The world of finance is undergoing a digital revolution, with traditional assets like US Treasuries making their way onto blockchains. This week, the total value of tokenized US Treasuries surpassed a significant milestone – $1 billion. This surge is largely attributed to the launch of the BlackRock USD Institutional Digital Liquidity Fund (BUIDL), a new Ethereum-based product allowing investors to hold tokenized US Treasuries.
BlackRock’s BUIDL Fund Drives Tokenized Treasury Growth
Launched in March 2024, BUIDL quickly amassed a market cap of $244.8 million. This rapid growth can be partly explained by four significant deposits totaling $95 million, propelling BUIDL to the second-largest tokenized government securities fund, according to Etherscan data.
Currently, BUIDL sits behind Franklin Templeton’s FOBXX, a well-established tokenized Treasury fund on Stellar with a market cap of $360.2 million. However, BUIDL offers distinct advantages. It boasts daily accrued dividends paid directly to investors and maintains a fixed price pegged 1:1 to the US dollar.
The tokenized Treasury market extends beyond BUIDL. Ondo Finance, a real-world asset tokenization company, recently deposited $79.3 million into BUIDL, facilitating quicker settlements for their US Treasury-backed token, OUSG. This highlights the interconnectedness within the tokenized Treasury ecosystem.
Why Tokenized Treasuries?
With rising interest rates, analysts at 21Shares, the parent company of 21.co, see tokenized Treasuries as an attractive alternative to stablecoin yields due to their perceived lower risk profile. This perspective is supported by 21.co’s Dune Analytics dashboard, showcasing the growing appeal of tokenized Treasuries.
The Future of Tokenization: Beyond Treasuries
BlackRock CEO Larry Fink himself acknowledges the transformative potential of blockchain tokenization. Boston Consulting Group estimates this market could reach a staggering $16 trillion by 2030. While US Treasuries are a significant piece, the potential extends far beyond, encompassing equities, real estate, and a vast array of assets.
Also Read: BlackRock Tokenization Blastoff! Real-World Asset (RWA) Market Poised for $16 Trillion Takeover
The Players in the Tokenized Treasury Game
Ethereum currently dominates the tokenized real-world asset (RWA) market, holding over $700 million in tokenized assets. Stellar and Polygon follow closely behind, with Franklin Templeton’s FOBXX and other platforms from companies like Ondo Finance, Backed Finance, and WisdomTree actively participating in this burgeoning space.
The tokenization of traditional assets like US Treasuries represents a significant step towards a more efficient and digital financial future. With major institutions like BlackRock entering the fray, the future of tokenized Treasuries and RWAs in general appears bright.
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