The BlackRock US Dollar Institutional Digital Liquidity Fund (BUIDL), managed by the world’s largest asset manager, has reached $549 million in assets under management, according to RWA.XYZ. This tokenized fund is emerging as a pivotal player in the evolving landscape of real-world assets (RWAs) as collateral for stablecoins.
Brokerage firm Securitize recently submitted a Frax improvement proposal to incorporate BUIDL as backing collateral for the Frax USD stablecoin. The proposal outlines several advantages of integrating BUIDL, including yield opportunities, enhanced liquidity, streamlined transfer mechanisms, and reduced counterparty risk. Given BUIDL’s investment focus on U.S. government securities, its potential inclusion could bolster Frax USD’s stability and market appeal.
The decision now rests with the Frax community, which will vote on whether to approve BUIDL as a reserve asset. If successful, this could mark a significant milestone for the tokenized fund.
Tokenized Assets on the Rise
The use of tokenized RWAs like BUIDL as collateral for stablecoins is gaining traction due to their cost-efficiency, fast settlement times, and attractive yield-bearing opportunities. In September 2024, Ethena Labs announced USDtb, a BUIDL-backed stablecoin distinct from its synthetic USDe product. USDtb launched on December 16, quickly amassing $65 million in total value locked (TVL). Unlike USDe, USDtb is overcollateralized at a 1:1 ratio with U.S. dollars held in the BUIDL fund, ensuring robust backing.
BlackRock Expands BUIDL’s Use Cases
BlackRock has been proactive in positioning BUIDL as a versatile collateral asset. Talks with Binance, OKX, and Deribit to integrate BUIDL into crypto derivatives trading are underway, potentially challenging the dominance of established stablecoin issuers like Tether and Circle.
Additionally, BUIDL is already integrated into Elixir Protocol’s deUSD stablecoin, which can be minted on Curve and traded against other stablecoins in its liquidity pools.
The Road Ahead
As tokenized RWAs like BUIDL gain acceptance across DeFi platforms and stablecoin ecosystems, their potential to reshape collateral markets is becoming increasingly evident. Whether through Frax USD or other initiatives, BUIDL’s role in driving liquidity, stability, and yield opportunities underscores its growing influence in the digital asset space.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
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