The tokenization of U.S. Treasurys has witnessed a notable surge, surpassing $1 billion across multiple blockchains such as Ethereum, Polygon, and Solana. This surge has been notably driven by the introduction of BlackRock's USD Institutional Digital Liquidity Fund.
Source: 21Share’ Dune Analytics
The fund, named "BUIDL" and launched on Ethereum on March 20, has rapidly achieved a market cap of $244.8 million.
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Tokenized U.S. Treasurys Drive Growth in BlackRock's BUIDL Fund
The growth in tokenized U.S. Treasurys has been driven by four significant transactions totaling $95 million within a week, propelling BlackRock's USD Institutional Digital Liquidity Fund (BUIDL) to become the second-largest fund of its kind. It follows Franklin Templeton’s Franklin OnChain U.S. Government Money Fund (FOBXX), which leads with $360.2 million in assets.
Source: rwa.xyz
This milestone of over $1 billion in tokenized U.S. Treasurys is spread across 17 distinct products, showcasing the expanding reach of this financial innovation.
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A notable contribution to BlackRock’s fund came from Ondo Finance, which added $79.3 million. This deposit, part of Ondo’s strategy to facilitate instant settlements for its U.S. Treasury-backed token, OUSG, makes it a significant player with a 38% stake in BUIDL. Tom Wan of 21.co highlighted this move as a significant step in the fund’s growth.
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Tokenization Trends in Asset Management
BlackRock’s BUIDL maintains a 1:1 peg to the U.S. dollar, providing investors with daily accrued dividends paid monthly. Its launch on Ethereum, utilizing the Securitize protocol, reflects the broader trend toward blockchain-based efficiencies in the financial industry.
BlackRock CEO Larry Fink and others anticipate tokenization as a means to streamline capital markets, with projections suggesting a potential market size of $16 trillion by 2030. This trend extends beyond government securities to encompass a variety of assets, including stocks and real estate, with Ethereum hosting $700 million of total real-world assets (RWA) on-chain.
Tokenization efforts are not limited to traditional asset management firms; Franklin Templeton utilizes Stellar and Polygon for its FOBXX fund, illustrating a diverse ecosystem of platforms supporting tokenized products. This sector encompasses both established financial institutions like WisdomTree and blockchain-native companies such as Ondo Finance and Backed Finance, showcasing a broad and multi-faceted approach to integrating real-world assets into the digital blockchain space.
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