The recent surge in the tokenization of U.S. Treasurys, exceeding $1 billion across various blockchains like Ethereum, Polygon, and Solana, has been significantly influenced by the introduction of BlackRock‘s USD Institutional Digital Liquidity Fund.
Launched on March 20 on Ethereum, the fund, known by its ticker “BUIDL,” has quickly reached a market cap of $244.8 million.
This growth was propelled by four substantial transactions totaling $95 million within a week, placing BUIDL as the second-largest fund of its kind, just behind Franklin Templeton’s Franklin OnChain U.S. Government Money Fund (FOBXX) which leads with $360.2 million in assets.
This milestone of over $1 billion in tokenized U.S. Treasurys is spread across 17 distinct products, demonstrating the expanding reach of this financial innovation.
The largest recent contribution to BlackRock’s fund came from Ondo Finance, which added $79.3 million. This deposit is part of Ondo’s strategy to facilitate instant settlements for its U.S.
Treasury-backed token, OUSG, making it a substantial player with a 38% stake in BUIDL. This move was highlighted by Tom Wan of 21.co, marking a significant step in the fund’s growth.
BlackRock’s BUIDL operates with a 1:1 peg to the U.S. dollar, offering investors daily accrued dividends paid monthly. Its launch utilized the Securitize protocol on Ethereum, reflecting the broader industry trend towards blockchain-based efficiencies.
BlackRock CEO Larry Fink and others in the sector see tokenization as a pathway to more streamlined capital markets, with predictions suggesting a potential market size of $16 trillion by 2030.
This innovation is not limited to government securities; a wide array of assets including stocks and real estate are also being tokenized, with Ethereum hosting $700 million of the total real-world assets (RWA) on-chain.
Tokenization efforts extend beyond traditional asset management firms, with Franklin Templeton utilizing Stellar and Polygon for FOBXX, reflecting a diverse ecosystem of platforms supporting tokenized products.
This growing sector includes both established financial institutions like WisdomTree and blockchain-native companies such as Ondo Finance, Backed Finance, and others, illustrating a broad and multi-faceted approach to incorporating real-world assets into the digital blockchain space.
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