expanding nine-fold from $100 million in early 2023. Analysts predict that with BUIDL’s growth, we may soon witness a $1 billion tokenized U.S. Treasury market.
Ondo Finance’s Strategic Move
RWA tokenization platform Ondo Finance played a pivotal role in BUIDL’s success. By transferring $95 million of funds to BUIDL, Ondo Finance shifted its own Treasury bill token’s asset backing from a less desirable exchange-traded fund to a blockchain-based solution. This move enables instant settlement and around-the-clock subscriptions and redemptions, enhancing efficiency and accessibility.
